Pakistan Budget FY26: From GDP to fiscal deficit, capital expenditure, here's how it stands against India

Pakistan unveiled its FY26 federal budget, reducing spending by 7% to $62 billion. The nation targets 3.6% growth. Fiscal deficit aims for 3.9% of GDP. Capital expenditure is set at Pakistan Rs 17.57 trillion. Nominal GDP growth is projected at 4.2% for 2025-26. This follows a 2.7% growth this fiscal year. The government aims to stabilize the economy.
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After facing major blows following tensions with India, Pakistan announced its federal budget for FY26 on Tuesday, shrinking overall spending by 7% with growth target at 4.2% for the fiscal year.Currently, Pakistan's growth lags far behind the region. In 2024, South Asian countries grew by an average of 5.8% and 6.0% growth is expected in 2025, according to the Asian Development Bank.After India bombed nine terror sites of Pakistan, the country in its Budget FY26 increased its defence expenditure by 20%. The government of Pakistan Prime Minister Shehbaz Sharif presented a budget that allocated $9 billion for defence spending in FY26.Pakistan's debt has increased to PRs 76,000 billion in the first nine months of the current fiscal year, according to the economic survey, which indicated that the cash-strapped country's economy is likely to grow by 2.7 per cent this year.Finance minister Nirmala Sitharaman announced that the fiscal deficit for FY25 is projected at 4.8% of GDP, with a target of 4.4% for FY26.On the other hand, Pakistan has set a target of 3.9% of its GDP.The capital expenditure of India was lowered to Rs 10.18 lakh crore from Rs 11.11 lakh crore estimated earlier for FY25. Pakistan on Tuesday set it at PRs 17.57 crore.In Budget 2025-26, India has set a nominal GDP growth target of 10.1% for FY26, slightly above the 9.7% achieved in the previous fiscal. Sharif's government has projected 4.2% economic growth in 2025-26. Growth in Pakistan this fiscal year is likely to be 2.7%, against an initial target of 3.6% set in the budget last year.Pakistan's debt has increased to PRs 76,000 billion in the first nine months of the current fiscal year, according to the economic survey, which indicated that the cash-strapped country's economy is likely to grow by 2.7 per cent this year.In the first nine months of the current fiscal year, the government's debt increased to PRs (Pakistani Rupees) 76,000 billion, including PRs 51,500 billion from local banks and PRs 24,500 billion in loans from external sources, according to the document, which comes a day before the presentation of the budget.Addressing a press conference after launching the economic survey, Aurangzeb said the GDP growth in 2023 was -0.2pc, which rose to 2.5pc in 2024.The Pakistan Finance Minister said that the forex reserves as of June 30, 2024, were $9.4 billion, which was a remarkable recovery from 2023 when Pakistan was down to two weeks of import cover. He said foreign exchange reserves rose to $16.64 billion in 2025.

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