By Staff Reporter
ISLAMABAD: The federal government, dominated by the Pakistan Muslim League-Nawaz, and the opposition-led administration in Khyber Pakhtunkhwa have unexpectedly aligned on a key fiscal reform: scaling back population as the primary factor in divvying up national resources under the National Finance Commission.
The convergence comes as the newly formed 11th NFC prepares for its first meeting on Friday, potentially forcing concessions from the more populous provinces of Punjab and Sindh while offering relief to sparsely settled Balochistan, Dawn newspaper reported on Monday.
“We will demand that population and backwardness should be disincentivised for resource distribution among the provinces,” Muzammil Aslam, Khyber Pakhtunkhwa’s finance minister, said at a conference in Peshawar hosted by the Federation of Pakistan Chambers of Commerce and Industry’s regional office and the province’s Board of Investment and Trade.
Federal figures, notably Planning and Development Minister Ahsan Iqbal, have voiced similar calls to de-emphasise population in NFC shares. While no provincial party has pushed for the population to yield more funds from the common pool, past censuses have drawn complaints of flaws, spurring demands for better counting methods.
Constituted last week, the NFC’s Aug. 29 session aims to lay the groundwork for talks on how to split the divisible pool, the pot of federal taxes shared with provinces. This rare harmony between the PML-N and Pakistan Tehreek-e-Insaf, bitter foes since the ouster of Imran Khan’s government in 2022, could corner Punjab and Sindh. With President Asif Ali Zardari and Prime Minister Shehbaz Sharif at the helm federally, and support from key institutions, provincial bosses in those areas may struggle to fend off changes to vertical shares between center and provinces, or horizontal ones among the units.
Aslam, a Karachi native serving in the PTI-led provincial cabinet, detailed Khyber Pakhtunkhwa’s position: pushing to tweak the horizontal formula, where 82 percent now hinges on population and 10.6 percent on backwardness. The province wants to dial down population while adding prosperity and forestation as factors. The NFC’s task is to agree on vertical and horizontal splits, he said.
Provinces get 57.5 percent vertically, with the federation taking the rest; Khyber Pakhtunkhwa seeks horizontal shifts too.
Aslam faulted the National Highway Authority for prioritizing roads in Punjab and Sindh over Khyber Pakhtunkhwa and Balochistan. “This imbalance in the development approach has aggravated the situation in the smaller provinces.”
He noted Iqbal’s warnings of federal fiscal collapse in five years, as Punjab and Sindh’s development outlays eclipse the center’s. Aslam highlighted 12 hydropower dams under way in his province, set to produce 1,000 megawatts at 8 U.S. cents per unit, but said wheeling fees jacked up to 27 rupees per unit would stymie cheap power exports.
He decried the stalled Left Bank Canal, untouched since the 1991 water accord. The framework dates to the 2009 7th NFC award, extended beyond its five-year constitutional life to 15 years. It hiked provincial shares to 57.5 percent from 47 percent, effectively 59 percent with extras for Balochistan, Khyber Pakhtunkhwa and Sindh, trimming the center to 42.5 percent. Since then, Islamabad has recouped ground via a 1.5 trillion rupee annual petroleum levy and equivalent provincial cash surpluses, flipping the balance. The center now urges curbing population weighting and offloading provincial duties to joint areas like dams, disasters, climate and security.
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