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IF history is to be a teacher rather than a repetitive tragedy, we must never forget that Pakistan’s 1973 Constitution, the very document that defines the country as a federal republic, was not written in a vacuum. It was a settlement born from the painful realisation after the 1971 cataclysm that a multi-ethnic, diverse country cannot be held together by coercive centralism. It can only endure an equitable partnership among its constituent units. Pakistan’s Constitution recognises this balance. The National Finance Commission is not a favour from the centre to the provinces. It is a constitutional mechanism for distributing national revenues between the federation and the provinces. While this federal character was further strengthened by the 18th Amendment, voices have lately emerged to roll back this framework in an attempt to reintroduce fiscal centralism. This may be dangerous.
There was a time when separatist narratives, such as nationalist movements in Sindh and KP, held significant sway. Today, these movements have lost their ideological traction. Even the lingering insurgency in Balochistan would struggle to sustain if stripped of foreign patronage. This mainstreaming did not occur by accident; it was the result of constitutional evolution and political willingness to give provinces due space in governance. The abolition of the Concurrent Legislative List reflected the realisation that citizens do not experience governance through abstract federal offices. They experience it through schools, hospitals, roads, local services and district administration. If the federal government now attempts to squeeze the provinces under the pretext of tightening its own fiscal belt, it may inadvertently breathe new life into dying centrifugal forces that feed on alienated governance.
Looking back, our obsession with centralised governance has deep historical and psychological roots. It stems from a colonial mindset where the absolute authority of the British monarch was projected through an all-powerful viceroy or governor general. Although Pakistan transitioned into a republic in 1956, this centralised disposition remained deeply embedded in the institutional fabric of the ruling elite, including the civil and military establishment. Thus, a bureaucratic resistance to devolution may be a reason behind incomplete federalisation despite constitutional reforms.
Two other factors have also supported voices against federalism. First, the provinces’ inability to upgrade their public service delivery capacity. By failing to reform their own bureaucracies, institutionalise local governments (LGs) and demonstrate administrative competence, they have left themselves open to criticism. This capacity gap has provided the federal elite with the perfect alibi to argue against provincial autonomy. The second factor is the fiscal pressure faced by the federal government. Its revenue share under the seventh NFC Award is seen as insufficient to meet the burden of debt servicing, defence, pensions and the running costs of government.
Resources shouldn’t be taken back from the provinces.
However, the solution to federal fiscal stress does not lie in taking resources back from the provinces; it primarily lies in radically reducing the size of the federal government itself. Parallel federal ministries and divisions that continue to duplicate devolved provincial subjects should be dismantled or reduced to standard-setting and international obligations. There is an urgent need to reconsider federal programmes in welfare domains, including BISP: while the centre may retain design, the delivery should be assigned to the provinces and LGs. The people live in the provinces, resources originate in the provinces, and daily governance challenges are endured in the provinces. To believe that a distant capital can better navigate the microdynamics of human development than the provinces themselves is an administrative delusion.
Fiscal federalism should be preserved as a foundation of Pakistan’s constitutional democracy. It does not necessarily imply a fiscally weak federation, but a right-sized federal government with adequate resources for defence, foreign affairs, currency, debt management and national infrastructure. Provinces, in turn, must be autonomous in delivering front-line public services. At the same time, they must not treat autonomy as immunity from accountability. They should strengthen their own revenue collection, improve transparency, reform provincial bureaucracies and empower LGs in the true spirit of Article 140A.
Pakistan’s federal balance will not be saved by recentralising power, but by making devolution work for the citizens. Fiscal federalism then becomes not merely a division of revenues, but a durable bond of trust among the federating units.
The writer is an economist.
Published in Dawn, June 18th, 2026
