Dynamic Budgetary Consequences of the 1991 NFC Award

A. F. Aisha Ghaus, Hafiz A. Pasha


The National Finance Commission (NFC) award of 1991 has been
acclaimed to be a historic achievement of the previous elected
government. It has come after a gap of many years (due since 1979) and
some abortive attempts earlier.! Meanwhile, the provinces had run into
large, chronic deficits on the current account, indicating the growing
inadequacy of divisible pool transfers as per the provisions of the 1974
award. Consequently, as an ad hoc provision, deficit grants and other
subventions had been used increasingly to support the on-going
operations of the provinces. At their peak in 1987-88, these grants were
Rs 17 billion (see Table 1), equivalent to about 2 percent of the Gross
Domestic Product (GDP) and financed over one-fourths of the provincial
current expenditure. Also, the federal government took over the
responsibility of provision of some provincial responsibilities as
contained in the Concurrent List of the Constitution like SCARPS, flood
control, fertiliser subsidy, universities, etc.

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DOI: https://doi.org/10.30541/v33i4IIpp.627-645


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