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Opposition-ruled states Punjab and Telangana on Saturday sought additional fiscal support from the Centre in the Union Budget 2026-27, arguing that the proposed Viksit Bharat Guarantee for Rozgar and Ajeevika Mission (Gramin) (VB-G RAM G) will place a heavier financial burden on states due to its revised cost-sharing formula, PTI reported.The demands were raised at the pre-Budget meeting chaired by Union Finance Minister Nirmala Sitharaman, which was attended by finance ministers of states and Union Territories, along with Union Minister of State for Finance Pankaj Chaudhary. The meeting also saw participation from the Governor of Manipur, chief ministers of Delhi, Goa, Haryana, Jammu and Kashmir, Meghalaya and Sikkim, and deputy chief ministers of several states, including Telangana.Opposition-ruled states said the changes to the rural employment framework weaken the employment guarantee and go against the spirit of cooperative federalism.Parliament last month passed the VB-G RAM G Bill, replacing the two-decade-old Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). Under the new scheme, the Centre will bear 60 per cent of the cost and states 40 per cent, compared with the 90:10 funding pattern under MGNREGA.Punjab Finance Minister Harpal Singh Cheema strongly opposed the proposed changes, saying the new framework dilutes the employment guarantee while shifting a significant financial burden to states.“Proposed MGNREGA changes weaken employment guarantee and burden states,” Cheema said at the meeting, calling for the restoration of the original demand-driven structure and funding pattern of the scheme.Telangana Finance Minister Mallu Bhatti Vikramarka said the Union government had replaced MGNREGA with VB-G RAM G without consulting states. He noted that the shift from a 90:10 to 60:40 funding ratio would further strain state finances.He also pointed out that any additional man-days beyond the normative allocation would now have to be borne by states, which would create a serious obstacle in providing demand-based work to job seekers.“This is entirely against the spirit of cooperative federalism and starving them of funds for capital outlay, which is essential for maintaining growth momentum,” Vikramarka said.The Telangana finance minister also suggested that surcharges on income tax and corporation tax be credited to a non-lapsable infrastructure fund, from which states could receive grants for infrastructure development. Alternatively, he said, surcharges should be merged with basic tax rates to expand the divisible pool of central taxes.On GST reforms, Vikramarka said GST 2.0 may boost demand but questioned its sustainability, warning that states’ revenues could fall due to rate reductions. He called for a suitable mechanism to compensate states for any revenue loss.Punjab also sought a special fiscal package, citing the “double whammy” of border tensions and floods in 2025. On GST, Cheema said Punjab is facing an annual revenue loss of nearly Rs 6,000 crore following GST 2.0 and pressed for a predictable GST stabilisation or compensation mechanism for states.

Pakistan’s equity market opened the new year on a strong footing as the benchmark KSE-100 index extended its bullish momentum in the second week, climbing 5,375 points, or 3% week-on-week (WoW), to close at 184,410.

The rally was triggered by renewed buying in heavyweight stocks amid improved market participation, supportive macroeconomic indicators, and positive company-specific developments, while easing yields in the latest T-bill auction and robust remittances further strengthened investor sentiment. On a day-on-day basis, the bullish momentum at the Pakistan Stock Exchange (PSX) continued unabated on Monday as the KSE-100 index surged past 182k, closing at 182,408, up 3,373 points (+1.88%).

On Tuesday too, the market’s surge continued, when the index gained 2,654 points (+1.45%) to close at 185,602. The powerful and sustained bullish trend remained intact on Wednesday as well, with the bourse maintaining its full strength and closing at a fresh all-time high of 186,518. In the initial five sessions of CY26, the index added a massive 12,464 points (+7.2%).

However, following the sharp rally, the PSX witnessed its first profit-taking session on Thursday, where the index closed at 185,543, down 976 points (-0.52%). On Friday, the PSX took a breather and the KSE-100 remained volatile, swinging in both directions before closing at 184,410, down 1,133 points (-0.61%). Despite the decline, the CY26-to-date gains stood strong at 5.95%, equivalent to a rise of 10,356 points.

Arif Habib Limited’s (AHL) weekly report noted that the KSE-100 index climbed from 179,035 points last week to 184,410 in the outgoing week, gaining 5,375 points (+3%), supported by a rally in heavyweight stocks driven by new year buying, and positive company-specific news and updates.

Among economic developments, the government through a T-bill auction raised Rs979.3 billion against the target of Rs850 billion. Yields were down across all tenors by 28.6 to 33.8 basis points. Participation remained strong at Rs2,554.6 billion.

Worker remittances reached $3.6 billion in Dec’25, marking a 17% year-on-year (YoY) increase. Cumulatively, 1HFY26 remittances clocked in at $19.7 billion, up 11% YoY.

AHL mentioned that tariff rebasing, following shift from financial year to calendar year, was likely to pull the power purchase price down by Rs0.51 per kilowatt-hour (kWh) in CY26 versus FY26. Cotton arrivals in factories remained stable as of end-Dec’25. In Punjab, cotton arrivals declined 4% in CY25, while Sindh arrivals improved by 4% YoY. However, total production are estimated at 6.8 million bales in FY26, representing a significant 33% shortfall against projections.

Meanwhile, the central government debt stood at Rs77.5 trillion as of Nov’25 compared with Rs70.4 trillion in Nov’24, up 10.2% YoY and 0.7% month-on-month, AHL added.

JS Global’s Syed Danyal Hussain, in his report, said that the benchmark KSE-100 index extended its bullish run in the second week of the year, closing at 184,410, up 3% WoW. The rally was largely led by banks, which contributed 57% to index gains, while cement stocks (8%) and auto shares (5%) provided limited support. Market participation improved notably, with average daily traded volumes rising 25% WoW.

On the macro front, he said, Pakistan recorded monthly remittances of $3.6 billion in Dec’25, reflecting a 17% YoY increase. Meanwhile, total public debt declined by Rs345 billion to Rs77.5 trillion in 5MFY26, largely supported by the transfer of State Bank’s profits to the government.

In policy developments, the government was exploring options to seek relaxations from the IMF ahead of the FY27 budget, with key proposals including a phased reduction in super tax over the next four years and lower power tariffs to enhance competitiveness.

Separately, the gas-sector circular debt climbed to Rs3.2 trillion, driven mainly by a sharp rise in late payment surcharges (Rs1.45 trillion). In the T-bill auction, the government raised Rs979 billion against the target of Rs850 billion, with yields falling by 29-33 basis points across different tenors. SBP’s reserves rose $141 million to $16 billion.