Written By Shah Nawaz
The National Finance Commission (NFC) Award is a crucial mechanism for distributing financial resources between the federal and provincial governments in Pakistan. Established under Article 160 of the 1973 Constitution, the NFC plays a pivotal role in ensuring fiscal balance and equity across the provinces. With the integration of the erstwhile Federally Administered Tribal Areas (FATA) into Khyber Pakhtunkhwa (KP), the need for a revised NFC Award has become more pressing than ever. This article explores how Khyber Pakhtunkhwa can advocate for an increased share in the NFC and examines the factors involved in the distribution of NFC resources.
The history of revenue distribution between the center and the provinces dates back to the Government of India Act 1935. Following Pakistan’s creation in 1947, the first revenue distribution award was announced in 1952, known as the Raisman Award. The 7th NFC Award, signed on December 30, 2009, provided a new formula for resource distribution, taking effect from July 1, 2010. However, significant changes since then, including the merger of FATA with KP and the 2017 population census, necessitate an updated NFC Award.
The distribution of NFC resources is influenced by several factors: population size, revenue generation, backwardness, area, the impact of the war on terror, and other relevant factors. The primary determinant of provincial shares in the NFC is population size. The 2017 census revealed changes in population distribution, warranting a re-evaluation of shares. Provinces that generate higher revenue are entitled to a larger share, encouraging them to enhance their tax collection efforts and economic activities. Additionally, provinces with higher levels of poverty and underdevelopment receive additional resources to support equitable development. Geographical size also influences resource allocation, recognizing the cost of providing services across vast regions. Furthermore, KP has been significantly impacted by the war on terror, which should be considered when determining its share to cover security and rehabilitation costs. Other relevant factors may include literacy rates, healthcare needs, infrastructure deficits, and environmental challenges.
Given these factors, how can Khyber Pakhtunkhwa secure a larger share of the NFC Award? Ensuring that the population data is accurate and up-to-date is crucial. KP should advocate for a population-based adjustment reflecting the influx of people from erstwhile FATA. Highlighting the province’s backwardness, economic needs, and the impact of the war on terror is essential. This includes detailing infrastructure deficits, healthcare requirements, and educational needs. KP should focus on improving its revenue collection mechanisms. Demonstrating efficient tax collection and economic activities can strengthen its position for a higher share. Engaging with federal and provincial political leaders, and participating actively in NFC meetings can help in voicing KP’s needs and negotiating a fair share. As demonstrated by PTI leader Taimur Saleem Khan Jhagra’s petition to the Peshawar High Court, legal avenues can also be pursued to ensure that constitutional provisions are adhered to and KP’s rightful share is granted.
In conclusion, for Khyber Pakhtunkhwa to secure a larger share in the NFC Award, a multifaceted approach is needed. This includes accurate population data, highlighting developmental needs, improving revenue generation, political advocacy, and legal action. By addressing these areas, KP can make a compelling case for an increased share in the NFC, ensuring equitable development and financial stability for its residents.
