ISLAMABAD – PRIME Institute, an Islamabad-based economic think tank haswelcomed holding of first meeting of 9th reconstituted NFC hoping that thefederal government and federating units would rekindle the consensualspirit of the 18th amendment and 7th NFC award for resolving issues at themeeting.In a statement, the PRIME institute said since 2010, economy of Pakistanhas increased by three-fourth to $313 billion, whereas increase inpopulation is just 17 percent to 207 million in 2017.It effectively means that per capita income has increased, though not tothe extent in regional comparison, it added.PRIME Institute was of the opinion that the 6th most populous countryrequired more fiscal devolution than less to spread the fruits of economicgrowth among broader population.“Provinces were supposed to constitute Provincial Finance Commission forformulating resource distribution till district level. However, with fewexceptions, it seems that prevalent centralization mindset at provinciallevel has constraint further fiscal devolution,” Zia Banday said.Impact of this approach is evident from under-spending of development fundsby the provinces. Despite availability of additional funds, provincialmachinery lacks the capacity of planning and implementing more developmentschemes.As per a study by an economist, Dr Nadia Farooq, socioeconomic provincialimpact of 7th NFC award has remained weak in terms of primary education andhealthcare footprint.Federal government is making a case for reduction of the provincial sharein the divisible pool on account of higher security and other backwardareas development-related expenditures.Provinces are expected to contest and resist any such decrease. And thetask seems difficult for federal government in owing to constitutionalprotection for resource distribution formula.However, it still has the space available for tweaking with revenue streamsin the divisible pool, which will reduce its size without disturbing theprovincial share.Responsibility lies on both federal and provincial governments to make thisNFC mechanism of fiscal federalism more meaningful and productive for thecitizenry of Pakistan.Principle of subsidiarity, whereby central government should only undertakefunctions that cannot be taken up at more local level, may facilitate inconstructing an effective and efficient outcome, the statement added.Bulk of the revenue collection will be more efficient at central level,whereas expenditure management can be more effective at lower tiers.In the spirit of fiscal devolution, federal government has to decrease itsload of functions and expenditures.On the other side, provinces need to engage local governments for spendingallocations and development initiatives.In this manner, the polity of Pakistan will become more strengthened withthe infusion of the inclusion spirit at grassroots level.
Pakistan s economy rises to 313 billion: Report
