Fiscal Decentralisation in Pakistan

Naeem Ur Rehman Khattak, Iftikhar Ahmad, Jangraiz Khan


Fiscal decentralisation is considered as an important policy
instrument to achieve economic efficiency and ensure effective
governance through financial autonomy of provincial governments. It
integrates the smaller units of federation and ensures their
participation in the economic development of country while at the same
time capacitate the central government to fulfil the national level
tasks more efficiently and effectively. It is considered as an important
growth accelerating measure. It empowers the lower level governments
through financial autonomy and administrative empowerment. Devolution
helps the lower tiers of government to act as a powerful administrative
agent of the central government. However, decentralisation helps units
to be more innovative, responsible and efficient as they have more
autonomous status. Decentralisation policy is believed to positively
affect economic growth because it envisage better derivation and
implementation of social policies. The decentralised setup of the
government does not have any information barriers and lower level of
government is better positioned to know the basic necessities and
developmental needs of the people that are living in different regions
of a country. Decentralisation brings up the true potential of a
locality with the efficient resource exploration and its efficient
utilisation. It furthers competition among the competing constituencies
for better service provision which results in higher efficiency. This
all has the potential to positively influence economic

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