NFC: Sindh’s proposals

IN a resolution adopted unanimously, the Sindh assembly has demanded the setting up of a new National Finance Commission and suggested a new formula for sharing the divisible pool between the centre and the provinces. The new formula stipulates that the provinces and not the federation would determine the share of the latter in accordance with their respective populations. Under the current formula the federation retains 62.5 per cent of the resources from the divisible pool and allocates the rest among the provinces in accordance with their populations. Sindh has long been unhappy with the 1997 formula, and wants the next NFC to develop its Award for the next five years starting July 2003 which would require the federal government to credit the net proceeds of taxes collected from various provinces into their accounts after deducting five per cent collection charges and payment of three and two per cent respectively to Balochistan and the NWFP as subvention. Each province would then contribute to the federation in accordance with its population which would in effect be 55 per cent of the total net taxes collected by all the four provinces put together.

This formula would immediately bring Punjab under pressure because population-wise it is bigger than all the three provinces put together. Of the total 145.44 million population nearly 81 million lives in Punjab. So, its contribution to the centre’s share of the net taxes collected would have to be about 55.44 per cent of its collection. What it would be left with would certainly not be enough for taking care of the needs of its large population. On the other hand, Sindh with a population of 33.55 million would be required to contribute only 23.06 per cent of its total collection, which in the year 1999-2000 was Rs 189.46 billion. This means that if the 1997 NFC had developed its Award according to the newly recommended formula, Sindh would have kept for itself 76.94 per cent of this amount or Rs 145.77 billion, whereas that year Sindh actually received only Rs 24.80 billion as its share. Since the NWFP has only 13.42 per cent of the total population and Balochistan 5.35 per cent, their contributions to the federal revenues would not be so high as to make them destitute and perhaps the two would no more need the subvention they receive from the divisible pool. Still, their overall backwardness is such that the two provinces would be needing extra help for many years to come.

The federation itself perhaps would not feel the pinch if its income from the divisible pool is lowered drastically because it has already undertaken an exercise with the help of multilateral donors to trim itself down by reducing its divisions and ministries. If this policy is implemented over the next couple of years gradually without causing any major dislocation and without throwing to many employees out of jobs all at once, then the reduction in the federation’s income under the newly suggested formula would not be such a disaster. However, Punjab would certainly be placed in a squeeze. So if this formula suggested by Sindh is added a rider that the provinces with the largest population and largest area would be given proper weightages in revenue sharing. This can be in the form of Sindh, which collects the largest amount of taxes, contributing mainly to these weightages under a reasonable and agreed formula. In that event, perhaps the demands of equity would largely be met even under the proposed formula which is seemingly tilted in favour of Sindh.

However, before adopting this new formula or rejecting it out of hand, a national debate can be held at the technical rather than political level to study all its pros and cons from every angle. Such a debate is necessary because the relevant resolution was moved in the provincial assembly jointly by the treasury and the opposition members and passed unanimously. So, one would expect the centre not to treat it lightly or try to play the ostrich. Sharing of the divisible pool on the basis of population alone has caused the provinces to deliberately exaggerate their popular figures during successive censuses. Secondly, the current formula helps Punjab twice over — once because population-wise it is larger than all the three provinces put together and, secondly, because it already has a large lead over the other provinces in terms of all-round development which keeps expanding with the passage of time. This has given rise to resentment against the larger province in the smaller ones. So, for the sake of provincial harmony too a new formula based on equity is very much needed.

World Cup blues

THE New Zealand cricket team’s decision not to play in Kenya during the upcoming World Cup because of perceived security fears has opened up a new front in what is becoming a politically charged build-up to cricket’s most prestigious event. With less than a week to go before the tournament begins, a cloud of uncertainty still hangs over the cricketing extravaganza. While most of the matches will be played in South Africa, it is the fixtures in Zimbabwe and Kenya that have become a sticking point for certain teams. New Zealand is worried about playing in Kenya because it fears a terrorist threat following the November suicide attack on a hotel in Mombasa which killed 16 people. The Kiwis had a close shave in Karachi last year when a bomb blast occurred just yards away from the coach in which they were about to set off for the stadium. The Kenyan authorities are dismayed at the decision and insist that the security arrangements are watertight. The problem over Kenya, however, is minor compared to the gathering storm over Zimbabwe. The British government has been trying to persuade the England team to pull out of the Zimbabwe fixtures in protest against what it views as President Robert Mugabe’s repressive and dictatorial policies.

While the England Cricket Board remains adamant about going ahead with the matches, individual players are beginning to have serious doubts about playing in Zimbabwe. The Australian government too has been pressing its players to pull out of the Zimbabwe fixtures. India, meanwhile, had earlier set an unfortunate precedent by severing cricketing ties with Pakistan on political grounds. It is unfortunate that politics is once again casting its dark shadow over an event that millions of people are avidly looking forward to. This is a trend that must be discouraged for the sake of the game. Playing cricket in Zimbabwe does not mean an endorsement of Robert Mugabe’s policies, just as playing with England or Australia does not amount to agreeing with the former’s hardline policy on Iraq or the latter’s treatment of asylum seekers. The one justified cricket boycott, that of South Africa during the apartheid era, was in an altogether different league because of the racist nature of the regime. The cricketing nations should see good sense and stop creating hurdles in the way of what promises to be an exciting event.