Sindh received more NFC funds but a 29% reduction in development budget
Every June, the Chief Minister of Sindh stands up and announces the province’s share of the federal distributable pool, and each year the number is higher than the last. This year was no different. Sindh’s revised receipts from 2025 to 2026 under the National Finance Commission award came to around Rs 1.879 trillion. The size of the budget for 2026 to 2027 reached Rs 2.207 trillion, an increase of about 17.5 percent. You would expect this to be good news. More money from the federal government should theoretically mean more schools built, more hospitals built, more roads paved and more water schemes reaching the districts that need them.
It hasn’t worked that way. Sindh’s annual development program, the budget line that pays for new infrastructure and public projects, fell from Rs 1.018 trillion in 2025 to 2026 to just Rs 720 billion in 2026 to 2027, a decrease of about 29 percent. Chief Minister Murad Ali Shah did not try to hide it. In presenting the budget, he pointed to “emerging geopolitical developments in the Gulf region, growing economic uncertainty, fiscal pressures” and the province’s own austerity. Within that total, provincial ADP itself was cut by 26 percent to Rs 385 billion, foreign project aid fell from Rs 366.7 billion to Rs 256 billion, and the deepest cuts came to the smallest, most localized schemes: district-level funding for things like small clinics, drainage systems and rural roads, down from Rs 15 billion to just Rs 5 billion. This is a 73% reduction. None of this is opposition talk. They come straight from the province’s own budget documents.
What the province has not done is tell anyone how the remaining Rs 15 billion is actually being distributed among its 30 districts. Citizens’ Budget 2026-2027, the Finance Department’s own summary to the public, takes the province as a whole and stops there. It has no divisional or district breakdown, is not in the budget strategy paper, and is not in any of the reporting outlets that have covered the Chief Minister’s speech in detail. The silence is worth sitting on for a second, because it’s not like there isn’t a formula: Sindh’s own finance department has told the Public Accounts Committee in the past that district ADP funds are to be allocated based on the district’s population and NFC award formula. If it still works that way, the province already has these numbers in a spreadsheet somewhere. It is simply choosing not to publish them. Therefore, no one outside the Finance Department can say whether the flood-affected district in the north is about 73 percent affected like the urban district of Karachi, or whether some districts are quietly surviving while others are declining.
This leaves an uncomfortable question hanging over the entire budget. If federal transfers continue to grow and provincial tax revenues continue to grow, what exactly is the justification for this drastic cut? Part of the story is Sindh’s promise to return about Rs 260 billion to the federal government, which was agreed upon in talks with the National Economic Council. But the province’s additional revenue that year was more than enough to absorb development spending on that scale without cutting, especially given that current expenditures, mostly salaries, pensions and grants to government agencies, actually increased by about 20 percent over the same period. The daily budget for education reached Rs 446.96 billion and that of health Rs 354.27 billion, even when their development aspects were allocated: education’s ADP fell from Rs 99.6 billion to Rs 25.86 billion, a decrease of about 74 percent, and the health budget fell from Rs 45.37 billion to about Rs 1726 billion.
So if the extra money isn’t going into development, and it’s not just being swallowed up by federal grants, where is it going?
One case, unrelated to the mechanics of this particular budget gap, is notable only for showing how little oversight can be achieved when public money leaves the coffers. The Sindh Solar Energy Project, a foreign-funded scheme aimed at bringing solar power to poor households, is currently under investigation after the Federal Board of Revenue found that more than 200,000 solar home system kits were imported between December 2024 and July 2025 at declared prices of sixteen to twenty-three, which were set at $1 per unit, compared to about $1 per unit. The Senate Standing Committee on Economic Affairs was told that fake invoices worth $12.5 million were uncovered, including tampering with import paperwork and suspicious remittances sent by entities in the United Arab Emirates. The case has since been referred for action under the Anti-Money Laundering Act, and the Sindh government has referred it to its Inquiries and Anti-Corruption Establishment. None of this proves where NFC’s money actually went. It just goes to show that when you look closely at how Sindh spends money, anomalies are not hard to find.
The people of Sindh deserve a straight answer. The money continues to trickle in every year, development spending continues to be cut, and the province still won’t say how what little is left is being distributed among its 30 districts. So where does it actually go?
The post Sindh got more NFC funds but 29% reduction in development budget appeared first on Daily Pakistan News
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