PUBLIC ADMINISTRATION

Intro to Public Administration

SEMESTER-1 (GROUP-B)
RESEARCH PROJECT:
“Allocation of Resources between Federal Government and
Provincial Government”

SUBMITTED BY:

 SOFIA GUL (2022-BPA-073)

 AYESHA ISHTIAQ (2022-BPA-013)
 SAWERA NAVEED (2022-BPA-067)
 MARYAM JAVED (2022-BPA-044)
 HAIQA ISHTIAQ (2022-BPA-026)

SUBMITTED TO:

Ms. Sadia Usmani

 Distribution of Budget between
Federal Government and Provincial Government

 Budget and its distribution: Government budget, forecast by a government of its

expenditures and revenues for a specific period. In national finance, the period covered
by a budget is usually a year, known as a financial or fiscal year, which may or may not
correspond with the calendar year. The word budget is derived from the Old French
bougette which roughly means “pouch”.

In the present century, a high proportion of economic activity is controlled, directly or indirectly,
by various levels of government (Federal, Provincial, and Local). Thus the budget has taken on
several other functions as well as the simple monitoring of the overall revenue and expenditure
of the government.

Expenditure programs are now planned in considerable detail, but the sheer scale of public
spending raises major control problems, and varying systems of control have been tried in
different countries. Taxation is used to raise revenue, redistribute income, and encourage or
discourage certain activities. To finance recurring deficits or wars, government borrowing is so
substantial that budgetary policy has important effects on capital markets and interest and credit
generally. Because the budget is now so important to national economies, several different
procedures for deciding on the structure of the budget have been developed, and these vary
considerably between countries.

In some, the United Kingdom, for example, most planning is carried out in secret by ministers
and civil servants, and public and parliamentary debate is minimal; while in others, the United
States, for example, there is lengthy debate during which the budget can be changed
significantly. The different levels of government complicate the budgetary process with different
spheres of influence and control over particular items of expenditure. The past few decades have
seen various proposals to eliminate one or more Cabinet departments.

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One of the goals of those proposals has been to terminate activities thought to be better
performed by state and local governments or the private sector; another has been to increase
programs’ effectiveness through reorganization. (CBO, 2012)

In Pakistan, there are four serious flaws in the process of preparing, passing, and implementing
the annual budget in the assemblies, both at the federal and provincial levels. First and foremost
is the absence of a public finance management law governing the budgeting system (Shaikh,
2013). Article 79 of the Constitution states that all matters relating to the federal consolidated
fund and its operation “shall be regulated by Act of Majlis-e-Shoora (parliament) or, until
provision in that behalf is so made, by rules made by the President”.

 Pakistan’s revenue in 2022-2023 is 7 trillion. The provinces will get Rs4. 1 trillion as
their share, leaving the federal government with Rs4. 9 trillion in net revenues.

This is flawed to the core where the question rises how is it possible that the Federal
Government budget holds more significance than the Provincial government? The
Legislature is not reflecting the purpose it is built for, which is the betterment of ‘people’.
The more concentration is towards the border thickening where if the country is powerful
from the outside and internally it is just empty and breaking apart to the point where in 2023
the main point of discussion that is standing is the concerns that Pakistan might default due to
the collapse of our economy. (Aamir Khan, 2022)

The government expenditure is funded by a common pool of tax payer’s money and the policies
that are formed with this money are further used to fund projects. The catch here lies in the fact
that the people who are paying for these policies are the larger group while the people who
benefit from these policies might be a much smaller group, which translates that one might not
be enjoying the benefits for which one is paying money. Such a scenario leads to excessive
spending of public money on policies that are not beneficial to society as a whole. Such
situations are prevalent in democracies that are multi-lingual, multi-ethnic, and divided based on
regions, religions, and other factors. (Finance Ministry, 1978)

The budget has also come to be used to achieve specific goals of economic policy. It was long
recognized that government borrowing could have important effects on the rest of the economy.
As the scale of government activity increased, the levels of expenditure and taxation were seen to

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have substantial direct effects on the total demand for goods and services in the economy. This
raised the possibility that by changing these levels the government could use its fiscal policy to
achieve full employment and reduce economic fluctuations. This stabilization function has been
used by many countries, with varying degrees of success, to expand the economy out of
recession and to control inflationary pressures. In the United Kingdom, for example, postwar
policy involved a sequence of “stop-go” moves by the government for stabilization;
unfortunately, these often occurred too late and had unintended destabilizing effects.

While the Legislature part of government might not be making efficient decisions for the
betterment of internal growth. The executive branch should be put into check and balance by the
judiciary as the work gets done with the fraudulent activities there is a possibility that when
people finally get a little better on the economic level and have a sufficient income source and
education that is relevant to the future growth, the risen people will hold the power in hand to be
able to fight for the rights on their own but since there is no check on how the budget that is
already not enough in many ways is used and abused by the powerful. The strong part of all this
is that Pakistan is a democratic state and people must realize that the power lies within them
only. (NewsDesk, 2023)

“In the present case it is a little , inaccurate to say I hate everything. I am strongly
in favor of common sense, common honesty, and common decency. This makes me
forever ineligible for any public office of trust or profit in the Republic. But I do
not repine, for I am a subject of it only by force of arms.” ― H.L. Mencken

The View of the Budgeting system of Pakistan from the outside:

In Pakistan, performance budgeting has the potential to significantly improve the poor quality of
public service delivery and the overall allocation of resources, in what has traditionally been
viewed as a rigid and unresponsive budget system. To contribute to better budgeting, Pakistan's
Ministry of Finance announced in June 2021 a Medium-Term Performance-Based Budget for the
next three fiscal years.

The new framework creates several potential benefits for stakeholders. Performance budgeting
should allow the government to better match budget allocation decisions with policy priorities,

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increasing the likelihood of meeting crucial commitments. It should help the country’s
parliament better understand the high-level objectives of spending and what goods and services
they will receive in return for their votes, while also holding government officials accountable
for results. It will provide new data and tools to hold line ministries accountable for spending
effectiveness and efficiency. Nevertheless, obstacles and challenges face government reformers
in implementing the new approach.

First, evidence suggests that the poor quality of performance indicators and their lack of
relevance to national and sectoral policy objectives remain significant obstacles the lack of
consistency with international data standards in Pakistan is another challenge. The use of
indicators and measurement standards that are defined by international institutions, such as the
OECD and the United Nations, facilitates benchmarking and other good practices.

A second challenge is that a lot of high-level outcomes statements published by the government,
and the objectives they derive from, are based on historical precedents but are of limited practical
value for performance management and budgeting. For example, the performance indicators
used by the Federal Government’s Commerce Ministry include the total annual export of goods
(in US$ billion), the increase in meat and meat processing exports, and the increase in the
percentage share of light engineering exports. The resources-results link in these examples is
weak because outputs often derive from multiple causes, including external demand for the
products concerned, some of which are beyond government control.

Similarly, agencies responsible for education and training services have proposed a “league
table” approach to providing information on services such as schools, vocational programs, and
the development of the national curriculum. These league tables make interesting reading but do
not explain the underlying causes of good or poor performance.

Third, in some cases, the relationship between the indicators selected and the outputs and
outcomes of services delivered may be intuitively clear but incapable of attribution or
measurement. For instance, one of the Federal Ministry of Finance’s major outcome indicators is
the “Reduction in Commodity Prices through Subsidies to Public and Private Corporations”. It is
not clear, however, how the Ministry will measure its success in achieving this objective. The
Ministry, for example, has limited control over provincial governments’ agricultural and fiscal
policies and exercises little influence over fixing commodity input prices.

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Similarly unclear is how the outputs of the finance ministry on the Management of Public
Finances, the Payment of Pensions, and the Repayment of Principal on Loans are linked with its
high-level outcomes such as Reforms and Improvement in Public Sector Enterprises and the
Reduction of Poverty. It would be beneficial for the ministry to consider how it contributes to
economic success, how it defines its economic objectives and outcome statements, how it
proposes to use this information to take decisions on the services it should deliver, and how it
intends to utilize data on the volume and quality of these services in measuring the ministry’s
performance.

Fourth, the COVID-19 pandemic has brought a tailspin to the country’s public finances. The
uncertainty that is inherent in budget preparation for FY2021-22 and years beyond is much
higher than usual because of increased volatility in revenues and hugely uncertain expenditure
needs. The finance ministry’s medium-term budget framework document currently provides little
insight into the government’s plans and programs in the post-pandemic phase to trigger
economic recovery, or how these plans fit into the new performance management framework.

Despite these challenges, the potential benefits of using performance data in the budgeting
process appear substantial. The focus on results supports a greater emphasis on the transparent
set of objectives in planning, as well as information on what works and what does not. Citizens
(and the legislators that represent them) will continue to demand material evidence that positive
results have been achieved for the taxes they pay.

The process of shifting away from complete reliance on input budgeting and toward an approach
that demands an analysis of performance is an important but challenging step in many countries.
In this sense, it is recognized that the utilization of performance data is a continuous process or
journey, not a destination. Pakistan's budget system will continue to adapt as circumstances
change, but no country has ever returned to input budgeting, despite all of the problems involved
in implementing performance budgeting.

Enlightenment took from this unexpected article:

The improvement in the allocation of budgeting can be achieved by “Performance Budget

System” which Pakistan is already using and is quite fond on but the story still remains the still
that the part of government that is executing this budget should be kept under a keen observation

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and the performance report should be available to ‘public; the people’ so the executive branch is
not only accountable to the judiciary but also the public, not only rich but also the working class.

1. Disclosure of the Performance Budget

2. Held accountable not only by the end of year but also throughout the year
3. Input taken from the Public and also hiring and consideration of the specialized people in
the policy leading towards making of the budget
4. Not only making the end goal clear but also making the policy values and the important
step by step (process) to be clear
5. Notifying the public of the achievements throughout the year in case the judiciary is not
good enough the people will make sure that the process is moving without any
unnecessary cessation.

Conclusion:

The purpose of this research was to identify the underlying problems of the allocation of

budgeting between the Federal Government and Provincial Government. Based on very

extensive research and much consideration the flaws of policy-making of the distribution of

resources are so much deeper than just the policy but also the implementation of both of these

governments on how there is no involvement of the public and the system of check and balance

is broken to the core. Impacting policy is difficult, not only because of the challenges of

translating research into policy-speak but also because of challenges inherent in the

policymaking process itself. The current Budgeting system is failing towards the basic

fulfillment of the public and the betterment of society. This is damaging the core values of the

bases on which Pakistan was made on, the liberty and the stamina of the public is damaged by

the system because it is not aiming towards education and employment opportunities.

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References
Aamir Khan. (2022, June 06). Retrieved from Tribune: https://tribune.com.pk/story/2360232/countrys-
defence-budget-allocation-mere-pennies-compared-to-india

CBO. (2012). The Budgetary Implications. Eliminating a Cabinet Department, 10.

Finance Ministry. (1978). Finance Ministry Pakistan. Constitution. Retrieved from

https://www.finance.gov.pk/nfc_cons.html

NewsDesk. (2023, Jan 03). Pakobserver. Retrieved from Govt paying special attention to neglected areas:
https://pakobserver.net/govt-paying-special-attention-to-neglected-areas-minister/

Shaikh, B. T. (2013). Resource Allocation in Pakistan's Health Sector. A Critical Appraisal and a Path
toward the Millennium Development Goals , 4.

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