Govt Plans Higher Spending on Water, Health and Education In FY27

Federal development spending on water, education, and health projects is set to increase in FY2026-27, with water sector schemes receiving the largest jump among the three priority areas.

According to sources, the federal government has proposed allocating Rs. 140.4 billion for water projects in the upcoming Public Sector Development Programme (PSDP), compared to a revised allocation of Rs. 82.2 billion this year. The increase of more than Rs. 58 billion reflects growing focus on dams, irrigation infrastructure, and water security challenges.

Education is also set for a significant increase. The proposed allocation for education, including the Higher Education Commission (HEC), has been raised to Rs. 78.5 billion from a revised Rs. 52.6 billion in the current fiscal year, an increase of nearly 49 percent.

Meanwhile, health and nutrition projects are proposed to receive Rs. 24.3 billion in FY2026-27, up from Rs. 14 billion in the revised FY2025-26 budget. The increase comes as the government seeks to improve healthcare infrastructure and public health services despite tight fiscal conditions.

The APCC document shows that infrastructure remains the government’s top development priority, with Rs. 729.9 billion, or nearly 65 percent of the proposed PSDP, earmarked for infrastructure-related projects. Within this category, transport and communications receive the largest allocation, followed by water and energy projects.

Overall, the federal PSDP for FY2026-27 has been proposed at Rs. 1.126 trillion amid significant fiscal constraints and a growing backlog of ongoing development projects. The government has indicated that limited resources will force it to prioritize high-impact and strategically important schemes while restricting the launch of most new projects.