PUNJAB’S budget for FY27 is a mix of good and bad political choices, with a cash-strapped centre tightening the fiscal noose around the provinces to claw back resources. On paper, the numbers look tidy: Rs5.9tr in outlay and a promised Rs910bn surplus. Moreover, the province’s finance minister kept repeating that nobody’s tax bill would rise. He had less to say about the nearly 40pc cut to annual development spending, which includes Rs140bn worth of projects financed by Punjab’s international development partners. Money meant for roads, schools and hospitals in the poorer districts will, instead, help cover federal expenses.

The nearly 42pc rise in next year’s tax target, driven by rate changes, wider coverage and tighter enforcement appears to be grounded in Punjab’s actual revenue capacity. The abiana overhaul, replacing the old crop-based water charge with flat per-acre rates and separate slabs for orchards and lift-irrigation, should make the system harder to dodge and easier to administer. Raising the sales tax on services pulls a chunk of the economy that currently operates off the books into view. What the budget avoids is harder to justify. Real estate and property remain taxed nowhere near their real value. Agriculture, Punjab’s largest economic activity, still contributes only a sliver to provincial revenue, with agricultural income tax collection stuck at a few billion rupees a year. That gap has survived because it suits those who would be taxed if it were plugged. To widen the tax base, the government must take on the sectors it has spared so far, and not further squeeze the ones already paying. The one part of the budget aimed at growth rather than collection is PIVOT, a Rs2tr push into industrial clusters, agro-processing and exports. It is an actual attempt at industrialisation, which Punjab needed. Whether or not it amounts to anything will come down to how the money is spent over the next three years, and not how it reads on paper today.

Published in Dawn, June 18th, 2026