Centre wants provinces to pay for defence, debt servicing

With NFC notified, govt mulls options on distribution of resources between centre, provinces


Hasnaat Malik May 12, 2020
A Reuters file image.

ISLAMABAD: As the president has notified the new National Finance Commission (NFC), the federal government is considering different options regarding the distribution of fiscal resources between the Centre and the provinces.

Debate is already going on in the media about shortage of funds with the federal government after the distribution of shares to the provinces in view of the 7th NFC Award and effects of the 18th Constitutional Amendment.

The biggest challenge for federal government is that the provinces’ share cannot be reduced. Currently, provinces take 57.5% share. Article 160 3A of the Constitution says that the share of the provinces in each award “shall not be less than the share given to the provinces in the previous award”.

If the federal government wants to increase its share then it has to amend the Constitution, which will not be easy in the prevailing political situation. Likewise, no NFC award can be finalised without the consent of all members.

Science and Technology Minister Fawad Chaudhry told The Express Tribune that the government didn’t want to roll back the 18th Amendment rather it desired to change the formula of distribution of resources.

He proposed that the provinces should contribute from their share toward defence expenses, payment of foreign debt and mega projects. For this purpose, Chaudhry believed that there was no need for amending the Constitution but stressed that dialogue should be initiated with the provinces.

PML-N warns govt against fiddling with 18th amendment

Former finance minister Ishaq Dar had also recommended that the provinces should contribute something toward the defence budget as security was everyone’s issue.

On the other hand, a section of lawyers believed that it would be unfair to ask the provinces to pay for the defence expenses because it was a federal subject. Similarly, foreign debt is also taken by the Centre, therefore it should be paid by it.

A senior cabinet member told The Express Tribune that the government was considering several workable proposals for the new NFC Award, adding that meetings of all stakeholders were continuing to consider this issue.

The cabinet member revealed that another proposal was also under consideration wherein the federal government might deduct provinces’ share for giving funds to the local governments as well as trans-provincial issues like building of dams, environment etc.

However, political analysts believe that it’s not easy for the provinces, especially Sindh and Balochistan, to accept this proposal. Under Article 140 A, each province shall, by law, establish a local government system and devolve political, administrative and financial responsibility and authority to the elected representatives of the local governments.

However, this constitutional provision was not being properly adhere to by the provinces. Except for a few judgments, the apex court has also not interpreted this article for making the local governments effective and strong. Hence, the local governments come in definition of the State.

Article 7 gives the definition of the State. It says: “The State means the Federal Government, 1[Majlis-e-Shoora (Parliament)], a Provincial Government, a Provincial Assembly, and such local or other authorities in Pakistan as are by law empowered to impose any tax or cess.”

It is learnt that one section within the government does not want to reconsider 18th Amendment and its effects on the provincial autonomy. However, they believe that financial issues may be resolved through negotiation with the provinces.

Likewise, there is need to make Council of Common Interests (CCI) more effective. Most of issues can be resolved through the CCI. However, senior lawyers say that former chief justice Mian Saqib Nisar in the PMDC case judgment has weakened the role of the CCI.

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