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AN APPRAISAL OF FISCAL DECENTRALIZATION IN PAKISTAN

ABSTRACT Fiscal federalism is a controversial issue in Pakistan. Because the major heads of the revenue collection are in the federal government control, from divisible pool, these resources are then distributed between federal government and provinces. Over time, federal government has taken most of the functions that were earlier assigned to provincial governments. This hunger of power has created the controversy between federal government and provincial governments and also among the provinces over distribution of resources. Present study analyzes this issue by using the provincial data of the revenue and expenditure. Study finds that Punjab the most populous province enjoys fiscal decentralization, followed by Sindh. However, the other two smaller provinces Khyber Pakhtoonkhwa and Balochistan are dependent on the central government because of their relatively small population and hence they get low revenue share from the divisible pool. It is suggested that smaller provinces should enhance their efforts to further stimulate the provincial revenue collection; moreover, the federal government should give more control over the natural resources to the provinces.

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May 15, 2014