There is a need to strengthen the institutions and governmental capacity both for the provision of public services in the field of development, as well as for inclusive economic growth. Some efforts have been made to improve institutional capacity in the past. However, results of such efforts have not been sustained in a structured and systematic manner. It is an area where both the government, as well as the international donors — including the multilaterals such as the United Nations (UN), World Bank, IMF, ADB– have not been able to achieve the desired success in Pakistan, as well as in many other countries of the world. This lack of progress on institutional reforms and mapping the way forward to achieve it in discussed in the political economy discourse. We refer to some literature (Husain 2015, Sherani 2017) in this article. In the political economy literature, institutions are the rules or constraints defining the structures of public and private interactions. These institutions can be formal constraints in the form of laws and rules, as well as the informal constraints guided by conventions, norms, and codes of conduct. Institutions not only involve constraints but also the enforcement of the same. Institutions as a whole determine the incentives and constraints for the structure of states and societies. In the context of Pakistan, two processes have led to decline in the institutional performance: first, transition to a constitutional democracy with in-built checks and balances has been difficult for Pakistan in its seven decades of history; second, elite belonging to all sectors– political, non-representative, private sector– have perpetuated and consolidated their capture of the state and domination, in continuation of the colonial legacy after the independence. Institutional decline has been exacerbated by the lack of impartiality of application of rules of govern mentality and creation of privileges for a small elite by practicing “crony capitalism” and appointment of loyalists in government institutions by undermining merit. There is a need for robust democracy with enforcement capacity to ensure public interest and quality of growth. The civil service has been politicized. To reform the civil service, the distinction between the superior and non-superior civil servants should be done away with. All service cadres at the federal and provincial level should be organized on equal basis. There should be a district level service working in the districts as well. In other words, there should be dedicated organizational structures of civil service at the federal, provincial, and district levels. Professionals and specialists working in the civil service should be treated at par with the regular civil service positions. Usage of e-government tools reduces transaction costs, promotes transparency, checks discretionary powers, decreases corruption, as well as helps to track output and performance. Despite progress on the introduction of e-governance in certain fields, there is also resistance by the old guard. E-governance should be promoted in a concerted manner One of the main issues with the civil service is that it is general in its orientation instead of offering specialized administration and there is a need to reform it. The academic background of the civil servants is diverse rather than specialized in accordance to their role in the government machinery. A modern bureaucracy requires a specialized cadre. There should be both streams of specialist as well as generalist civil servants to meet the varied requirements of various ministries and departments. Institutions of economic governance require the specialists, while district administration and secretariat functions, amongst others, can be handled by the generalists. The government rules must ensure the security of tenure for the civil servants to insulate them from political pressures. The prevailing system of annual confidential reports should be replaced with an open performance evaluation based on defined performance indicators and an open discussion between the supervisor and appraisee to set targets and map the path to achieve them. A mid-year review should evaluate performance and provide feedback. In this way, the performance evaluation would be used as a tool to develop the capacity of civil servants to help them better discharge their duties. There is also the need to appoint capable individuals to head the state-owned enterprises (SOEs) and to support them against vested interests, after the appointments have been made on merit, so that they could take difficult decisions to restructure the SOEs and effectively implement them. Arbitrary use of powers to appoint the CEOs of SOEs in a discretionary manner should be discouraged and such appointments should be made according to well-defined procedure. Pakistan has made some progress in the evolution of e-governance. There is need to further build on it. Usage of e-government tools reduces transaction costs, promotes transparency, checks discretionary powers, decreases corruption, as well as helps to track output and performance. Despite progress on the introduction of e-governance in certain fields, there is also resistance by the old guard. E-governance should be promoted in a concerted manner. Overall, planning, enforcement, oversight and regulatory functions of the government need to be improved with a restructured civil service. There is also the need for a credible civil service to undertake “transformation” initiatives to diversify exports, modernize the economy, promote knowledge-based production base, focus on expanding the renewable energy, increase output in agriculture by improving the extension services, and deliver effective public services, amongst others. Pakistan’s performance has improved to a moderate degree on a few governance indicators in the recent years. However, most of the focus has been to improve the inputs such as provision of energy and access to capital. There is not enough recognition to improve the state capacity and institutional framework that converts these inputs into deliverables. There is a need for a cross-party charter of democracy for institutional reforms. The reforms “constituency” in the country needs to be strengthened and potential “losers” from the reforms addressed/compensated to tackle the resistance such a reforms process entails. The writer is an Islamabad-based social scientist