• Chief Minister Murad reduces capital expenditure by 29pc to Rs720bn for next fiscal year • Education, health, environment and social protection to take major hits

KARACHI: Sindh Chief Minister Murad Ali Shah on Wednesday cut development spending by a steeper 29 per cent to Rs720 billion for 2026-27, compared with the original estimates for the outgoing fiscal year.

Unveiling the budgetary proposals , Mr Murad announced reduced allocations for almost all key segments of the Annual Development Plan (ADP), including a 26pc, or Rs135bn, cut in the provincial contribution to Rs385bn for FY27, down from Rs520bn in FY26.

The annual capital expenditure in FY26 was estimated at Rs1,018.3bn and later revised to Rs944bn. However, the development spending allocations for the next fiscal year were even lower than the revised figure.

In fact, foreign project assistance declined sharply from Rs366.7bn in FY26 to Rs256bn in FY27, a decrease of Rs110.7bn. The revised estimate for this assistance in FY26 was Rs400bn.

The impact was clearly observed across several sectors that are part of the province’s annual capital expenditure, commonly referred to as ADP. The allocation for the district programme has been drastically cut to Rs15bn for FY27, down from Rs55bn in FY26, while the revised estimate for the outgoing year was Rs40bn.

Similarly, the allocation for the general public service was sharply reduced to Rs53.5bn for FY27 from Rs168.4bn in FY26, and was later revised downward to Rs72.44bn.

Another significant cut was noted in education affairs and services, which was reduced to Rs52.5bn in FY27 from Rs100.7bn in FY26, while the revised estimate was Rs75.5bn.

Environmental protection has been a major issue, causing significant losses to the province, but the government cut allocations for this vital sector by over 50 per cent compared to the outgoing fiscal year.

The allocation for environmental protection in FY27 is Rs541 million, compared with R1.018bn in FY26. The health sector also recorded a decline despite rising demand for improvements in this sector. The provincial government estimated health expenditure for FY27 at Rs38.9bn compared with Rs45.4bn in FY26.

The highest allocation under the annual capital expenditure in FY27 is for social protection (including district ADP) at Rs327.3bn, reflecting a major decline from Rs362bn, which was revised upward to Rs425.2bn for FY26.

The estimate for economic affairs for the upcoming fiscal year has been proposed at Rs182.3bn, down from Rs280bn in FY26, which was later revised downward to Rs271.8bn for the outgoing fiscal year.

Mr Murad, in his budget speech, said that the decrease in the development expenditure will be absorbed by all development components.

“The prevailing regional security situation has necessitated higher national expenditures on defence and strategic preparedness, thereby reducing the fiscal space available for development spending across all tiers of government. At the same time, volatility in global energy markets and recurrent fuel crises have increased the cost of government operations, infrastructure projects, transportation, and service delivery, placing additional strain on public finances,” he said.

“Even in a difficult fiscal environment, we have protected priority development projects and essential public services that directly affect the lives of our people,” he said.

Published in Dawn, June 18th, 2026