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Dynamic Consequences of the 1997 NFC Award: Provincial Social Sector Expenditures

Author

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  • Muhammad Sabir

    (Social Policy and Development Centre (SPDC), Karachi.)

Abstract

An adequate provision of social services is a concurrent function of federal and provincial governments. However, in Pakistan, the financing and delivery of social services largely prevails in the hands of provinces and major sources of revenues in the hand of federal government, which creates vertical imbalances. Federal transfers are the mechanism for their correction and these are constituted through the National Finance Commission (NFC) Awards. The last NFC Award was constituted in 1997 and it changed both the size of divisible pool and the share of federal and provincial governments in the divisible pool. The changed provincial shares have based on higher tax revenue collection, which was not materialised during the following four-year period after the award. Therefore, provincial governments experienced the shortfall in the federal transfers during last four years after the award and have experienced a lower growth in transfers than projected in 1997 NFC Award. This is in contrast with the provincial experience during 1991 NFC Award, in which provinces had received higher revenue transfers from federal government than projected.

Suggested Citation

  • Muhammad Sabir, 2001. "Dynamic Consequences of the 1997 NFC Award: Provincial Social Sector Expenditures," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 40(4), pages 967-984.
    • Handle: RePEc:pid:journl:v:40:y:2001:i:4:p:967-984
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    File URL: http://www.pide.org.pk/pdf/PDR/2001/Volume4/967-984.pdf
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    References listed on IDEAS

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    1. Yingyi Qian & Barry R. Weingast, 1997. "Federalism as a Commitment to Reserving Market Incentives," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 83-92, Fall.
    2. Michael Smart, 1996. "Taxation incentives and deadweight loss in a system of intergovernmental transfers," Working Papers msmart-96-03, University of Toronto, Department of Economics.
    3. de Mello, Luiz Jr, 2000. "Fiscal Decentralization and Intergovernmental Fiscal Relations: A Cross-Country Analysis," World Development, Elsevier, vol. 28(2), pages 365-380, February.
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    Cited by:

    1. Iftikhar Ahmed & Usman Mustafa & Mahmood Khalid, 2007. "National Finance Commission Awards in Pakistan: A Historical Perspective," PIDE-Working Papers 2007:33, Pakistan Institute of Development Economics.
    2. Muhammad Sabir, 2010. "Financial Implications of the 7th NFC Award and the Impact on Social Services," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 49(4), pages 387-403.
    3. Khalida Ghaus & Muhammad Sabir, 2014. "Intergovernmental Fiscal Transfers and Gender Sensitive Education Financing," Southern Voice Occasional Paper 13, Southern Voice.

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