NFC award revision key to economic revival

Business forum insists resource distribution formula does not reflect current development priorities

LAHORE:

The Pakistan Business Forum (PBF) has urged the federal government and all provincial stakeholders to initiate an immediate and comprehensive revision of the National Finance Commission (NFC) award, stating that an updated fiscal framework is now critical to Pakistan's governance, economic revival and agricultural transformation.

PBF provincial leaders Malik Talat Suhail, M Ashfaq Paracha, Daroo Khan Achakzai, Tariq Jadoon and Malik Khuda Baksh emphasised that the existing distribution formula, shaped nearly 15 years ago, no longer reflects the country's current economic realities, demographic pressures, climate vulnerabilities and national development priorities.

"Pakistan's economy is facing unprecedented stress, with the federal government bearing significant responsibilities ranging from security and energy management to large-scale infrastructure and climate adaptation," PBF said. "Under the existing NFC formula, the federation is left with limited fiscal space after mandatory transfers to provinces, which restricts its ability to drive national reforms and long-term development."

The forum noted that while the provision of financial resources to provinces was a necessary step for strengthening provincial autonomy, the evolving national challenges require a recalibrated fiscal arrangement that ensures the financial sustainability of both the federation and provinces.

It highlighted that agriculture, which is the backbone of Pakistan's economy, suffers due to fragmented provincial policies and inconsistent resource allocation since the 18th Constitutional Amendment. PBF stressed that agriculture needs coordinated national planning, adequate investment and a unified strategy that can only be achieved if federal and provincial fiscal responsibilities are realigned through a revised NFC.

According to the forum, a modernised fiscal arrangement should promote productivity, encourage technological adoption, support research and innovation, improve irrigation systems and strengthen the value chain so that Pakistan can regain competitiveness in the global market. It added that climate-resilient agriculture and food security require joint financing mechanisms that cannot be implemented effectively under the current distribution model.

It also underlined that governance reforms, improved service delivery and stronger accountability frameworks are directly linked with how fiscal powers and responsibilities are divided. "Provinces must enhance their revenue generation capacities and ensure transparent utilisation of funds, while the federation must retain sufficient resources to fulfil its national duties."

PBF reiterated that a strong federation is essential for national cohesion, macroeconomic stability and long-term reform, while empowered provinces and functional local governments can only be sustained through a balanced and modern fiscal system.