PESHAWAR, Sept 9: Islamabad has indicated to the federating units that the subvention pool, proposed to be constituted under the new National Finance Commission (NFC) award, would involve Rs20 billion for distribution among the smaller provinces every year, according to sources.

“The amount to be put under the subvention pool may be more than the figure intimated to provinces,” said the sources privy to a meeting of the provincial cabinet, which was apprised of the progress of the NFC and the NWFP’s stand regarding fiscal rights of the province, especially over hydel profit.

Sources told Dawn that a decision to the effect of distributing funds from the subvention pool was yet to be taken as the three smaller provinces had been asked to submit their proposals on that before the next NFC meeting scheduled here on Sept 15.

Sindh, NWFP and Balochistan want the distribution of subvention funds on the basis of fiscal effort, backwardness and area respectively to qualify for more funds. However, a final decision to this effect has not been made as yet, according to sources.

The NWFP, according to a source in the provincial cabinet, wants that the subvention pool should involve 10 per cent funds of the federal divisible pool - distributed among the provinces on population-basis.

Besides, the provincial government, said the sources, wanted that the province, due to its backwardness in comparison with the  remaining federating units, should be diverted more funds to improve its fiscal position.

The province, said the sources, wanted that it should be diverted, at least, 50 per cent of the total funds that would be placed in the subvention pool.

However, said the provincial cabinet’s sources, the provincial  government’s stand was being differed with by the federal government and a couple of other provincial governments.

The NWFP, said the sources, had made a case for greater amount of funds on the pretext that the province had lower literacy rate than Punjab and Sindh, lower per capita income in comparison with the rest of the country and a less developed communication network apart from lacking a strong industrial base.

Besides, the province, said the sources, had sought greater share in the funds because of the paucity of funds it had to go through consistently because of non-payment of full amount of hydel profit share by Wapda.