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Public Adminstration QUESTION #9552
Question 1
The National Finance Commission (NFC) is constituted every five years. What distinguishes 'vertical resource distribution' from 'horizontal resource distribution' in the NFC Award, and which criterion has historically been most contested in horizontal distribution?
  • Vertical distribution allocates resources between federal and provincial governments; horizontal distribution allocates among provinces — and 'population' as the sole criterion is contested by smaller provinces✔️
  • Vertical distribution allocates development expenditure among sectors; horizontal distribution allocates current expenditure — and 'tax effort' as a criterion is contested by industrially underdeveloped provinces
  • Vertical distribution refers to distribution within provincial governments to district levels; horizontal distribution is between the federal government and provinces — and 'area' as a criterion is contested by densely populated provinces
  • Vertical distribution is the division of NFC funds between the federation and provinces; horizontal distribution is between the Senate and National Assembly in passing the budget — and 'representation' is the contested criterion
Correct Answer Explanation
Vertical resource distribution is the share allocated to provinces from the divisible pool (e.g., 37.55% to provinces collectively). Horizontal distribution is how that provincial share is divided among the four provinces. Using population as the sole criterion benefits Punjab (largest population) and is contested by Balochistan, NWFP and Sindh, who advocate for multiple criteria including area, per capita income gap, infrastructure index and tax effort.