September 8, 2002	Sunday	Jamadi-us-Saani29,1423

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PESHAWAR, Sept 7: The federal government and the smaller provinces need to overcome differences over several fiscal issues to a develop a consensus for evolving an amicable resource distribution formula under the new National Finance Commission (NFC) award, according to the sources.

“The NFC members still have differences over the various important issues and a consensus has not been evolved over several matters yet,” said the sources.

Apart from the resource distribution formula for the new NFC’s five-year term, the sources said, issues still remained to be decided by the federation and the federating units. This includes the resolution of the net hydel profit issue involving Wapda, the NWFP and Islamabad as parties; the issue of determining the base line for the distribution of funds among the smaller provinces from the proposed subvention pool; and the issue of distributing 2.5 per cent additional amount of General Sales Tax (GST) among the provinces.

Even the recent two-day NFC meetings held at Karachi could not help the provinces and federal government to bridge the gap over the contentious issues, as none of them, said the sources, appeared to be ready to withdraw from their respective stand.

Though, no new head of taxes or fee is being added to the Federal Divisible Pool (FDP) of resources, the stakeholders, including four provinces and federal government, appear to be far from developing a consensus over the question of evolving a ‘suitable’ resource distribution formula for the five-year operations of the new NFC, according to sources.

Sources told this scribe that the federal government had come up with two proposals in respect of the evolving resource distribution formula for the new NFC — agreeing to the upward revise the provinces’ share under the FDP in both the cases.

One of the proposals envisages the ratio distribution of resources between the provinces and federal government at 45:55.

Whereas, in the other proposal the ratio of the provinces and federal government’s share stands at 40:60.

However, the federating units, apparently, want the distribution of resources at 50:50 ratio getting raised their share from the present 37.5:62.5 between provinces and federal government, respectively.

Though the smaller provinces’ demand of considering other variables, apart from population as the basis for the distributing of resources from the FDP among the stakeholders, has partially been accepted on the part of the Centre by agreeing to establish a subvention pool to distribute additional funds among the smaller provinces, there remained to be decided several issues to materialize the move.

In this respect, the most crucial question of devising a suitable arrangement acceptable to the three provinces — Sindh, NWFP and Balochistan — for the purpose of distributing subvention funds, has yet to be decided.