KARACHI, Aug 29: The National Finance Commission (NFC) is beginning its two-day decisive meeting on Friday here to finalize the award on distribution of pool of taxes between the federation and the provinces and among the provinces.

Sources close to the NFC doubt that a consensus award would be arrived at during the coming meeting. They expect Islamabad would have to finally prevail upon all disputes among the four provinces to put their signatures on an accord as was done in 1997.

“A consensus on NFC award should not be a foregone conclusion when there is a military setup in Islamabad and there are handpicked governments in all the four provinces,” a retired civil servant, who had attended the last NFC working said.

Even if the NFC meeting in the city manages to draw up a resource distribution formula, sources say, its announcement may not be made now. President Gen Musharraf himself may announce the award in presence of the governors, finance ministers and other members of the Commission in Islamabad.

When will this NFC award become operative is a question that remains unanswered. Queries made at different levels in Karachi and Islamabad have failed to evoke any answer.

“In case the NFC comes out with an award and is implemented immediately, then it means a new budget at the federal and the provincial levels,” a well-placed source in the Sindh government said.

But putting off its implementation till next budget is also fraught with many legal and constitutional issues which may be raised in the elections campaign, which is to pick up tempo next week. Whatever the NFC award comes out, is bound to become an election issue.

The NFC deliberations over the last two years have brought forth a sharp difference between Islamabad and the four provinces. The provincial governments are reported to have unanimously asked for a review of the distribution ratio of federal divisible pool. The 1997 award had fixed 62.5:37.5 share between the Centre and provinces. The four provinces now want this arrangement to be shared equally, i.e., 50:50.

With the situation on borders, the federal government wants provincial governments to realize the rising resources needed for the defence. The provinces want some share in the fiscal space that Islamabad has managed to obtain from debt relief obtained from the donor countries.

FORMULA: There is also sharp differences between the provinces on the criterion of resources distribution. Punjab wants funds on population basis as it has benefited most since 1975 when the first NFC award came out. Sindh wants resource generation capacity and good governance to be given equal importance. Balochistan wants size to be given weightage and NWFP demands royalty on hydel power.