Planning Minister Ahsan Iqbal put his hand well and truly in the proverbial hornet’s next on Tuesday while addressing the launch of the Asian Infrastructure Report 2025 by the Asian Infrastructure Investment Bank, when he said that the criteria of population and poverty, according to which resources have been distributed by the last National Finance Commission in the 7th Award in 2010 in an 82.98:17.02 ratio between the federal government and provinces, were regressive. He did not make clear whether he was attacking the crude population basis on which previous Awards had been made, or merely the inverse population density parameter included ten. At the same time, the previous Award introduced the parameter of rate of change in poverty, which would penalize, rather than reward, provinces which not just remained poor, but were slow in removing poverty.
One reason the NFC has become sensitive, is that a change that was part of the 2010 Eighteenth Amendment prevented a reduction of the share of the provinces. That meant the only change in federal provincial proportions could be a further reduction in the federal share. One of the matters still left open is that of the inter-provincial allocation of the provincial shares. Punjab, the most populous province, has always argued for an untrammeled population basis. Sindh, where Karachi port is located, has argued for contribution to tax revenue to be considered. Balochistan has argued for population density. KP has argued for poverty incidence.
The final result has been a sort of deadlock, and though the 7th Award expired in 2015, no NFC has been constituted. There are partisan reasons, but there are strong bureaucratic lobbies as well, which prevent any province abandoning one jot or tittle of their claims. Mr Iqbal has chosen to descend right into this controversy, even though nothing can be done without a National Finance Commission being brought into existence.
Mr Iqbal has raised important issues, which go to the heart of the NFC Award mechanism, but it cannot be said that he has raised the issue. He has merely engaged in some loud thinking, and has gone public with a debate that needs to be held. However, the place for that the NFC, and Mr Iqbal, not only a Cabinet member but also Secretary General of the ruling PML(N), should throw his weight behind the convening of a new NFC, so that it may begin the tortuous process of making an Award.
