Resource Distribution Mechanism in Pakistan: A Critical Review

Iftikhar Ahmad
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Iftikhar Ahmad: Pakistan Institute of Development Economics

No 2025:11, PIDE-Working Papers from Pakistan Institute of Development Economics

Abstract: This study reports important literature on resource distribution in Pakistan. Resource distribution is a vast policy area having three different dimensions including federal to provinces transfers, provincial to local governments transfers and direct transfers from federal to local governments. This study specifically concentrate on the first proposition, hence, analyses literature on National Finance Commission awards (NFC) in Pakistan. There is handsome literature available on resource distribution in Pakistan but a major chunk seems to be repetitive given the stagnant state of affairs in Pakistan. For analysis, studies have mainly relied on three methodological spheres including thematic analysis, basic arithmetic estimates and the econometric techniques that frame the cause and effect dimensions of fiscal resource distribution. Papers, as obvious, adopted thematic analysis while discussing the resource distribution mechanisms overtime. The papers broadly structured the discussion around different NFC awards and explained the changes and disagreements among the stakeholders. These studies enable the reader to understand the historical overview of the resource distribution in Pakistan. The second strand of discussion on resource distribution consists of the studies that have presented arithmetic estimates to discuss the current or suggested resource distribution and their implications on provincial resource availability. Lastly, a number of studies have resorted to econometric techniques to report the impact of fiscal decentralisation on different economic and social indicators namely economic growth, public expenditure efficiency, health, education, poverty, infrastructure as well as governance and corruption. These studies have worked out the cause and effect analysis and commented on the effectiveness of fiscal resource distribution in Pakistan employing different dependent variables. To summarize, this study agrees that NFC award of 2010 is a step forward in the stagnant affairs of resource distribution in Pakistan, nevertheless, the current formula as well as the resource distribution mechanism is still far from optimal in true sense.

Keywords: Fiscal Federalism; formula transfers; grants; intergovernmental relations; NFC Awards; Pakistan; resource distribution mechanism (search for similar items in EconPapers)
Pages: 32
Date: 2025
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