PESHAWAR, Sept 15: The proposed subvention pool involving Rs20 billion for the distribution among the smaller provinces will be protected as the federal government will be releasing fixed shares to Sindh, Balochistan and the NWFP every year during the five-year operation of the new National Finance Commission (NFC) award, official sources say.

The smaller provinces had been made to agree to the distribution of the subvention funds on the basis of ‘fixed amount’ instead of evolving any formula for determining their share under the proposed pool, they said.

The sources told Dawn that of the Rs20 billion, NWFP’s share had been fixed at about Rs6.6 billion every year. Sindh would get over Rs5.5 billion whereas Balochistan would have around Rs7.8 billion per annum during the operation of the 6th NFC.

“No one has lost. Every body has gained substantially under this arrangement,” said a senior officer of the federal government.

The federating units had been made to agree to this arrangement necessitating them that there was required ample time to decide a proper formula “which is not possible at this point of time “, said the sources while quoting the federal government’s stand.

Sindh, Balochistan and the NWFP wanted that the subvention pool funds should be distributed among them on the basis of backwardness, fiscal effort and size, respectively.

As per the decision made at a NFC meeting held at Peshawar on Sunday, the federal government would provide Rs15 billion every year from its own kitty for the pool while the three provinces would jointly contribute Rs5 billion from their respective annual share under the Federal Divisible Pool (FDP).

The sources said the pool would be protected as there would neither be any increase nor decrease in its annual size as was the case with the subvention extended to Balochistan and the NWFP under the current NFC.

“Neither the impact of inflation will be applied to it nor will it get shrunken due to shortfall, if any, recorded by the Central Board of Revenue (CBR) in its annual revenue in the future,” they added.

Under the current NFC, Balochistan and the NWFP were supposed to get Rs8 billion annually as subvention, apart from their shares under the FDP. It was due to a cut in inflation — as is claimed by the federal government — the two provinces accordingly got their reduced share from the subvention, though fractionally.

The sources said the federal government, at the NFC platform, had refused to enlarge the proposed size of the subvention pool from Rs20 billion.

An NFC member said the federal government had adopted this stand owing to its [Islamabad’s] increasing commitments.

The government has also refused to write off the cash development loans outstanding against the provinces or bring down the interest being charged on the loans.

NWFP’S NET HYDEL PROFIT: The meeting also discussed the net hydel profit issue involving the government of NWFP and Wapda as the main parties.