By Staff Reporter
ISLAMABAD: The government of Khyber Pakhtunkhwa has formally asked federal authorities to revise the National Finance Commission resource-distribution formula or, failing that, to provide discretionary grants to all provinces until a new consensus is reached.
The request follows the province’s walkout on Thursday from the net-hydel-profit subgroup of the 7th NFC, after the other three provinces declined to incorporate the merged districts’ population into the new formula. That adjustment would have lifted KP’s share of the divisible pool to 18.96 percent from the current 14.62 percent.
A senior official, speaking on condition of anonymity, told local media that if the NFC process fails to resolve the impasse, the province is prepared to take the matter to court.
Finance Minister Muzzammil Aslam said the eight successive annual extensions of the 7th NFC under Article 160(6) of the Constitution have repeatedly violated its provisions by failing to reflect the territorial and demographic changes brought about by the 25th Constitutional Amendment. That amendment merged the former Federally Administered Tribal Areas into KP in 2018, a step the province argues carries both developmental and national-security obligations.
“While KP remains committed to the letter and spirit of Article 160 of the Constitution, namely the NFC provisions, it does not want to remain a party to an unconditional formula detrimental to the region of Pakistan that anchors its national security, which is a declared national priority by consensus achieved in 2018,” Aslam said.
He added that because other stakeholders have refused to acknowledge the legal requirement to update the formula and include the merged districts’ share, KP withdrew from the subgroup “to highlight the need for corrective action and its incorporation in the annual order of the 7th NFC modifications.” With the current annual modification no longer enjoying consensus, provincial shares are being disbursed without a valid constitutional basis, Aslam said.
In the interim, the province is asking the federal government to implement a revised formula or institute discretionary grants to ensure that essential services are not disrupted and that the center can continue meeting its obligations, including those related to stabilizing the western border. “Our focus remains to work in a non-partisan and non-parochial fashion to ensure that the national goal decided by the provinces and the federal government with the passing of the 25th Constitutional Amendment is carried out in principle and practice so that both development and security prosper in the country,” he said.
The subgroup from which KP walked out had been tasked with making recommendations on the merger of the former FATA districts and their share in the divisible pool. Aslam described the other provinces’ refusal to honor previously minuted agreements and constitutional principles as “narrow provincialism.”
The provincial minister noted that funds totaling Rs964 billion — which a timely, automatic update of the NFC formula would have directed toward development, stabilisation, and security in the merged districts — have instead been spent elsewhere. That diversion, he said, undermines the national priority of bringing those areas on par with the rest of the country.KP has consistently invoked legal mechanisms to press for updates to the annual extensions of the 7th NFC since June 2018, Aslam said, precisely to prevent the arrangement from becoming ultra vires of the Constitution. The last eight annual orders, he added, have effectively covered “three and a half provinces,” excluding the merged districts on the western border and thereby breaching the constitutional principle of equitable resource distribution.
The minister stressed that the province remains committed to the NFC process and federalism as essential pillars of development, harmony and security. Progress, however, is impossible without addressing the “constitutionally recognised population and territorial realities,” he said.
To that end, KP has proposed that the federal government immediately convene an NFC meeting with a clear agenda: updating the formula, removing unconstitutional elements from the annual orders issued under Article 160(6), and aligning them with the Constitution.
The dispute underscores long-standing tensions in Pakistan’s fiscal federalism. The 7th NFC Award, originally negotiated before the FATA merger, has been extended year after year without incorporating the additional population and territory now under KP’s administrative responsibility. The merged districts, which form a critical segment of the country’s western frontier, have faced persistent security and development challenges since the merger.
Aslam framed KP’s position as one of principle rather than confrontation. The province, he said, continues to advocate nation-building and the strengthening of the federation, particularly given the security situation along the western border. It will no longer accept a situation in which funds constitutionally due to the merged districts flow instead to more developed regions, he added, describing such disbursements as unlawful.
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