Rs270bn projected for provinces - NFC award for 2004-05
By Khaleeq Kiani
ISLAMABAD, March 25: Provincial share in the federal divisible pool under the next NFC award has been projected at over Rs270 billion for the year 2004-05, up by over 26 per cent over the budgeted Rs214 billion for the current fiscal year, it is learnt.
A member of the National Finance Commission told Dawn that provinces were informed about this figure at the March 20 informal meeting of the commission. He said discussions in the NFC had moved from technical deliberations to the political front where adjustments would have to be made on the basis of give-and-take.
However, he was critical of the federal government's failure to indicate its position on resource distribution and said the centre was keeping its cards close to its chest.
He said such a confusion had been created about the NFC that a non-official member from a smaller province abstained from the informal NFC meeting, although he was present in the finance ministry before the meeting and stayed in the federal capital till evening.
He said initially three non-official members from Punjab, Sindh and Balochistan had decided to stay away from the informal meeting but two of them were persuaded to join the meeting.
Originally, the finance ministry had no intention to involve the non-official provincial members in the informal meeting and wanted to discuss issues only with provincial finance ministers but later it invited them when told that the NFC quorum was not complete without the non-official members.
Sources said the three provinces had taken the stand that the collection charges deducted by the federal government on collection of taxes on behalf of provinces should not be more than two per cent. In some cases, the federal government was deducting up to five per cent collection charges.
The sources said Sindh had offered that it would accept even 10 per cent weightage to the revenue generation provided the principle was broadly set for the distribution of provincial share through the multi-factor formula instead of the population alone criterion.
The sources said the provinces had also taken the stand that the 2.5 per cent GST currently being provided to the provinces in lieu of octroi should not form part of the divisible pool.
The member said the NFC meeting was informed about the federal government's projections. In absolute terms, all the provinces would get a substantial increase in their share that would range from Rs15 billion (for Punjab) to Rs9 billion (for Balochistan).
Total revenue for the next year was projected at around Rs565 billion to Rs570 billion, up by more than 11 per cent from current year's budget estimates of Rs510 billion.
The public sector development programme (PSDP-2005) would be kept in the region of Rs200 billion, up by around 25 per cent from current year's PSDP of Rs160 billion. As such, the total outlay of the federal government would be in the region of Rs875 billion, against Rs805 billion estimated for the current year.
On the question of the sharing of resources among the provinces, the member said the meeting was in favour of a 'multi-factor approach' instead of a 'population-alone' basis in view of strong position taken by the three smaller provinces, although Punjab had still not made any commitment to give up its position on the matter.
The meeting seemed converging on the principle that weightage for revenue, poverty and area would be so formulated that it would not reduce the existing share of any province so that a notional formula could be converted into a multi-factor formula with consensus, creating a win-win situation for all the provinces as well as for the federation.
The member said the federal government gave an impression that if a formula for the sharing of resources was not agreed upon, the provinces would be the loser because they would have to content themselves for another with the 37.5 per cent share calculated under the previous award.
