Roads, Highways Get Biggest Share of Federal Development Budget for FY27

The federal government has proposed allocating the largest share of its development budget for the transport and communications sector in fiscal year 2026-27, signaling a continued focus on highways, motorways and connectivity projects despite severe fiscal constraints.

Under the proposed Public Sector Development Programme (PSDP) of Rs. 1.126 trillion, the sector is set to receive Rs. 408.9 billion, making it the single largest recipient of federal development funds.

According to sources in the Planning Commission, infrastructure projects will account for Rs. 729.9 billion, or about 65 percent of the total PSDP. Within this allocation, transport and communications will receive around 36 percent of the entire federal development budget, ahead of water resources at Rs. 140.4 billion and energy projects at Rs. 135.6 billion.

The National Highway Authority alone has been allocated Rs. 264 billion for ongoing and new road projects, including major investments in the N-25 highway, Indus Highway corridors, motorways and regional road networks.

Among the largest transport schemes proposed for funding are multiple sections of the N-25 connecting Karachi, Quetta and Chaman, which together account for more than Rs. 125 billion in planned allocations. Other major projects include the Hyderabad-Sukkur Motorway, Khyber Pass Economic Corridor, Karakoram Highway relocation works and several strategic road projects in Balochistan, Khyber Pakhtunkhwa and Gilgit-Baltistan.

While infrastructure remains the dominant priority, the government has also proposed Rs. 187.2 billion for social sector projects, including Rs. 78.5 billion for education and higher education, Rs. 24.3 billion for health and nutrition, and Rs. 70 billion for the Sustainable Development Goals programme.

Special areas, including Azad Jammu and Kashmir, Gilgit-Baltistan and merged districts, are proposed to receive a combined allocation of more than Rs. 145 billion.

The development plan has been prepared amid significant fiscal pressures. Ministries and divisions sought more than Rs. 4.1 trillion for development projects, but the Finance Division provided an indicative ceiling of only Rs. 1.126 trillion.

The Planning Commission has also warned that the federal project portfolio carries a throw-forward liability exceeding Rs. 10 trillion, while more than 90 percent of projects face cost or time overruns, underscoring the challenge of financing new initiatives alongside ongoing commitments.