Implications of the 7th NFC Award on Health Services in Pakistan

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Fiscal decentralization is aimed to improve Public Services Delivery as the subnational governments get control of additional revenue and expenditures responsibilities and are in a better position to provide basic services to the local people. The 7th NFC Award is considered as a big step toward fiscal federalism wherein the criteria for horizontal and vertical distribution of resources has been changed to accommodate major demands of the federating units. This research paper has been an attempt to identify that to what extent the new fiscal arrangements under the 7th NFC Award has been successful to improve health services delivery in Pakistan. For this study data on various health indicators has been collected for the period 2001 to 2019 divided into two groups i.e., pre 7th NFC period (2001 to 2010) and post 7th NFC Award period (2011 to 2019). To identify the impact of 7th NFC Award on health services delivery in Pakistan various variables were selected including Infant Mortality, Under Five Years’ Mortality, Life Expectancy at Birth and Health Expenditures (%GDP) as dependent or endogenous variables at national level whereas for comparison at provincial level Life expectancy at birth and Under Five Years mortality were used as dependent variables. The variables were tested at the national level as well as the provincial level and interprovincial comparison was also performed. For the analysis purpose different techniques for trend analysis were applied including the Chow breakpoint test, recursive coefficient, Wald-Coefficient Restriction test, Equality of Variance test, trend estimates, Durbin Watson Test and Forecast analysis. Additionally, the Difference-in-Difference approach was also applied to compare other provinces as treatment groups i.e., Sindh, Khyber Pakhtunkhwa and Baluchistan with Punjab as a control group. The results suggest health indicators have responded positively to the additional funds’ transfer and Life expectancy at birth, Infant mortality and Under Five years’ mortality have improved at national level. Life expectancy and under five years’ mortality has generally improved in all provinces except for life expectancy in KP. While comparing the performance of other provinces with Punjab it is found that life expectancy at birth, infant mortality and Under Five years’ mortality have improved in Sindh and Khyber Pakhtunkhwa while Baluchistan did not improve health indicators in comparison to Punjab. However, to realize further benefits of the fiscal decentralization it is suggested that additional fund transfer is not a sufficient factor to bring change and should be complemented by administrative and legislative actions on part of the government. Innovations and the role of the private sector are crucial in improving public services delivery in health sector. Moreover, the capacity of the government machinery and the ability to develop plans and strategies is important to realize the benefits of the fiscal decentralization by the provinces.