Case built for FATA’s inclusion in next NFC Award

Study shows tribal areas could have had larger allocation than otherwise given

PESHAWAR: A war that has stretched to six years from a decade has cost the exchequer Rs21 billion in damages annually since 2001 in the Federally Administered Tribal Areas (Fata). However, for their economic sustainability now, it is demanded the tribal areas be included in the next National Finance Commission Award.

An exhaustive study, Revenue Sharing for Fata, conducted over a period of eight months by economic experts and officials from FATA Secretariat calculates the statistics of damages and budgetary allocations for the tribal heartlands, while analysing the taxation system.

While the cost of war against militancy has been estimated by the Finance Division at US$865 million in the year 2013-14, specific estimates of damages caused to Fata are not available. However, fiscal experts and various senior functionaries of the government sector, particularly the Finance Division, estimated cost of damage to the tribal belt was roughly 25% of the total cost of damages, which comes to US$206 million or Rs21 billion per year. Moreover, the cumulative figures from 2001-2014 come to a whopping Rs250 billion.

Share in NFC

“There are two points that emerge from the study” a senior official told The Express Tribune. “[First being] Fata gets less than what is due to it as per the NFC, [secondly] transfers to Fata have seen a reduction in percentage of the federal consolidated pool.”

Currently, Fata does not have a recognised seat in the NFC while it heavily relies on financing from the public sector. Although the requests for grants are made from the FATA Secretariat, the final budgetary submissions to the legislature are largely based on arbitrary decisions of the federal government.

In the absence of real-time statistics for Fata, even if hypothetical allocations are made for the tribal areas based on the NFC formula of 2009 — where allocation percentage based on poverty is the highest for K-P and revenue collection and generation is the lowest for Balochistan — the budget allocated to Fata under the discretionary and non-equalisation scheme is less than half of what it could have got had it been part of NFC.

Fiscal equality 

Even in comparing annual budget allocations of Fata for the last eight years with Khyber-Pakhtunkhwa’s and Gilgit-Baltistan’s, the tribal areas on an average get lesser. “Had Fata been a constituent of the NFC, probability of appreciating the needs of Fata and allocation of additional resources would have been recognised,” said the official.

“A fair application of the principle of symmetric fiscal equalisation to Fata should not be postponed any longer. The policy principles for revenue sharing arrangements that apply to the rest of the federation should apply to Fata as well,” reads the document that has been sent to the Ministry of State and Frontier Regions (SAFRON) to argue the case of Fata to be included in the next NFC Award.

Tribespeoples’ rights

While arguing upon the special constitutional status of Fata, officials have recommended that residents of Fata have a claim on all the national resources. Fata should become a non-voting member through cooption in the next NFC Award, either through a constitutional amendment or through an application of NFC formula for revenue assignment through an Executive Order. The legal status of Fata is not a barrier to addressing the issues and should not be treated as one.

The recommendations also stress claim of Fata on historical shares of royalty from Warsak Dam and Gomal Zam Dam since their inception. According to the Constitution, royalty and excise duty on natural resources shall be paid to the provinces where the resources are located. After the 18th Amendment, revenue generated through oil and gas is to be shared by the federal and provincial governments at the ratio of 50:50. However, Fata is not included in the resource sharing formula.

Published in The Express Tribune, July 16^th, 2016.