The federal budget 2025–26 lays bare more than just numbers. It exposes a country caught in a pattern of reaction rather than reform, reflecting a strategic drift where long-term planning has given way to fiscal firefighting. While official pronouncements tout growth, consolidation, and reform, the allocations and exemptions paint a different picture—one of a state muddling through, failing to course-correct even as economic and social pressures mount. Rather than steering the country toward a viable development path, the budget’s revenue measures and spending priorities indicate an institutional stasis, rooted in tactical compromises and an avoidance of deeper structural change.

Policy Disconnect

The Pakistan Economic Survey 2024–25, unveiled days before the budget, admitted that economic growth fell short of targets across major sectors. Real GDP inched up by 2.68%, falling short of the 3.5% goal. Agriculture, once a mainstay, barely registered 0.6% growth, largely due to water shortages and declining yields in key crops like cotton and wheat. Even industrial growth, reported at 4.8%, is questioned because Large-Scale Manufacturing (LSM) shrank for the third year in a row.

The budget projects a 4.2% GDP growth target and sets ambitious goals for agriculture (4.5%), industry (4.3%), and services (4%) in FY26. Yet the policy environment offers little to back these projections. Critical sectors continue to be weighed down by legacy subsidies, politically protected exemptions, and skewed incentives. This misalignment between growth projections and underlying sectoral realities is symptomatic of deeper policy drift. For example, the targeted 4.5% agricultural growth lacks the........

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