CHANGING MODES OF FISCAL FEDERALISM IN PAKISTAN: A CASE OF CENTRE-SINDH FISCAL INTERPLAY

Abstract

The last 75 years have highlighted the extent to which issues regarding resource distribution in Pakistan have been closely related to the country’s chequered history of federal-provincial relations. Repeated interventions have marred these relations regarding various dimensions of provincial autonomy as enshrined in the constitutional frameworks that have been operative since 1947. The complexities involved have paved the way for multiple other issues, including ethnic, political and economic disparities. The Pakistan federation has applied a three-pronged strategy—bureaucratization, centralization and homogenization—to cope with federating units’ demands for provincial autonomy, economic decentralization and appropriate representation. Yet, despite its criticality, there has been little attempt to understand and analyze the fundamental question of why Pakistan’s economic system has been predominantly centralized, and so why the provinces have been made so dependent on federal fiscal shares, grants-in-aid and subversion instead of evolving the capacity to generate their own revenue mechanism? The paper addresses these-long standing political-fiscal challenges with particular focus on the relationship between the Centre and Sindh.