Punjab not to budge on population as criterion: NFC formula
By Nasir Jamal
LAHORE, May 6: In what is billed to be final meeting of the National Finance Commission (NFC) scheduled for next week, Punjab will stick to its stand that population should be retained as the sole indicator for resource distribution among the provinces in the next award.
"The options given by Federal Finance Minister Shaukat Aziz to distribute resources among the provinces under the next NFC are non-options. We haven't even discussed them," said a person privy to the NFC talks while speaking to Dawn about Punjab's stance.
The options given by Mr Aziz propose distribution of resources between the federating units on the basis of multiple indicators, assigning each factor - including backwardness, population, area and revenue generation - different weightage in each option.
Sindh has already rejected them as it wants revenue generation to be given greater weightage in the distribution formula. It has also demanded that the federation should transfer at least 50 per cent of the total resources from the divisible pool and that 2.50 per cent GST be kept out of it.
It also wants the collection charges deducted by the centre to be reduced to two per cent from the existing five per cent. In Punjab any change in the existing single-indicator resource distribution formula is being seen as a "recipe for disaster" for the provincial economy which, unlike the other provinces, heavily depends on fiscal transfers from the divisible pool.
Further, the provincial officials involved in NFC negotiations say the centre's own data shows that population is not the single basis for distribution the resources between provinces.
On the basis of population, Punjab should be getting 57.36 per cent share from the federal transfers. But the data pertaining to the past few years amply shows that it is getting 47 per cent, or 10 per cent less than its population share.
Sindh on the other hand is getting 26 per cent compared to its population share of 23.71 per cent, the NWFP about 16 per cent in ratio to its population share of 13.82 per cent while Balochistan 11 per cent in relation to its population share of 5.11 per cent.
The provincial authorities say Punjab is receiving around Rs20 billion less than what it "should have been getting if population were the sole criterion of resource distribution".
Historical data goes to prove that the shortfalls in the needs and resources of provinces stemming from population based formula are met through straight transfers or grants as guaranteed in the constitution, they say.
Talking about the current status of NFC talks, and differences between the federating units and the provinces and Islamabad, the sources said: "The differences (on resource distribution formula) are far from resolved. We are still far from any settlement."
They said that next week's meeting could be final and decisive "only if the provinces were forced to agree on a certain solution by someone enjoying highest authority". "None of the previous NFC awards were decided with consensus," the added.
It may be recalled that the NWFP has also refused to sign next NFC award unless its dispute with Wapda on net hydel profits is resolved. The Balochistan government wants just distribution of gas development surcharge.
Though the sources say Punjab would support other provinces in their demand for greater share in the divisible pool, they do not believe that Islamabad will concede to transferring 50 per cent of the resources to them.
"I believe that the central government will agree to part with 48 per cent resources from the divisible pool, including 2.50 per cent GST and subventions, at the most," said a provincial cabinet source.So far the federal finance minister has agreed to give only 47 per cent, including 2.50 per cent GST, from the divisible pool.
