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Fiscal Equalisation among Provinces in the NFC Awards

Author

Listed:
  • Aisha Ghaus-Pasha

    (Institute of Public Policy)

  • Hafiz A. Pasha

    (School of Social Sciences)

  • Asma Zubair

    (Beaconhouse National University, Lahore)

Abstract

This paper constructs a Fiscal Equalisation Index (FEI) to calculate the extent of fiscal equalisation among the provinces achieved in various NFC awards. The results show that the process of fiscal equalisation had largely broken down prior to the 2009 NFC award, following the ad hoc arrangements announced in 2006. Earlier awards have, however, been fiscally equalising in character, primarily through special grants and inclusion of new straight transfers. According to the FEI, although the highest level of fiscal equalisation was achieved following the 1990 NFC award, the largest improvement in the index has been with the 2009 NFC award, which has introduced an element of fiscal equalisation in the divisible pool transfers for the first time.

Suggested Citation

  • Aisha Ghaus-Pasha & Hafiz A. Pasha & Asma Zubair, 2010. "Fiscal Equalisation among Provinces in the NFC Awards," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 49(4), pages 563-576.
    • Handle: RePEc:pid:journl:v:49:y:2010:i:4:p:563-576
    as

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    File URL: http://www.pide.org.pk/pdf/PDR/2010/Volume4/563-576.pdf
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    References listed on IDEAS

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    1. Richard A. Musgrave, 1961. "Approaches to a Fiscal Theory of Political Federalism," NBER Chapters, in: Public Finances: Needs, Sources, and Utilization, pages 97-134, National Bureau of Economic Research, Inc.
    2. Le Grand, Julian, 1975. "Fiscal Equity and Central Government Grants to Local Authorities," Economic Journal, Royal Economic Society, vol. 85(339), pages 531-547, September.
    3. Shah, Anwar, 1991. "Perspectives on the design of intergovernmental fiscal relations," Policy Research Working Paper Series 726, The World Bank.
    4. Robin W. Boadway & Frank R. Flatters, 1982. "Efficiency and Equalization Payments in a Federal System of Government: A Synthesis and Extension of Recent Results," Canadian Journal of Economics, Canadian Economics Association, vol. 15(4), pages 613-633, November.
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    Cited by:

    1. Qurat ul Ain & Yan Jie & Larisa Ivașcu & Syed Ghulam Meran Shah & Tahir Yousaf, 2023. "Whether rising tide has lifted all the boats? Effect of inter‐governmental transfers on household income inequality in Pakistan," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 430-447, January.

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