NFC Award redesign

The government’s decision to reformulate the allocation methodology for the National Finance Commission (NFC) Award should face severe pushback, despite the government’s confounding effort to label the move as a population control measure. Pakistan continues to be one of the fastest growing countries in the world in terms of population, but also one of the poorest. This is a dangerous combination as without economic development, there won’t be enough jobs for existing or future generations.

But this problem requires a concerted effort by federal and provincial-level actors to reduce birth rates, not a reallocation of provincial funds which could deprive populous areas of necessary finances. While Planning Minister Ahsan Iqbal claims the provinces are competing to increase their populations to increase their NFC Award share, this seems overly simplistic, given that children don’t just come off a production line. But he did name the actual problems at play and implicitly accepted the government’s lack of real solutions for them — urban-rural divides and ethnic fault lines. Whether in Karachi or the rest of Sindh, people deserve governments that address their problems. Similarly, the failure to get Pakhtun and Baloch residents of Balochistan on the same page is a failure of successive governments unrelated to birth rates. At the same time, a rework of the allocation formula would still be acceptable with a reduction in weightage for population if new social uplift projects are given additional priority, as long as the government can prove the reallocation is on merit, rather than an effort to put their thumbs on the scales ahead of the elections.

Islamabad’s main complaint can also be addressed without toying with the formula for the provinces — one suggestion is to deduct estimated debt servicing costs before the actual division, so as to ensure that the federal government also has some money available to spend on development. After all, for better or worse, the debt is not a federal or provincial problem, but a national one.

Published in The Express Tribune, May 24^th, 2023.

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