ISLAMABAD: While the government of Pakistan Tehrik-e-Insaf (PTI) has announced that it has initiated the process of preparing the next National Finance Commission (NFC) Award, it, however, may not be able to finalise it due to financial constraints.
According to an official at the Ministry of Finance, though the government has initiated the process of making the 9th NFC Award on the direction of Finance Minister Asad Umar, the process is unlikely to be finalised as the center is not in a position to give an additional share to provinces as required after 18th Amendment in the constitution.
Asad Umar recently informed the National Assembly that as it was a constitutional obligation and he, on the first day in his office, directed the finance secretary to initiate the process for the new NFC Award. He said it would be his utmost endeavor to announce the new NFC Award at the earliest.
“The previous government had avoided announcement of next NFC award for the same reason of financial constraints. Every time when the new award is announced, the share of provinces is increased as compared to previous shares. Keeping in view the present economic situation, this is almost impossible for the government to meet the constitutional obligations,” he said adding that the government will shortly realise the financial constraints.
Under the constitutional mandate, the current resource distribution arrangement, based on expenditures and needs of the stakeholders, has to be revised every five years. After FATA’s merger with Khyber Pakhtunkhwa (KP), the province, with increased population and a much larger territory, will qualify for a bigger share in the Divisible Pool.
Referring to a letter of Planning Commission date June 25, 2018 regarding the meeting of the National Economic Council (NEC), the finance ministry has also initiated deliberation over giving a share to FATA from provinces divisible pool.
As per sources, the Provincial Finance Wing of the ministry has started on resource distribution criteria after the merger of FATA. For the lack of required revised resources, the PML-N government had left the NFC Award issue unresolved until the end of the party’s five-year tenure.
Apart from the resources constraints and new scenario of FATA-KP merger, the distribution of resources as per new population census and expected creation of a South Punjab province, one of the major items of PTI’s 100-day agenda will also be hindering the finalization of next NFC Award.
According to sources, apart from the technical and legal hindrance, the consensus among the parliamentary parties was also very difficult. All stakeholders have to demonstrate flexibility and mutual accommodation for arriving at a decision to strengthen fiscal federalism and not weaken it.
To amend the NFC formula for sharing of resources between the federation and all the provinces combined, a two-third majority is required in the parliament which the PTI will not command. A change of heart in major opposition parties, which managed the 18th Amendment, is unlikely to occur.
Pakistan People’s Party (PPP) and some other parties have already started objecting any possible move of reducing share of provinces in the next NFC Award terming it unconstitutional. PPP Senator Mian Raza Rabbani, on Thursday, warned the government that any reduction in provincial shares from the NFC Award would be a step towards rolling of the landmark 18th Constitutional Amendment.
While quoting some reports, he said the caretaker finance minister Dr Shamshad Akhtar had uundertakena study that suggested the reduction of provincial shares from the NFC Award from 57.5 per cent to 49.3 per cent. Referring to Section 3-A of Article 160 of the Constitution, he said the reduction in the share would be a violation of the Constitution. National Party Senator Hasil Bazenjo also endorsed the remarks of Senator Rabbani. He said that the proposal was a step towards rolling back of 18th Amendment as “they are starting from NFC and this will end with the rollback of the 18th Amendment.”
