The federal government has proposed higher development spending on water, education, and health projects in fiscal year 2026-27, with the water sector set to receive the biggest increase in absolute terms among the three areas.

Under the proposed Public Sector Development Programme (PSDP) for FY2026-27, the government has earmarked Rs. 140.4 billion for water-related projects, up from the revised allocation of Rs. 82.2 billion in the outgoing fiscal year. The increase of more than Rs. 58 billion reflects a stronger focus on dams, irrigation systems, and broader water security needs.

Spending on education has also been proposed at a significantly higher level. The allocation for education, including the Higher Education Commission (HEC), has been increased to Rs. 78.5 billion from a revised Rs. 52.6 billion in FY2025-26, showing a rise of nearly 49 percent.

Similarly, health and nutrition projects are expected to receive Rs. 24.3 billion in the next fiscal year, compared to Rs. 14 billion in the revised budget for the current year. The increase comes as the government looks to strengthen healthcare infrastructure and improve public health services despite limited fiscal space.

According to planning documents, infrastructure will remain the government’s main development priority in FY2026-27, with a proposed allocation of Rs. 729.9 billion, accounting for nearly 65 percent of the total PSDP.

Within the infrastructure portfolio, transport and communications will receive the largest allocation at Rs. 408.9 billion, followed by water projects with Rs. 140.4 billion and energy schemes with Rs. 135.6 billion.

Overall, the federal PSDP for FY2026-27 has been proposed at Rs. 1.126 trillion amid mounting fiscal pressure and a growing backlog of ongoing projects.

The government has signaled that limited resources will require strict prioritization of high-impact and strategically important schemes, while the launch of most new projects is expected to remain restricted.