NFC Award

The 7th NFC Award was announced in time to be incorporated in the 2010-11 budgets

Punjab Finance Minister Ayesha Ghous recently joined the other provinces in calling for the commissioning of the 9^th National Finance Commission Award by December. While it is true that delaying it further could create a sense of deprivation among the smaller provinces, we find it rather difficult to agree totally with her logic of putting the cart before the horse i.e., her view that the NFC award can be announced before the census exercise is undertaken. In any case, even if an Award is announced by December this year, it would remain ineffective until the next budget, which is almost nine months away. Going by the mood of the Supreme Court with respect to holding of the census, it would be very difficult for the federal government to postpone it beyond March next year anyway. Holding the census is essential for formulating a realistic Award as population carries the maximum weightage in the provincial distribution formula.

The 7^th NFC Award, which on its expiry in 2014-15 became the eighth one, was announced in time to be incorporated in the 2010-11 budgets. Still the mismatch between the increase in the needs of the provinces following the passage of 18^th Amendment in June 2011 and the budgetary allocations received by the provinces under the 7^th NFC Award remained irreconcilable throughout its five-year tenure as well as during its current tenure while the federation by not jettisoning a number of provincial responsibilities had to shoulder extra financial burdens. The government needs to call a meeting of the Council of Common Interests to discuss the redistribution of responsibilities among the federation, provinces and local governments as envisaged in the 18^th Amendment. Otherwise, the federation would continue to draw an ever smaller share from the divisible pool with its responsibilities remaining the same as before the passage of 18^th Amendment, with the added burden of debt servicing and funding the ongoing war against terror.

Published in The Express Tribune, September 11^th, 2016.

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