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Financial Implications of the 7th NFC Award and the Impact on Social Services

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  • Muhammad Sabir

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

Abstract

One of the major developments in 2009-10 was a successfully concluded 7th NFC Award [NFC Award (2009)], which has brought about some profound changes in the resource distribution formula. Since 1973, it is the first time when the distribution of resources among provinces is based not only on the population but also on other criteria such as backwardness, inverse population density, and revenue collection/generation. This Award has also helped resolve other issues such as GDS and Hydroelectricity Profit. This paper analyses the financial implications of the NFC Award 2009 and its impact on three major social services, namely, education, health, and water supply and sanitation. The result shows that as compared to the NFC Award 1997 and Presidential Distribution Order: Distribution of Revenues and Grants-in-Aid Order 2006, the changes made in vertical distribution of resources under the NFC Award 2009 favour the provincial governments (combined) rather than the federal government. An interesting finding is that while there is a decline in vertical share of the provinces under the NFC Award 2009 as compared to the NFC Award 1991, this decline is not evenly distributed among the provinces. In relative terms, the NFC Award 2009 benefits the two relatively more backward provinces, Khyber Pakhtunkhwa and Balochistan, as compared to Sindh and Punjab. Moreover, the projected values of social sector expenditures indicate that the NFC Award 2009 has a positive impact on social sector spending. Given that Pakistan has a comparatively low spending on social services, this award is a positive move

Suggested Citation

  • 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.
    • Handle: RePEc:pid:journl:v:49:y:2010:i:4:p:387-403
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    File URL: http://www.pide.org.pk/pdf/PDR/2010/Volume4/387-403.pdf
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    References listed on IDEAS

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    Cited by:

    1. Khalida Ghaus & Muhammad Sabir, 2014. "Intergovernmental Fiscal Transfers and Gender Sensitive Education Financing," Southern Voice Occasional Paper 13, Southern Voice.

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    More about this item

    Keywords

    Intergovernmental Fiscal Relation; Provincial Expenditure on Social Services;

    JEL classification:

    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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