NFC award: Govt to dole out Rs2.6b to provinces

K-P, Punjab bag the largest share of the award

ISLAMABAD:

The government on Monday announced that it would dole out Rs2.6 billion among the provinces for maintaining cash surplus during the first quarter of the current fiscal year that helped finance burgeoning federal expenditures.

The announcement was made by Finance Minister Ishaq Dar during the second bi-annual meeting of the National Finance Commission (NFC), convened to review implementation on the 7th NFC Award for the period of January-June of last fiscal year.

The biggest share of Rs2.6 billion federal award went to Khyber-Pakhtunkhwa (K-P) and Punjab provinces, as both federating units preferred to transfer their accumulated surpluses to the centre rather than spending on cash-strapped education, health care and infrastructure projects.



According to a statement issued by the finance ministry, the payments were doled out as an incentive for provinces for maintaining surpluses during July-September.

It added that the Council of Common Interests (CCI) - the highest inter-provincial constitutional body, had allowed paying an interest rate equal to three-month treasury papers to the provinces as a reward for saving the funds.

Out of the Rs2.6 billion allocated for the provincial award, K-P secured Rs1.1 billion, while Punjab received roughly Rs1 billion, Balochistan Rs533.7 million and Sindh secured Rs18.1 million.

In the first quarter, Punjab saved Rs32.6 billion, Sindh Rs9.3 billion, K-P Rs3.6 billion and Balochistan Rs11.6 billion, according to a summary of fiscal operations of finance ministry.

Critics, however, argue that rewards linked with savings would discourage the provinces from spending on development schemes. They added that it also goes against the principle of provincial surplus -a sum that province saves and helps to reduce the overall national deficit. Paying interest rate on savings will convert it into borrowings, they added.

According to the report, FBR claimed that it had collected Rs 2.254 trillion in taxes during the FY 2013-14. Out of this amount, Punjab received Rs 645.8 billion, Sindh Rs384.6 billion, K-P Rs232 billion and Balochistan Rs137.9 billion on account of share in the divisible pool and royalties and grants provided to the provinces.

Speaking to The Express Tribune, Haji Adeel, K-P government’s technical member of the NFC, complained that the centre was not transferring the province’s due share on account of net hydel profit.

Published in The Express Tribune, December 9^th, 2014.