LAHORE:
Federal and provincial budgets for fiscal year 2025-26 have been passed by assemblies, each one claiming to be providing a huge relief to an ordinary Pakistani citizen or household, but the ground reality suggests otherwise.
A large number of ordinary citizens have expressed scepticism about the immediate effect on their strained household budgets. In the backdrop of a persistently high inflation, officially recorded at 3.5% in May 2025, and a total budget outlay of Rs17.5 trillion, the government’s balancing act between fiscal consolidation and public relief measures has left many feeling underwhelmed.
For salaried workers like Tariq Sikandar, earning Rs120,000 per month, the budget offers a rare positive. “My tax burden will drop by nearly Rs2,500 per month,” he said, while referring to the government’s decision to increase the income tax exemption threshold to Rs600,000 annually and lower tax rates for middle-income brackets. “It’s a small relief, but in this economy, every rupee counts,” he added.
This adjustment, part of broader efforts to formalise the tax net, benefits approximately 67 million salaried individuals. However, in Pakistan, a majority of the workforce is earning less than Rs50,000, with no regular yearly increments, especially in the private sector.
For female household members like Fatima Bibi, managing a family of five, the budget fails to address her primary concern, ie, soaring kitchen expenses. “Flour, sugar and cooking oil are still painfully expensive,” she said, adding “the government’s claims of providing relief sound good, but the reality does not match their claims, even milk and yogurt prices since the announcement of budget have increased, how can they control this mess.”
While the government has allocated Rs1.186 trillion for subsidies in FY26, a large chunk of that goes to the power sector, with no amount earmarked for utility stores. For over 70% of population, as of today, relief means a substantial reduction in prices of food basket, petrol and electricity. Till such relief is provided, which is highly impossible considering the global situation and the country’s deficits, the government’s moves may not be considered people-centric.
On the other side, industrial workers, too, voice apprehension. Aslam Hussain, employed at a Faisalabad textile factory, questions the budget’s job creation promises. “They talk of 5% export growth target and industrial support, but our factory hasn’t raised wages for two years,” he stated.
The billions of rupees allocated for the export industry support package focus on technology upgrades, which workers like Hussain fear may not translate into higher incomes. “Without wage increases, how can we match the growing inflation, how will our condition get better, there should be a mechanism to control the private sector too, when it comes to matching wages,” he emphasised.
Transporters, squeezed by energy costs, say imposing an additional levy means cutting down the already shrinking margins. Haider Raza, who operates a mini-truck between Peshawar and Rawalpindi, points to the hike in petroleum levy, expected to surpass Rs100 per litre. “Diesel prices will rise again and my profit margin vanishes, every time this happens. The government defends the levy as necessary to meet its tax collection target, but for small transporters, it’s a direct hit to livelihoods,” Raza added.
Economists also acknowledge the budget’s tightrope walk. Dr Ayesha Ali, an economist, said that the 4.2% GDP growth target and the reduced budget deficit at 3.9% show the commitment to stability. “But heavy reliance on indirect taxes, like the 18% standard sales tax, hits low-income households the hardest.”
She notes that while the Rs1 trillion development budget is aimed at long-term growth, immediate relief measures like the Benazir Income Support Programme (BISP) stipend, adjusted for inflation, remain insufficient for the poorest 20% of families.
Ayesha added that for an average Pakistani, the FY26 budget feels like a blend of modest gains and missed opportunities. “Tax relief for salaried class is a tangible win, yet it’s overshadowed by the reality that indirect taxes and inflation will continue to dominate daily expenditures. Structural reforms take time, but households need a respite now. Without sharper targeting of subsidies and price controls, inequality pressures will not ease. In markets, factories and homes, the consensus is clear; the budget offers breathing space for some, but for most, the struggle persists beneath the weight of bigger economic currents.”
