IDEAS home Printed from
   My bibliography  Save this article

Intergovernmental Transfers: An Evaluation of Mechanism and Design of Transfers in Pakistan


  • Idrees Khawaja

    (Pakistan Institute of Development Economics, Islamabad.)

  • Musleh ud Din

    (Pakistan Institute of Development Economics, Islamabad.)


The 7th National Finance Commission (NFC) Award has seemingly put an end to the deadlock over revenue distribution among the constituents of the federation in Pakistan. This paper argues that though the 7th NFC Award’s use of multiple indicator criteria for the distribution of resources is a step forward in the right direction, the distribution design still falls short on various counts. For example, the weight of 82 percent for the population share is on the higher side whereas the demographic structure of the population, an important indicator of the expenditure needs, does not figure up in the distribution design. Also, the basis of weights assigned to the four elements of the revenue distribution criteria is unknown and no rigorous exercise seems to have been undertaken to determine these weights. Similarly, matching grants, which are a key element of the distribution design elsewhere, are altogether absent in Pakistan. Furthermore, provinces still rely on large transfers from the centre which undermines the incentives of the provinces to generate their own revenues. The paper emphasises that there is a need to rethink the mechanisms for resource sharing as well as the institutional structure of the NFC itself.

Suggested Citation

  • Idrees Khawaja & Musleh ud Din, 2013. "Intergovernmental Transfers: An Evaluation of Mechanism and Design of Transfers in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 52(1), pages 45-68.
  • Handle: RePEc:pid:journl:v:52:y:2013:i:1:p:45-68

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item


    Intergovernmental Transfers;

    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pid:journl:v:52:y:2013:i:1:p:45-68. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Khurram Iqbal). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.