CPEC is deeply interconnected with federal structural in Pakistan. There is a difference of opinion amongst the scholars and policy makers regarding the impact of CPEC on federalism in Pakistan. This paper is an attempt to analyze liberal framework of federation and its connection with neoliberal development project of CPEC. In neoliberal framework, the decentralization and distribution of resources amongst the federating units and sub-national identities seems complex puzzle. The dominant forces amongst federating units joined same elite class for the protection of their own interest. This elite concentration and bargain model is reciprocal to the fundamental idea of federation. This paper demonstrates that CPEC is sharpening the unevenness amongst the federating units and sub-national identities.

This article discusses federalism and deferent theories related to it. Federalism as a theory, as a concept and as an organizational structure refers to the distribution of powers between the two levels of the government. It stands for unity, cooperation, and interdependence between the central government and the component units. Being dynamic in nature, it adopts changes according to the prevailing conditions of the country. An attempt has been made to elucidate federalism from two broad perspectives of the classical approach and Modern approach. The classical approach restricts federalism to cooperation and independence with quasi federalism, coupled with the element of encroachment from the federal government. This approach is merely based upon the doctrine of legal formalism or formalism fallacy. The modern approach focuses on two cardinal principles of cooperation and interdependence. The modern theory is a broad term and encompasses many forms of federalism within its ambit.

History of the politics of agitation and protest indicate that political agitation has always been converted from any point to the issue of provincial autonomy in Pakistan. The case of Pakistan Tehrik-E-Insaf (PTI), on alleged rigging after the general elections of 2013 also suggests that the protest after general elections 2018 would at last be transformed from rigging to demanding the redressal of provincial grievances over devolution of power under 18th amendment. Since, provincial governments including Khyber Pakhtunkhwa (KPK) had continuously been registering grievances about the transfer of liabilities without transferring corresponding assets and resources to provinces. In current scenario under the slogan of 'New-Pakistan' the registering of complaints by political leadership against federation though the card of provincial autonomy would have more and prolonged potential and attraction for the general public rather than merely protest on rigging. Therefore, the biggest challenge for the government in new Pakistan would be addressing the provincial issues. Because sooner or later the protest led by opposition political parties over rigging in 2018 elections would be transformed within one year into the protest for provincial issues. In the backdrop, this study highlights the challenges for newly established government of PTI in-terms of center-province relations over provincial autonomy. Further, conventional approach of federalism (extreme centralized federalism) still prevails in Pakistan which ultimately poses impediments to center-provinces virtuous working relations. That’s why it would be significant to investigate that on what issues working relation between federal and provincial governments may potentially be deteriorate. Political and economic measures have also been suggested in this study for PTI government to address the regional grievances and disparity in New-Pakistan.

Federalism is created by a state having heterogeneous population with a desire to have provisions for adequate distribution of economic resources within a democratic form of government. The economic interaction is usually guaranteed by the constitutional arrangement of the land. The desire for the creation of a federation may be the economic interaction, interdependence on each other by the Centre and federating units. Proper distribution of powers between the Centre and Federating Units flourish when the residuary powers are vested in the federating units. The 18th Constitutional Amendment made a landmark in the history of Pakistan as it introduced a paradigm shift in the democratic set-up of the country. This shift had long been cherished by most of the mainstream political parties as it gives an opportunity to the ruling parties to complete the tenure of the government.