NFC disbursements: Provinces to get Rs1.3t share in federal taxes

ISLAMABAD:

The federal government is all set to transfer Rs1.3 trillion to the provinces as their share in federal taxes, which will exceed the outgoing fiscal year’s transfers by Rs240 billion. The net transfers in the outgoing fiscal stood at Rs1,073.7 billion.

Fiscal year 2011-12 will be the second consecutive year for the implementation of the 7th National Finance Commission (NFC) Award, an agreement that determines the resources allocated to the centre and the federating units.

Compared to provinces’ 56 per cent share from the last fiscal, the new share has been increased to 57 per cent of the total taxes.

Of the total transfers, Rs 1,044 billion will be handed over to the provinces as their share in the federal divisible pool which is Rs209 billion more than that in the outgoing fiscal year.

The remaining Rs269 billion will directly be transferred to federating units.

Net transfers to provinces will be brought down to Rs1,270.9 billion under the NFC Award, making it Rs248 billion or nearly one-fourth more than the transfers made in the outgoing fiscal year. The provinces will return Rs42.8 billion to the federation on account of loan markup and loan retirement.

Punjab’s share in the federal divisible pool will be Rs576.6 billion, making it Rs113.2 billion more than the actual transfers to provinces. Sindh will receive Rs324.4 billion – an increase of Rs46.6 billion compared to the previous fiscal. Khyber-Pakthunkwa will receive Rs191.8 billion with an increase of Rs35 billion or 22.3 per cent over the actual transfers in the outgoing fiscal. Balochistan will get Rs110.2 billion which is Rs11 billion or nearly 11 per cent more compared to the last fiscal.

The centre will directly transfer Rs159.4 billion to the provinces, making it nearly Rs4 billion less than the Rs163 billion transferred to federating units in the last budget.

Provinces will receive special Rs55 billion grants under the NFC Award in fiscal year 2011-12, with an increase of Rs1.4 billion or 2.5 per cent compared to the last fiscal.

Under the NFC Award, provinces will receive Rs38.2 billion for development projects, an increase of 74.4 per cent compared to the last fiscal’s Rs21.9 billion.

The federal government, under the NFC Award, will transfer Rs166.4 billion to the provincial governments in the next fiscal on account of programme loans. The grant that was to be handed out to the federating units for various projects could not be completed.

Provinces will receive Rs90 million under the Japanese grant, making it Rs38 million or nearly 73.1 per cent more than that compared to the last fiscal.

The transfers to provinces, on a net basis, registered an increase of Rs54,212 million in the revised estimates for 2010-11. With an increase of 24.3 per cent in the revised estimates, they have been placed at Rs127,008,2 million for the next fiscal.

Published in The Express Tribune, June 4^th, 2011.