The long-delayed Gaj Dam project has once again come under scrutiny after the Federal Constitutional Court was informed that the contractor responsible for the project has received billions of rupees more than the original project cost, despite the dam still being far from completion.

During a recent hearing, the court was told that the contractor has already received approximately Rs. 62 billion, even though the project was originally approved at a cost of Rs. 26 billion. Despite receiving these additional funds, less than half of the work on the dam has reportedly been completed.

The case has raised serious concerns about project management, cost overruns, delays, and the use of public funds.

Court Reviews Delays in Gaj Dam Construction

A two-member bench of the Federal Constitutional Court, headed by Chief Justice Amin ud Din Khan, heard the case regarding the prolonged delay in the construction of Gaj Dam.

The court reviewed various aspects of the project, including its progress, funding issues, and the reasons behind the repeated delays.

After hearing preliminary arguments from both sides, the court adjourned the hearing until June 11 and directed Additional Attorney General Amir Rehman to present detailed arguments at the next hearing.

The judges are expected to examine whether the delays were caused by the contractor, government departments, funding shortages, or a combination of multiple factors.

What Is the Gaj Dam Project?

The Gaj Dam project is one of Pakistan’s important water infrastructure projects. It was designed to help improve water storage, irrigation facilities, and water supply in parts of Sindh.

Large dam projects play a critical role in Pakistan because they help store water for agriculture, reduce water shortages, and improve flood management.

The project was launched more than a decade ago with the expectation that it would contribute to regional development and support local farming communities.

However, progress on the project has remained slow, and the dam has become a symbol of the challenges facing large public-sector development projects in the country.

Original Cost Was Rs. 26 Billion

According to the lawyer representing WAPDA, the project was originally launched in 2011 with an estimated cost of Rs. 26 billion.

At the time, the budget was considered sufficient to complete the dam and related infrastructure.

However, over the years, costs continued to increase.

The court was informed that the contractor has now received an additional Rs. 36 billion over and above the original project estimate.

This means total payments linked to the project have reached around Rs. 62 billion.

The increase represents a cost escalation of approximately 138 percent compared to the original approved budget.

Such a large increase in project costs has become a major point of concern for the court and public authorities.

Less Than Half of the Project Completed

One of the most significant concerns raised during the hearing was the project’s slow progress.

According to WAPDA’s counsel, despite receiving billions of rupees in additional payments, the contractor has failed to complete even 50 percent of the work.

The lawyer argued that the pace of construction has remained unsatisfactory and that taxpayers have not received value for the money spent so far.

The court was informed that although substantial public funds have already been utilized, the dam remains unfinished many years after its launch.

This situation has led to questions regarding project planning, execution, monitoring, and accountability.

Previous Deadlines Were Missed

During the hearing, WAPDA’s legal team informed the court that the Sindh High Court had previously provided the contractor with a deadline to complete the project.

The contractor was expected to finish the remaining work within a specific timeline.

However, according to WAPDA, the deadline was not met.

The failure to complete the project within the court-approved timeframe further contributed to concerns regarding the management of the dam’s construction.

Repeated delays have not only increased costs but have also postponed the expected benefits that local communities were supposed to receive from the project.

Contractor Rejects Allegations

The contractor’s lawyer, Masood Khan, strongly disputed the allegations presented by WAPDA.

According to him, the picture being presented was incomplete and did not accurately reflect the challenges faced by the project.

He told the court that progress on the project had previously been acknowledged by the country’s highest court.

The lawyer argued that when the matter came before the Supreme Court in 2019, it had already been reported that approximately 50 percent of the work had been completed.

According to the contractor’s legal team, this fact was recognized by the Supreme Court in its judgment.

The contractor therefore rejected suggestions that little progress had been made despite receiving funding.

Funding Shortages Blamed for Delays

A major argument presented by the contractor’s lawyer was that insufficient funding from government authorities had slowed down construction work.

According to him, both the federal and provincial governments failed to provide funds on time.

The lack of regular financial support created difficulties for project implementation and prevented continuous construction activities.

The lawyer maintained that the contractor could not be held solely responsible for delays when the project itself suffered from funding shortages.

He argued that large infrastructure projects require uninterrupted financing, and without adequate funds, progress naturally slows down.

Work Reportedly Stopped Since 2024

The contractor’s counsel further informed the court that work on the Gaj Dam project has remained suspended since 2024.

According to him, the suspension occurred because required funds were not available.

As a result, construction activities came to a halt, causing further delays in project completion.

If this claim is correct, it means the project has effectively been stalled for an extended period, making it even more difficult to meet completion targets.

The court is expected to examine whether the suspension resulted from government funding failures, contractor issues, or a combination of both.

Questions Over Cost Escalation

One of the key issues before the court is the sharp increase in project costs.

Infrastructure projects often become more expensive over time due to inflation, rising material costs, exchange rate fluctuations, design changes, and delays.

However, when costs rise dramatically while progress remains limited, concerns naturally emerge regarding project oversight and financial management.

The court is expected to seek explanations regarding:

• Why project costs increased significantly.
• How additional funds were utilized.
• Whether payments were properly justified.
• Why project timelines were repeatedly missed.
• Who bears responsibility for delays.

Answers to these questions could help determine whether corrective action or accountability measures are needed.

Importance of Completing the Dam

The delay in completing Gaj Dam has implications beyond financial concerns.

Once completed, the project is expected to provide multiple benefits, including:

• Improved water storage capacity.
• Better irrigation facilities for farmers.
• Enhanced water availability in nearby regions.
• Flood control benefits.
• Support for agricultural productivity.

Many local communities have been waiting for these benefits for years.

The continued delay means that the expected economic and social advantages have also been postponed.

Court to Continue Hearing

After hearing arguments from both WAPDA and the contractor, the Federal Constitutional Court decided to adjourn the case until June 11.

The judges are expected to continue examining the facts, funding issues, construction progress, and legal responsibilities associated with the project.

Additional Attorney General Amir Rehman has been directed to assist the court and present arguments during the next hearing.

The upcoming proceedings may provide further clarity regarding the reasons behind the delays, the sharp increase in project costs, and the future of the Gaj Dam project.

As the case continues, public attention remains focused on whether one of Pakistan’s long-delayed infrastructure projects can finally move toward completion after years of delays, rising expenses, and ongoing legal disputes.

The federal cabinet on Friday approved the budget for the fiscal year 2026-27 after reviewing key economic proposals and spending plans for the upcoming year.

The cabinet meeting was chaired by Prime Minister Shehbaz Sharif and attended by senior federal ministers, advisers, and top government officials. During the meeting, members discussed major budgetary measures, revenue targets, development spending, and economic priorities for the next fiscal year.

The approved budget outlines the government’s plans regarding taxation, public spending, development projects, salaries and pensions, debt management, and economic growth. Cabinet members reviewed the proposed allocations for various sectors, including education, health, defense, infrastructure, energy, and social welfare programs before giving their final approval.

The budget is expected to focus on maintaining fiscal discipline, meeting revenue collection targets, supporting economic growth, and continuing reforms agreed upon with international financial institutions. Government officials also discussed measures aimed at controlling inflation, expanding the tax base, increasing exports, and attracting investment.

Following the cabinet’s approval, the budget was cleared for presentation before Parliament, where lawmakers will debate the proposed measures before the Finance Bill is formally passed.

The approval marks an important step in the government’s economic planning process as it prepares to implement its fiscal agenda and development priorities for the 2026-27 financial year.

Pakistan’s federal government has set an ambitious economic roadmap for the upcoming fiscal year, targeting 4 percent GDP growth while projecting inflation at 8.2 percent, according to official documents released as part of the Annual Development Plan for FY2026-27.

The plan outlines the government’s strategy to boost economic activity, improve infrastructure, strengthen energy and water resources, and expand social development programs. It also includes major investments in transportation, hydropower, education, healthcare, and environmental protection.

Government Targets Faster Economic Growth

After an estimated GDP growth of around 3.7 percent in the outgoing fiscal year, the government is aiming to accelerate economic expansion to 4 percent in FY2026-27.

GDP growth is considered one of the most important indicators of a country’s economic performance. A higher growth rate generally reflects increased business activity, industrial production, investment, and employment opportunities.

To achieve this target, the government plans to focus on key sectors of the economy:

• Agriculture growth target: 3.8 percent
• Industrial growth target: 4.5 percent
• Overall investment target: 15 percent of GDP

Officials believe that stronger agricultural output, industrial expansion, and increased public and private investment will play a crucial role in supporting economic recovery and long-term growth.

Inflation Expected to Ease

The development plan projects inflation at 8.2 percent during FY2026-27.

Inflation has remained one of Pakistan’s biggest economic challenges in recent years, affecting the purchasing power of households and increasing the cost of living.

Government planners expect inflationary pressures to gradually ease due to:

• Improved economic stability
• Better supply conditions
• Lower global commodity prices
• Fiscal discipline measures
• Stabilization of the exchange rate

If achieved, the 8.2 percent inflation target would represent a significant improvement compared to the high inflation rates experienced in previous years.

Exports and Remittances Expected to Increase

The government is also targeting stronger performance in external trade and foreign exchange inflows.

According to official projections:

• Goods exports are expected to reach $32.9 billion
• Services exports are projected at $11.3 billion
• Imports are expected to rise to $70 billion
• Overseas remittances are projected at $42.4 billion

Exports remain a key source of foreign exchange earnings for Pakistan. Policymakers hope that increased exports will help reduce pressure on the country’s external accounts and support economic growth.

At the same time, remittances sent home by overseas Pakistanis are expected to remain one of the strongest pillars of the economy.

The projected remittance figure of $42.4 billion highlights the continued importance of overseas workers in supporting Pakistan’s foreign exchange reserves and household incomes.

Massive Investment Planned for Energy Sector

The government has allocated substantial resources to strengthen Pakistan’s energy infrastructure.

Energy shortages and rising electricity demand have long remained challenges for economic growth. To address these issues, the government plans major investments in hydropower projects and electricity generation.

Mohmand Dam Project

The Mohmand Dam Hydropower Project has been allocated Rs. 26 billion.

The project is considered one of Pakistan’s most important water and energy initiatives. Once completed, it is expected to:

• Generate clean electricity
• Improve water storage capacity
• Support irrigation needs
• Reduce flood risks

Dasu Hydropower Project

The government has allocated Rs. 21 billion for the Dasu Hydropower Project.

The project is expected to become one of the country’s largest sources of renewable energy and will play a major role in reducing dependence on imported fuels.

Power Generation Capacity to Increase

The development plan sets a target of adding 3,787 megawatts (MW) of electricity to the national power system during FY2026-27.

Additional generation capacity is expected to:

• Improve energy availability
• Reduce electricity shortages
• Support industrial activity
• Meet rising household demand

To support these objectives, the government has allocated Rs. 151 billion under the Public Sector Development Program (PSDP) for the energy sector.

Major Water Sector Investments

Water security remains a critical issue for Pakistan, particularly as population growth and climate change place increasing pressure on available resources.

The government has allocated Rs. 74.92 billion for water-related projects under the PSDP.

Water Availability Target

Officials aim to increase water availability from:

• 63.5 million acre-feet
  to
• 84.2 million acre-feet

This increase is expected to improve irrigation supplies, support agriculture, and strengthen long-term water security.

Water Storage Expansion

Pakistan also plans to significantly expand its water storage capacity.

Current storage capacity of:

• 13.5 million acre-feet

is expected to increase to:

• 23.5 million acre-feet

Greater storage capacity will help the country better manage droughts, floods, and seasonal water shortages.

Karachi Water Supply Project Receives Funding

The government has allocated Rs. 10 billion for the Karachi Bulk Water Supply Project.

Karachi, Pakistan’s largest city, faces chronic water shortages and growing demand due to rapid population growth.

The project is expected to:

• Improve water distribution
• Increase water availability
• Support urban development
• Reduce supply disruptions

Major Investments in Road Infrastructure

Transport infrastructure forms a major part of the government’s development agenda.

Several large road and highway projects have received significant allocations.

N-25 Quetta Project

The government has allocated Rs. 100 billion for the N-25 project.

The highway serves as a key transportation corridor connecting different regions of Balochistan and supporting trade activities.

Sukkur-Hyderabad Motorway

A total of Rs. 30 billion has been earmarked for the long-awaited Sukkur-Hyderabad Motorway project.

The motorway is expected to:

• Improve road safety
• Reduce travel times
• Facilitate trade and logistics
• Strengthen regional connectivity

Sindh Coastal Highway

The Sindh Coastal Highway has been allocated Rs. 25 billion.

The project aims to improve access to coastal regions and support tourism and economic development.

Mehran Highway

Another Rs. 21 billion has been allocated for the Mehran Highway project.

Officials expect the project to improve transportation infrastructure and enhance connectivity across Sindh.

ML-1 Railway Upgrade Gets Major Funding

The government has allocated Rs. 25 billion for the modernization of the Main Line-1 (ML-1) railway project.

ML-1 is one of Pakistan’s most important railway corridors and forms a key component of future transportation modernization plans.

The upgrade is expected to:

• Improve railway efficiency
• Increase train speeds
• Enhance cargo transportation
• Reduce transportation costs

The project is also viewed as critical for strengthening trade and economic integration across the country.

Education Sector Receives Additional Support

Education remains one of the government’s priority areas under the development plan.

Daanish Schools

The government has allocated Rs. 22 billion for Daanish Schools.

These institutions primarily serve students from underprivileged backgrounds and provide quality education opportunities in various parts of the country.

Officials believe the investment will help expand educational access and improve learning outcomes.

Healthcare Funding Included

The federal government has earmarked Rs. 3 billion for the Prime Minister’s Health Program.

The program is intended to improve healthcare access for citizens, particularly lower-income families.

Healthcare funding is expected to support:

• Medical treatment assistance
• Expanded healthcare coverage
• Improved access to health services

Environmental Protection and Tree Plantation

Climate change and environmental sustainability are also key priorities in the development plan.

The government has set a target to plant 11.3 million trees during FY2026-27.

Tree plantation efforts aim to:

• Combat climate change
• Improve air quality
• Reduce environmental degradation
• Increase forest cover
• Support biodiversity

Environmental experts consider afforestation projects essential for building resilience against climate-related challenges.

Focus on Long-Term Economic Stability

Officials say the Annual Development Plan reflects a broader strategy aimed at balancing economic growth with infrastructure development, social welfare, and environmental sustainability.

The government hopes that investments in energy, transportation, water resources, education, healthcare, and climate resilience will help create jobs, attract investment, improve productivity, and support long-term economic stability.

While achieving the 4 percent GDP growth target will depend on domestic and global economic conditions, policymakers believe the planned investments can provide a foundation for stronger growth and improved living standards in the coming years.

The success of the strategy will ultimately depend on timely project implementation, effective resource management, and the government’s ability to maintain fiscal discipline while meeting development objectives.

The federal government is preparing several welfare and development initiatives in the upcoming Budget 2026-27, with a major focus on poverty reduction, youth empowerment, climate resilience, and economic stability.

According to official budget documents, one of the most significant initiatives planned for the next fiscal year is the distribution of interest-free loans to around 86,000 individuals under the Pakistan Poverty Reduction Program. The initiative is aimed at helping low-income families improve their living standards, start small businesses, and create sustainable sources of income.

The upcoming budget is expected to balance economic reforms required under the International Monetary Fund (IMF) program with measures designed to provide relief and opportunities for ordinary citizens.

Interest-Free Loans for Low-Income Families

Access to affordable financing remains one of the biggest challenges faced by poor and lower-middle-income households in Pakistan. Many families struggle to obtain loans from commercial banks because of strict requirements, high interest rates, and lack of collateral.

To address this issue, the government plans to provide interest-free loans to approximately 86,000 deserving individuals during FY2026-27.

The loans will be distributed under the Pakistan Poverty Reduction Program, which is designed to help vulnerable communities improve their economic conditions.

Officials believe the program will enable beneficiaries to:

• Start small businesses
• Expand existing businesses
• Purchase livestock
• Invest in agriculture
• Open retail shops
• Purchase tools and equipment
• Create self-employment opportunities

The initiative is expected to improve household incomes and reduce dependence on financial assistance programs.

Supporting Economic Independence

Government officials believe that providing direct financial support through loans is more effective than relying solely on cash assistance programs.

Instead of receiving temporary financial aid, beneficiaries will have the opportunity to generate their own income and become financially independent.

For example, a person may use an interest-free loan to:

• Open a grocery store
• Purchase sewing machines for a tailoring business
• Buy livestock for dairy farming
• Start a small transportation service
• Establish a home-based business

Such opportunities can help families create sustainable sources of income while contributing to local economic activity.

Focus on Poverty Reduction

Poverty reduction remains one of the government’s key priorities as millions of Pakistanis continue to face economic challenges due to inflation, unemployment, and rising living costs.

Officials say the interest-free loan scheme forms part of a broader strategy aimed at:

• Reducing poverty
• Increasing financial inclusion
• Supporting entrepreneurship
• Creating employment opportunities
• Strengthening rural economies

The government hopes the initiative will particularly benefit people living in underserved and economically disadvantaged areas.

Climate Resilience Projects Included in Budget

Apart from poverty alleviation, the upcoming budget also places significant emphasis on climate resilience and environmental sustainability.

According to official plans, around 80 climate-related projects are expected to be completed during FY2026-27.

Pakistan remains one of the countries most vulnerable to climate change despite contributing only a small share of global greenhouse gas emissions.

The country continues to face challenges such as:

• Floods
• Heatwaves
• Droughts
• Water shortages
• Extreme weather events

To address these risks, the government plans to invest in projects that strengthen infrastructure and improve communities’ ability to cope with environmental challenges.

Improving Climate Infrastructure

The planned projects may include:

• Flood protection systems
• Water conservation initiatives
• Climate-resilient infrastructure
• Disaster management facilities
• Irrigation improvements
• Environmental protection programs

Officials believe these investments will help reduce economic losses caused by climate-related disasters while protecting communities and livelihoods.

The government has increasingly focused on climate adaptation since the devastating floods of recent years highlighted the country’s vulnerability to extreme weather events.

Major Focus on Youth Development

Youth development is another important area receiving attention in the upcoming budget.

Pakistan has one of the largest youth populations in the world, and policymakers view young people as a critical driver of future economic growth.

To improve employment opportunities, the government plans to significantly expand the Prime Minister’s Youth Skill Development Program.

Under the program, approximately 120,000 young people are expected to receive training in information technology and digital skills during FY2026-27.

Digital Skills for Modern Jobs

The global economy is becoming increasingly digital, creating growing demand for workers with technology-related skills.

The government’s training initiative aims to equip young Pakistanis with skills that can help them secure employment both locally and internationally.

Training areas may include:

• Software development
• Web design
• Digital marketing
• Graphic design
• Data analytics
• Cybersecurity
• Artificial intelligence
• Freelancing skills
• E-commerce management

Officials believe these skills can help young people access better-paying jobs and participate in the rapidly expanding digital economy.

Boosting Freelancing Opportunities

Pakistan already ranks among the world’s leading freelancing markets.

Many young Pakistanis earn income through online platforms by offering services to international clients.

The government’s digital training initiative is expected to further strengthen the country’s freelancing sector by helping more individuals develop marketable skills.

Officials hope this will increase foreign exchange earnings while creating employment opportunities without requiring significant physical infrastructure.

Rs. 5.29 Billion Allocated for Skills Training

To support these efforts, the government plans to allocate Rs. 5.29 billion for IT and digital skills training programs.

The funding will be used to:

• Establish training centers
• Develop educational content
• Conduct certification programs
• Improve technical education
• Support digital learning initiatives

Officials believe the investment will help prepare Pakistan’s workforce for future employment opportunities in technology-driven industries.

Youth Internship Program Receives Funding

In addition to skills training, the government has also allocated Rs. 300 million for the Prime Minister’s Empowered Youth Internship Program.

The initiative aims to provide practical work experience to young graduates and students.

Internships can help participants:

• Gain professional experience
• Improve employability
• Build professional networks
• Develop workplace skills
• Increase chances of securing permanent employment

Many employers prefer candidates who have prior work experience, making internship programs an important bridge between education and employment.

Overall Budget Size

According to budget estimates, the federal government’s total expenditure for FY2026-27 is expected to range between Rs. 17.5 trillion and Rs. 17.6 trillion.

The budget is being prepared at a time when Pakistan faces multiple economic challenges, including:

• High public debt
• Fiscal deficits
• Inflation pressures
• Revenue collection targets
• IMF reform requirements

As a result, policymakers are attempting to balance fiscal discipline with public welfare initiatives.

Revenue Targets for Next Fiscal Year

The government has set ambitious revenue targets for the coming year.

The Federal Board of Revenue (FBR) is expected to receive a tax collection target of approximately Rs. 15.3 trillion.

Achieving this target will require significant improvements in tax compliance and expansion of the tax base.

Authorities are expected to introduce measures aimed at:

• Reducing tax evasion
• Expanding documentation of the economy
• Improving tax administration
• Increasing revenue collection

Non-Tax Revenue Projections

Apart from tax collection, the government expects to generate approximately Rs. 2.77 trillion through non-tax revenues.

These revenues may come from:

• State-owned enterprises
• Regulatory fees
• Government services
• Dividends
• Other public-sector income sources

Petroleum Levy Collection

The government also expects to collect around Rs. 1.73 trillion through the Petroleum Development Levy (PDL).

The levy remains an important source of revenue and is applied to petroleum products consumed throughout the country.

Revenue generated through the levy helps support government spending requirements.

Debt Servicing Remains the Largest Expense

One of the biggest challenges facing Pakistan’s public finances is the growing cost of debt servicing.

According to budget estimates, the government is expected to spend approximately Rs. 7.8 trillion on interest payments alone during FY2026-27.

This means a large portion of government revenue will be used simply to service existing debt obligations.

Economists often highlight debt servicing as one of the biggest pressures on Pakistan’s fiscal position.

Defence Spending

Defence remains another major component of government expenditure.

Budget documents suggest defence spending could range between Rs. 2.7 trillion and Rs. 3 trillion during the upcoming fiscal year.

The allocation is expected to cover:

• Military operations
• Personnel costs
• Equipment procurement
• Security-related expenditures

Development Spending Remains Limited

The Public Sector Development Program (PSDP) is expected to remain constrained due to fiscal pressures.

Development spending is projected at around Rs. 1 trillion.

The PSDP finances important infrastructure and development projects across the country, including:

• Roads
• Schools
• Hospitals
• Water projects
• Energy infrastructure

Despite limited resources, the government plans to prioritize projects that support economic growth and social development.

Economic Growth Outlook

The upcoming budget follows an estimated GDP growth rate of approximately 3.7 percent during the outgoing fiscal year.

For FY2026-27, the government hopes to maintain economic recovery while controlling inflation and improving fiscal stability.

Officials believe continued reforms, investment, and private sector activity can help support growth in the coming years.

Salary and Pension Relief Expected

Government employees and pensioners may also receive some relief in the new budget.

Officials are considering salary and pension increases of around 10 percent.

While final decisions are yet to be announced, the proposed increase is intended to help offset rising living costs faced by public sector workers and retirees.

Balancing Reform and Relief

The Budget 2026-27 reflects the government’s attempt to strike a balance between economic reforms and public welfare.

On one hand, authorities must meet IMF commitments, increase revenue collection, and maintain fiscal discipline.

On the other hand, there is pressure to provide relief and opportunities for citizens facing economic hardship.

Programs such as interest-free loans, youth skills training, climate resilience projects, and internship opportunities are expected to play an important role in achieving these objectives.

If implemented successfully, these initiatives could help improve livelihoods, create employment opportunities, strengthen economic resilience, and support long-term development across Pakistan.

This version uses simple language while providing detailed context and explanations for readers.