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Decentralization deferred: The unfulfilled promise of 18th Amendment and local governance

31 0
25.07.2025

In 2010, Pakistan passed the landmark 18th Constitutional Amendment, a legislative milestone that was widely hailed as a turning point in the country’s journey toward democratic deepening and decentralization.

The amendment was envisioned as a transformative measure one that would transfer legislative, administrative, and fiscal authority from the federal center to the provinces, and eventually, to local governments. It promised greater autonomy, more accountable governance, and enhanced service delivery at the grassroots.

Fifteen years on, however, the vision remains unrealized. Instead of embedding a functional three-tier governance system, the amendment has revealed persistent structural and political barriers that continue to undermine genuine devolution.

Passed alongside the 18th Amendment, the 7th National Finance Commission (NFC) Award represented a critical fiscal realignment. It increased the share of provinces in federal divisible resources from 49 percent to 57.5 percent and adopted a new formula for resource distribution: 82 percent based on population, 10.3 percent on poverty and backwardness, 5 percent on revenue generation, and 2.7 percent on inverse population density. While this was a progressive step at the time, recognizing disparities among provinces and aiming to rebalance federalism, it inadvertently entrenched a number of limitations.

One major issue is the weak incentive for provinces to improve tax collection. With only 5 percent weight assigned to revenue generation, provincial governments find little fiscal reward in undertaking the politically sensitive and administratively burdensome task of expanding their tax base.

Simultaneously, the federal government faces growing fiscal deficits due to heavy debt servicing, defense spending, and subsidies, leaving limited space for growth-oriented investments. This results in a structural deadlock: provinces are underfunded and unmotivated, while the center........

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