ISLAMABAD: In a move likely to spark intense provincial debate, Finance Minister Senator Muhammad Aurangzeb on Monday proposed a fundamental overhaul of Pakistan’s fiscal structure by delinking the National Finance Commission (NFC) Award from population figures, a dramatic shift aimed at addressing what he called the country’s “existential problem”: a soaring 2.5% population growth rate.
Speaking during the launch of Economic Survey 2024-25 alongside Secretary Finance Imdadullah Bosal, Chief Economist Dr. Imtiaz, and Economic Advisor Dr. Raja Hasan, the finance minister confirmed that Prime Minister Shehbaz Sharif has called a pivotal meeting on the NFC framework in August. The proposal is expected to face stiff resistance from provinces that benefit from the current population-based formula.
“The NFC Award needs a fundamental rethink,” Aurangzeb said. “We cannot continue rewarding unchecked population growth. It is unsustainable, economically, socially, and environmentally.”
His remarks marked a departure from previous governments’ reluctance to touch the politically sensitive NFC mechanism, which determines the distribution of federal revenue among the provinces. The minister’s bold call sets the stage for a contentious debate, with provincial governments likely to argue that population remains the most equitable basis for resource sharing.
By proposing to delink the NFC Award from population, the very foundation of Pakistan’s inter-provincial fiscal contract, Aurangzeb has opened a politically treacherous but potentially transformative debate.
The continued dominance of population (82 per cent) in the horizontal formula of NFC is also problematic. While population remains a valid baseline, it ignores geographic, infrastructural, and security-related disparities. Provinces like Balochistan, with vast but sparsely populated areas, face high service delivery costs yet receive disproportionately low transfers. This undermines the goal of equal development.
