Seventh National Finance Commission Award( Pakistan)
by The seventh consensus National Finance Commission reached between federal and provices on division of resources is a historic step in the right direction. A lot of hard work will be required by provinces in future in augmenting their resources.
Seventh National Finance Commission Award (Pakistan)
By Mohammed Arifeen
The seventh consensus National Finance Commission reached between the centre and the provinces on the division of resources is a historic step in the right direction. The Centre and the provinces of Punjab and Sindh played a fair game when addressing the problem of Balochistan and North West Frontier Province. The previous award rewarded the Centre with 52.5 percent of the divisible pool; whereas the current award reduces this to 44 percent i.e. an increase of 8.5 percent in the share of the provinces. The sole criteria for allocation of resources on population basis have been done away with. The long standing demand for more provincial autonomy has been met to a more or less extent.
All the four provinces have shown flexibility to accommodate one another. The federal government too had played a strategic role and tried its best level to bring about a trust between itself and the four provinces. The past practice in which grants and other special awards by the Centre took 10 percent out of the total revenue pool has been cast off and the revenue collection charges taken by the Centre has been cut down to one percent
The non- National Finance Commission issues like the federal government’s dispute with the North west Frontier Province on net hydel profits and with Balochistan on gas development surcharge has been amicably settled. Both the provinces will receive over Rs100 billion each as a resolution of these issues
According to the new award the four factors of population, poverty/ backwardness, revenue collection and inverse population were to be balanced against each other. Population has been allocated a weight of 82 percent in the horizontal distribution formula, poverty/ backwardness 10.3 percent, revenue collection / generation 5 percent and inverse density population density 2.7 percent.
Under the new formula the percentage share of Punjab will be reduced by 1.27 percent to 51.74 from the present 53.1 percent. Sindh percentage share will decline by 0.39 percent to 24.9 percent from existing 24.55 percent and North West Frontier Province share by 0.26 percent to 14.62 percent from the current 14.88 percent. In view of the special needs of the Balochistan province the three provinces mutually agreed to reduce their share. In this aspect the share of Balochistan increased to 9.09 percent from the current 7.17 percent.
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