Fiscal Federalism in Pakistan: The 7th National Finance Commission Awardand Its Implications

Pakistan is a federal country. Distribution of resources has a profound impact on income, development, backwardness, and poverty. The paper briefly discusses the federation, its needs and importance in general. The National Finance Commission (NFC) award is considered as a step towards federalism. In the historical perspective of the NFC awards, the salient features of the recent 7th NFC award, the weightings, and the criteria adopted in the n ational as well as provincial Finance Commission award s are described. Major issues faced by the Provincial as well as Federal governments regarding the award and its implementation are discussed in detail. Good practice lessons to be derived from it are also pointed out. The conclusion includes recommendations for a strong federation and effective use of the NFC award.Fiscal Federalism, NFC Award, Impact and Implications, Political Economy, Rule and Discretion, Pakistan

Household’s willingness to pay for safe drinking water: A case study of Abbottabad district

This study is based on survey data and used both the contingent valuation method and averting behaviour approach to capture HH's willingness to pay for services and quality in the drinking water sector. In case of the HH’s WTP for improved water services, the study estimates that there is statistically significant effect of location that in urban areas, HHs has more WTP for improved water services. The study also finds that sources of water have a significant effect on WTP i.e. the HH who have own source are willing to pay in the higher range (Rs 51–100) further tap water has significant effect on WTP for the first two quartiles. As expected, education level ignificantly affects WTP for safe drinking water.contingent valuation, averting behaviour, household survey, willingness to pay, Pakistan

Sustaining Economic Development by Reforming Basic Institutions through Community Participation

It is universally accepted and advocated that without community involvement and participation, development initiatives either in the economic or social sector, have little chances of success/sustainability, especially at the grassroots level, where the majority of the country’s population lives [AKRSP (1984, 1999); FAO (1989); Khan et al. (1984) and Mustafa (1998)]. In this connection the concept and approaches of community development have been tested in Northern Areas of Pakistan and the principles and experiences have been replicated in some other parts of the country by Non Government Organisations (NGOs), different national and international government projects and programmes [Mustafa and Grunewald (1996); NRMP (1993) and NRSP (1995)]. The need for conceptualising a realistic framework for collaboration between government/other development agencies and community organisations engaged in pursuit of both social and economic goals is imperative for an equitable and sustainable development because when it comes to community involvement, the two sectors cannot be divorced from each other [Khan (1999) and Reid and Khan (1996)]. The objectives of the paper are: to highlight the need and the importance of grassroots non-government institutions based on participatory community development approaches; to analyse the role of community participation models in the country and to recommend strategies for an effective linkage between grassroots non-government organisations and basic-services-driven government institutes for effective and sustainable development; also to review and recommend primitive structural changes in basic institutions as development partners.

Environmental Fiscal Reforms through Decentralisation for Sustainable Development and Poverty Eradication

Markets and government planning are providing alternative systems for coordinating people’s consumption of resources. The effectiveness of coordination depends on the capability of each system to signify accurate information about people’s wants and available supplies of resources. And on the incentives each provides for individuals to react to the desire of others [Hayek (1945) and Wills (2007)]. Natural resources generate public revenues and benefits. Its equitable distribution and sustainable production leads to real development and ultimately helped to poverty reduction and alleviation. Therefore, natural resource revenues necessitate distributions that favour the needs of the indigenous poor people and local sustainable development. Productive and high-value natural resources are seldom accessible to all citizens and their benefits are rarely evenly dispersed crosswise peoples and geographically across nations. It is worth mentioning that revenues collected from natural resources have a long history of being mismanaged and misappropriated—with political and economic elite often capturing a large share of the benefits while the nations disenfranchised must often absorb inexplicably large share of the associated social and environmental expenses. These are highly interdependence; a sound environment is crucial to poverty reduction and sustainable growth, particularly in low-income countries [IBRD/World Bank (2005); World Bank (2006a) and Mustafa (2008)]

Guy Bessettle. Involving the Community: A Guide to Participatory Development Communication. Penang, Malaysia: Southbound. 2004. xiv+154 pages. Paperback. Price not given.

Participatory approaches, tools, and methods have become a buzzword and common practice in development programmes throughout the world. Institutions of participatory development, specialised expertise, and a body of knowledge relating to participatory development, developed over the last couple of decades, are now an important part of the development literature. Whereas much of the theory and practice in the Development Economics has been based on top-down models, they are being replaced by bottom-up participatory strategies to ensure that socioeconomic needs of the poor and the vulnerable are met. There is ample evidence that participation strategies have been quite successful in the realisation of economic and social objectives

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Simulation Model for Distributions of Crop Yields Based on Farmer Perception-A Case Study from Highland Balochistan, Pakistan

Balochistan is a vast, arid rugged, sunbaked stretch of larid with multicoloured mountain ranges and green juniper valleys. This is the largest province of Pakistan in terms of area and the smallest in terms of population. Seventy-five percent of its population earn their livelihood from agriculture and livestock. The farmers are very poor and the literacy rate in Balochistan is the lowest, only 10.06 percent and in the case of the rural areas it is further decreased to 5.61 percent. Only 35 percent of the cultivated area is irrigated [Government of Balochistan (1991»). Balochistan has an arid or semi-arid climate with annual precipitation varying from 50 mm in the West and over 400 mm in the East. The rainfall distribution pattern is erratic with extremely high and low temperatures [Kidd et al. (1988»). In such a harsh and unpredictable environment and with a very low literacy rate amongst the farmers, it is very difficult and expensive to get and generate timeseries information from farmers on the distribution of field crops. Information on yield of field crops of a specific area is vital for planning and development of that area/location. The usual approach of analysing yield distributions demand an extensive data base. There is a need to provide a way to generate estimates of crop yield distributions (over time) based on farmer interviews at any particUlar location or area. There should be a rapid, inexpensive and objective way to measure yield gaps between the potentials (from growth model) and farmers experience. Area with large gaps can, therefore, be identified without long running trials

Enhancing Vocational Training for Economic Growth in Pakistan

Training and skills development play vital role in development. The demand for vocationally trained and technically educated human resource rises with every step towards industrialisation and modernisation of production units and work premises. Therefore, skill and capital are complementary. The paper specifically reviews and analyses the status of vocational training related policies and practices and their impact on the development of human resource in Pakistan. The study revealed that there is a time lag of 3 to 10 years to harness the benefits of training. Therefore, government should plan accordingly. It also explores that there exists a wide gap between demand and supply of effective manpower and lack of coordination amongst government and private agencies. There is a need to update and revise the existing curriculums, enhance of the status of the teachers, and strengthen the Institutions. Pakistan has favourable demographic transition trend, therefore, there is a need to exploit it properly. Public and private sectors should pursue demand based policies that promote growth in Human Resource Development.

National Finance Commission Awards in Pakistan : A Historical Perspective

This study explores the evolution of fiscal resource distribution in Pakistan. Pakistan is a federation comprising four provinces, federallyadministered areas, and the Islamabad Capital Territory. Being a central type of government, most of the revenues are collected by the centre and then redistributed vertically between the federal and the provincial governments, and horizontally among the provinces. Provinces then also redistribute revenues among lower tiers of the government, through a revenue-sharing formula. A thorough look at the history indicates that this process has been complex and has a far-reaching impact. A less systematic approach has been adopted to decentralise the financial matters. Over time, the divisible pool has expanded due to heavy reliance on indirect taxes as well as improvement in the collection. Population is the sole distribution criteria, adopted in all NFC awards from the divisible pool. This has raised friction among the provinces, necessitating inclusion of other potential variables evolved from international best practices. In addition to that, absence of technical experts and permanency of the NFC is another impediment. The NFC is supposed to provide the framework for amicable distribution of resources between the federal and the provincial governments for the joint goal of development and prosperity.NFC, Pakistan, fiscal federalism, Rule and Discretion, political economy, Population, Subventions, Doing the Business of Government