Islamabad:
The planning minister, Ahsan IQBAL, has proposed to urgently review the Prize of the National Finance Commission and suggested freezing the population number in 241.5 million and including indicators such as water and climate vulnerabilities with the purpose of distribution of money between the federal units.
Iqbal made the recommendations to Prime Minister Shehbaz Sharif, urging him to review the 15 -year prize that has survived his five -year constitutional life and requires a review to relieve “acute stress” in the federal government. The president of Pakistan is extending the award every year due to a disagreement between the provinces and the center on the new formula.
The recommendation has been done at a time when the Tenth National Finance Commission has expired on July 21 and the Ministry of Finance, which is the Secretariat of the Commission, is in the process of forming a new commission.
Sindh has retained Asad Sayeed and Khyber-Pakhtunkhwa could be represented again by Musharraf Rasoo Cyan in the 11th Commission. Nasir Khosa can represent Punjab as his technical member, but there is still no official notification, which must be issued after the approval of the president of Pakistan. Baluchistan has nominated Mr. Farman.
The Minister of Planning and Development has proposed new multiple criteria, for the distribution of resources by focusing on the development -oriented formula instead of the award dominated by demography.
The minister has suggested to the prime minister that the population number must freeze in the last census (241.5 million) and their weight must be reduced from the current level to promote the stabilization of the population.
82% of the NFC is distributed on the basis of the population among the provinces, which is an incentive against population control and also exaggerate the number.
The annual growth rate of the population of Pakistan is 2.6%, which is close to the annual economic growth rate and is highly unsustainable. The current horizontal distribution is very weighted (82%) towards the population.
While the population is an essential indicator, this creates adverse incentives against population control and penalizes the provinces with a better demographic management, Iqbal declared.
The Planning Minister has also recommended to include the performance of provincial income as a new criteria for distributing resources. He has written that there is a need to reward the provinces with higher proportions of GDP taxes and the strongest digital fiscal infrastructure.
The provinces have no incentives to expand their limited tax bases and depend largely on their actions under the NFC.
The minister has also proposed to include environmental resilience as a new criterion by adding indicators such as forest coverage, climate adaptation investments and reforestation efforts.
According to another important recommendation, human development results must be linked to the transfer of resources and the province must prioritize education, health and gender equity.
The Constitution requires that the five governments agree unanimously in the new formula and even if a government does not disagree, no change in the prize can be made.
The minister also recommended including the vulnerability of water as another new criterion and suggested assigning funds for provinces that invest in infrastructure and sustainable water management.
The minister has underlined unity and national inclusion as a reference point for the distribution of money between the center and the provinces. The center has only 42.5% participation and is also responsible for the expenses in Azad Jammu and Cashmira, Gilgit Baltistan and the ICT of the divisible group to guarantee full participation in national development for its citizens.
The minister said that more than 150 billion rupees are spent annually by the federal government in development and recurring obligations in AJK, Gilgit-Baltistan and the fused districts and the capital of Islamabad, all of the federal participation, while these regions have the right to have their own participation in the divisible group as other provinces.
The Federal Government is also financing the Benazir Income Support Program (BISP) for a sum of 716 billion of 716 years, although social protection is a provincial subject transformed after the 18th amendment.
Iqbal said it was necessary to immediately initiate the process for a new prize of the National Finance Commission (NFC), adding that it is a constitutional obligation and a fiscal need.
Iqbal said that the seventh NFC award has now been in force for almost 15 years, far beyond its planned duration and the consideration of merits due to new realities.
He said the federal government faced tax pressures due to anomalies in this NFC award. Therefore, a new NFC award is imperative to ensure that fiscal federalism remains dynamic, equitable and receptive to the evolutionary development panorama of Pakistan while protecting the rights of the provinces, he added.
Due to the limited fiscal space and a higher expense in debt services, the federal government does not remain with sufficient fiscal space for development. The minister said that the Public Sector Development Program (PSDP) has been reduced alarmingly, from 2.6% of GDP in 2018 to only 0.8% in 2025.
This regression represents not only a restriction in national development, but also a systemic distortion of constitutional fiscal responsibilities with federal subjects that are sub -finished, he added.
He also emphasized by promoting fiscal responsibility and the generation of own income at the provincial level, and what is more important, the operationalization of provincial finance commissions (PFC)
The constitutional promise of equity cannot be done without the intraprovincial distribution of resources. The Provincial Finance Commissions (PFC), which imagined that the resources within the provinces decentralize, remain latent or non -transparent in their operation, he added.
The new NFC award should make PFC operationalization mandatory as part of the NFC framework, he recommended the Minister of Planning.
Without adequate federal federal space, the implementation of emblematic national programs, including special economic zones (Sezs), Pakistan Digital, National Network, dams, human resources development and multi -model connectivity infrastructure, remains compromised, said the minister.
