PESHAWAR, June 24: The federal government’s claim of having registered significant reduction in the inflation rate has impacted the financial conditions of NWFP and Balochistan after the size of special grants extended to them were revised downward considerably for the financial year 2001-02.

NWFP and Balochistan had been projected to receive Rs4.259 billion and Rs5.247 billion, respectively, as subvention during the fiscal year 2001-02.

However, the revised budgetary estimates of the federal government reflect that NWFP would receive Rs3.898 billion and Balochistan Rs4.805 billion on account of special grants from Islamabad during the financial year 2001-02.

This leaves NWFP to receive Rs361 million less than the initially projected subvention amount (Rs4.259 billion) and Balochistan to get Rs442 million less than the (Rs5.247 billion) amount.

As per the current National Finance Commission (NFC) award, the two provinces were made eligible to get subvention for a period of five years — starting from the 1997-98 financial year — for which fiscal projections had also been reflected as part of the monetary plan envisaged under the NFC award.

Similarly, the magnitude of the subvention was envisaged to be increased annually 11 per cent, though the same was made subject to the subsequent adjustments in the rate of inflation every year.

Financial and economic experts have, however, disputed the federal government’s claim of registering reduction in the rate of inflation. They opposed the government’s claim on the ground that increase in the prices of petroleum products, gas and electricity tariff recorded during the five-year operations of the current NFC award did not support Islamabad’s claim.

Not only that the amount (as per revised estimates) received by the two provinces appeared to be much less than the current NFC award’s projection, even the initially projected subvention amount specified for them separately was less than the NFC award’s original projections.

As per the original projections contained under the current NFC award’s document, the NWFP was to get Rs5.025 billion subvention in during financial year 2001-02 and Balochistan Rs6.194 billion.

“The magnitude of special grants for NWFP and Balochistan got reduced only because of the fact that Islamabad managed to bring down the rate of inflation,” claimed a senior government functionary when contacted by this scribe.

However, independent experts did not agree with the claim adopting the stand that increase in prices of essential items of daily use and utility charges did not support the argument.

SUBVENTION FOR FISCAL 2002-03: In the absence of a new NFC award, which is due to take effect on July 1, 2002, the federal government has decided to take the revised budgetary estimates of subvention for the financial year 2001-02 for the two provinces as their respective benchmarks, under the same head, for the financial year 2002-03.