Sindh Chief Minister Syed Murad Ali Shah, while talking to a delegation of the United Nations Fund for Population Activities (UNFPA), said that the formula for the NFC award should be decided keeping in mind the development of the country and the well-being of the people.
According to a statement issued by the spokesperson of the Chief Minister of Sindh, the delegation is being led by UNFPA Country Representative Dr. Loy Shabane. The meeting was attended by DG NUST Dr. Ashfaq Khan, UNFPA Sindh Head Muqdar Shah and Renuka Swamy. Provincial Minister for Population Dr. Azra Pechuho, Principal Secretary Agha Wasif, Secretary Population Hafeezullah Abbasi and others were also present.
The meeting discussed the NFC award, distribution of resources and its impact. DG NUST Dr. Ashfaq Khan briefed the Chief Minister of Sindh on the formula for the NFC award and its role in the development of the country. The National Finance Commission (NFC) is a constitutional body that determines the distribution of resources between the federal and provincial governments.
Dr. Ashfaq Khan said that according to the constitution, the President of Pakistan forms the NFC every five years. The commission determines the method of financial distribution between the federation and the provinces. There are two types of fiscal imbalances in Pakistan, one is vertical and the other is horizontal fiscal imbalance. More than 90 percent of taxes in Pakistan are collected at the federal level.
He said that only 10 percent of taxes are collected at the provincial level. The provinces are dependent on the federation for collection at the federal level. Before 1947, resources were distributed in British India through the Nei Meyer Award under the 1935 Act. After the establishment of Pakistan, the first NFC Award was prepared in 1951, which was known as the “Reismann Award”.
The briefing stated that before 1971, resource distribution was based on GDP performance and tax collection, while population was not included. From 1971 until the sixth NFC award, population was the main criterion for resource distribution.
The Sindh Chief Minister said that between East Pakistan and West Pakistan, GDP performance and tax collection were also based on it. For the first time, different criteria were adopted for resource distribution in the seventh NFC award.
Dr. Ashfaq Khan said that these criteria included population at 82 percent, backwardness at 10.3 percent, revenue generation at 5 percent, and IDP at 2.7 percent. In major countries of the world such as the United States, Germany, Canada, and Australia, population is not given any priority, South Africa gives population at 7 percent, Nigeria at 30 percent, and India at 15 percent.
The Sindh Chief Minister said that since 2008, the Pakistan Peoples Party has been of the view that the sales tax should be collected entirely by the provinces. The provinces are close to the consumer, so tax collection will improve.
It was suggested in the meeting that Pakistan’s National Finance Commission should be depoliticized and only technocrats should be kept in the Finance Commission.
It was said in the briefing that not all states are represented in India’s National Finance Commission, only five states are represented. In India, the criteria for resource distribution change in every Finance Commission. In India, most of the focus is on Green India, in which forest and environmental parameters are part of the NFC. India’s total forest coverage is 24.6 percent, while Pakistan’s is 4.8 percent.
It was suggested that the NFC criteria should include income gap of 30 percent, population of 15 percent, demographic of 17.5 percent, human development of 10 percent, area of 7.5 percent, tax collection of 5 percent and forest coverage of 5 percent.
The Sindh Chief Minister said that further discussions on NFC should be continued so that a good formula can be decided. There should be such a formula that ensures equitable distribution of resources, poverty eradication and development in the country. The NFC award formula should be decided keeping in mind the development of the country and the well-being of the people.
