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This research describes the education sector of Balochistan in relation with fiscal allocation. It establishes a relationship of the quality and quantity of teachers and schools with literacy rate, then literacy rate with education budget of the province. For this study, two different methodological approaches are used, such as the qualitative method based on interviews of experts and past research findings. The quantitative method based on secondary data obtained from directorate of education and finance department government of Balochistan. According to this paper education in Balochistan is facing a shortage of schools, especially for girls, a shortage of trained teachers, a shortage of middle and secondary schools, and too many „single-teacher? and/or overcrowded schools. The empirical results suggests a weak correlation of education budget with literacy rate but a strong relationship of literacy rate with schools and teachers at middle and secondary levels. A cumulative decrease of 3% in literacy rate has been observed for 2012 to 2014 under the specification of maximum education budget as compared with past. The purpose of this study is to explore the co-relation of funding and vast geography which is directly or indirectly affecting the education sector in Balochistan. [ABSTRACT FROM AUTHOR]