May 14, 2002	Tuesday	Rabi-ul-Awwal 1, 1423

KARACHI, May 13: The Annual Planning Coordination Committee (APCC) is expected to meet on June 1 and the National Economic Council some time in the middle of second and third week of June at Islamabad to finalize the next fiscal year’s Public Sector Development Programme (PSDP).

The APCC, with federal finance minister in chair, will finalize the PSDP for the next fiscal year, will indicate resources allocation for the federal ministries, provincial governments and the special poverty alleviation programme. The NEC will be chaired by the President and Chief Executive General Pervez Musharraf and will finalize the resource allocations before the final presentation of the federal budget some time in third or last week of next month.

But before these two bodies — APCC and NEC — decide on the size, outlay and resource allocation of the development programme for the next fiscal, the National Finance Commission (NFC) is expected to hold its final and decisive meeting in Karachi before the end of this month.

The NFC in its last meeting before the end-May is expected to come out with resources distribution award between the federation and the provinces and among the provinces.

Those who are watching the proceedings of the NFC closely in Karachi are confident about one issue. The resource distribution ratio between the federation and provinces will be equal that is 50 per cent for the federation and remaining 50 per cent to be shared by the provinces.

Well placed sources in Karachi say that provinces have apparently prevailed on Islamabad to reconsider the previous distribution ratio of 62.5 per cent for federation and 37.5 per cent for provinces. Whatever fiscal space has been made available in the budget from the foreign debt restructuring provinces want a share. Provinces also want a share in the proceeds of privatization.

Sources in Sindh quote Finance Minister Shaukat Aziz, who, in one of the meetings, said that after meeting the defence and debt servicing obligations, the federation is ready to offer maximum share to the provinces.

But then the principles of resources distribution between the provinces remain a ticklish issue. Provinces have sharp differences. Sindh questions the principle of making population the only criterion for distribution of resources which entirely benefits Punjab. One of the four working groups of the NFC has mentioned examples of 18 federations and unions in the world where resources are distributed on multiple basis and population is the smallest ratio.

Punjab contends that even in the existing arrangement there was more than one criterion for resources distribution. Besides population, resources are provided by way of direct transfers and special subventions are being given to NWFP and Balochistan.

Whatever the principles are decided for resources distribution, the NFC award this time is bound to become an explosive issue of public discussion in all the four provinces. All the powerful political groups representing both the rural and urban population are demanding ‘just and fair’ share in the national resources. An extremist view is that Sindh should decide how much it has to give to the federal pool.

Reports from Punjab also indicate that sentiments are running high on this issue. Economists in Punjab question Sindh’s asserting of contributing 70 per cent to the national exchequer.

“This time NFC is facing a very tough situation and it would have to be a tight rope walking for the federal finance minister to decide on resources distribution,” a well placed source in Sindh said.

Yet another issue in Sindh would be the award of Provincial Finance Commission for distribution of provincial resources among the district governments. Sindh wants backward districts to get greater share in the resources. “But feudal and a corrupt bureaucracy are responsible for the backwardness,” an economist said who pointed out that greater resource allocation is no solution for backwardness.

These issues — the NFC award and the award of the Provincial Finance Commission — will acquire special significance in the next two and three months.

Those engaged in budget making in Sindh secretariat are expected to take adequate care of the possible pressures that would come on the administration in the coming next three and four months after the presentation of the budget.