Security expenses: Centre seeks 7% cut in gross divisible pool

Forty-four more wings of civilian armed forces to be raised soon, says Dar


Shahbaz Rana December 20, 2016
PHOTO: APP

ISLAMABAD: The Centre on Monday proposed that the size of the gross federal divisible pool be cut by 7% to meet ‘additional expenses’ on security and federally-administered regions, but declined to share security matters with the provinces.

The proposal was tabled by the federal government during the third meeting of the National Finance Commission (NFC) without formally putting it on the meeting’s agenda. The move prompted a strong protest from Khyber-Pakhtunkhwa.

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“If the Centre’s proposal is accepted, it will reduce the provinces’ share in rupee terms,” said Dr Kaiser Bengali, Balochistan’s technical member on the NFC.

On Monday, the NFC meeting reviewed two proposals regarding allocating 3% of the gross federal divisible pool to meet additional expenditures on security and another 4% for Gilgit-Baltistan, Azad Jammu and Kashmir (AJK) and Federally Administrated Tribal Areas (FATA),” said Finance Minister Ishaq Dar, who is also chairman of the NFC, after the committee’s meeting which was attended by seven of the nine members.

Discussions are being held for finalising the ninth NFC award.

Though both the finance ministers of Sindh and Balochistan skipped the meeting, their technical members were in attendance.

The federal divisible pool comprises various taxes and levies collected by the federal government. According to the current NFC award, which is seventh in succession, 57.5% of the net federal divisible pool goes to the provinces, while the remaining is used by the federal government.

Earlier, Dar had ‘requested’ the provincial NFC members not to share adverse views with media persons on the proposals regarding cutting the size of the divisible pool, the officials who attended the meeting told The Express Tribune.

They said K-P’s member threatened to stage a walkout after the finance minister tabled the proposals. K-P believes the federal government should have shared summaries at least 10 days before the meeting.

A finance ministry official said the ministry had sent the summaries on Thursday. The response appeared to be flawed, as the Council of Common Interests (CCI) had referred the matter to the NFC for a decision on Friday.

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Asked if the 7% cut in the divisible pool would not be in violation of the Constitution that guarantees that 57.5% of the pool to the provinces, Dar said that in his view, this would not affect the share guaranteed to the provinces.

The Constitution, the finance minister said, guarantees that the share of the provinces should not be less than 57.5% of the net divisible pool, while the proposal “is to cut the gross divisible pool”, said Dar.

The K-P government is already receiving 1% of the gross divisible pool to mitigate the effects of the war on terrorism on its economy.

However, Dr Bengali said if the new proposals were accepted, it would result in a de facto reduction in the provincial share without any de jure reduction.

Dar said the provincial representatives had sought time for consultations and they would come up with an appropriate reply in the next meeting.

The federating units also demanded that the federal government share complete set of proposals, including modalities for use of funds, particularly related to the special areas.

Dar said 4% of the divisible pool would be additional spending in the special areas, as was also recommended by the Fata reforms commission.

Citing growing national defence needs, Dar said 57 wings of civilian armed forces were being raised and 44 more would be raised soon.

Asked if the federal government would bring security under the joint control of the provinces and the Centre, Dar said the National Security Fund had been proposed to be created because of exceptional circumstances and the subject of security would remain in the federal domain.

He said the additional cost of security was estimated at roughly Rs300 billion.

The finance minister said the National Finance Commission would try to finalise the new award within this fiscal year.

He said there was no link between the NFC award and the next population census, which will be conducted between March and May next year in two phases.

He said the army has informed that 42,000 troops would be made available for the largest-ever population count.

The finance minister expressed the hope that the military would not be required for the second phase of the census.

Published in The Express Tribune, December 20th, 2016.

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