The first meeting of the National Finance Commission took place three and a half months after its being constituted. That long hiatus was as nothing compared to the delay in its constitution, due in time to make an Award by the time a new Award was due in 2014. However, the federal proposal that the provinces shoulder the federal expenditure on the Higher Education Commission, the Benazir Income Support programme and various development programmes, was rejected out of hand by the provinces. They had not been melted by the federal government’s presentation of its own needs, which showed that it had been forced to incur more and more debt, with the increase in debt servicing so much that it consumed all resources, to the point where debt servicing was only possible by contracting new debt. The federal proposal of a special fund to meet these expenses, to be subtracted from the provincial shares, did not win any takers on the Commissiion, which has to make decisions by consensus.
The NFC set up a number of separate working groups, one for KP, which has come up with a number of demands, all of which mean a special share for it out of the Federal Divisible Pool. There is a demand for it to receive extra to enable it to meet the expenses of the former Federally Administered Tribal Areas, which were merged into KP in 2018, after the last Award. In previous Awards, the expenses of the FATAs were met by the federal government out of its share of the Pool, so KP would now want that. KP has got other items it wants handled, such as the extra money it has been getting for terrorism. This may be problematic, for the federal government has frequently questioned where the previous allocation has gone.
Politically, because KP is governed by the national opposition, it is likely to prove the main hurdle to the necessary consensus. However, it is intriguing that none of the provinces has expressed a desire to carry forward the work of the last NFC, which for the first time added other considerations than population to the formula for horizontal distribution of the Pool, of the provincial share between the provinces. That the NFC has targeted mid-January for its next meeting indicates that its pace will probably enable it to complete its work by April, which will enable it to finalise an Award barely in time for the next financial year.
