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| 24 May 2004 | Monday | 04 Rabi-us-Saani 1425 |
NFC meeting fails to resolve differences
ISLAMABAD, May 23: The Centre and the provinces failed on Sunday to end an impasse over distribution of resources for the sixth National Finance Commission (NFC) Award, despite direct intervention of Prime Minister Zafarullah Jamali.
A meeting presided over by the prime minister and attended by four chief ministers and their finance ministers, the federal finance minister and non-official members of the NFC, remained in session for over five hours but failed to break the deadlock.
At one time, however, it appeared that an agreement was possible and that perhaps prompted the prime minister to tell reporters at the Urs of Bari Imam in the evening that all the provinces had agreed to a formula presented by the Centre regarding distribution of funds under the NFC.
All grievances and apprehensions of provinces had been addressed, he said, adding that the award would be announced before the announcement of the budget. But hopes were dashed as two provinces - Sindh and the NWFP - went public to announce that negotiations had failed and their next budgets would have to be based on the previous award. They said there was no scheduled meeting on the NFC in the immediate future.
A participant of the meeting indicated that Prime Minister Jamali had to leave for Saudi Arabia to make another effort to get the Saudi oil facility restarted to enable the federal government to give more than 47.4 per cent to the provinces from the divisible pool.
While the NWFP demanded personal intervention of President Gen Pervez Musharraf, terming him the only hope for resolving the dispute, Sindh opposed it saying that only the nine-member NFC committee had the powers to deal with the NFC under the Constitution and the president could only present a consensus NFC award to the National Assembly.
Sindh, meanwhile, demanded that the provinces should be allowed to directly borrow from the banking sector at market rates and pay back huge build-up of interest on cash development loans extended by the federal government.
Sindh's non-official NFC member Kemal Lodhi said the province had borrowed Rs16 billion many years ago but its interest had accumulated to Rs92 billion. Punjab owed even higher to the Centre on this account, he said.
President Musharraf, he said, had termed it riba and asked the finance ministry three years ago to waive the interest but to no avail. He said Sindh also reiterated its demand for transfer of responsibilities of health, education, local government and interior ministries to the provinces to reduce expenditure on civil administration.
The Sunday meeting started at about 12:20pm and at about 4:15pm the prime minister asked the finance ministers and other members from the provinces to sit with the federal finance minister and find out a solution. They remained in session for another 70 minutes but later dispersed without any agreement.
Sindh Finance Minister Syed Sardar Ahmad said Punjab chief minister first agreed to give 94 per cent weight to population and the remaining six per cent to backwardness, inverse population ratio and revenue generation but later backed out.
He said the provinces also could not resolve their differences over the distribution of 2.5 per cent GST and nobody was ready to accept Sindh's demand for giving two per cent weight to revenue generation which Sindh would never give up.
He said that about 69 per cent GST was being collected by Sindh and 24 per cent by Punjab. The GST used to be distributed by giving 37.5 per cent weight to population and 62.5 per cent to actual collection and Sindh wanted this principle to continue for distribution of 2.5 per cent GST in lieu of octroi and zila tax but Punjab now wanted its distribution on the basis of population alone.
Mr Sardar said Sindh had also offered to give a special support of Rs5 billion to the NWFP and Balochistan to compensate them in case of a drop in their share as a result of a distribution criteria based on multi-factor formula but this was also rejected.
Mr Kemal Lodhi said that it was wrong, as generally believed, that the Centre was offering 47 per cent share to the provinces because it also included 2.5 per cent GST in lieu of octroi. He said if 2.5 per cent GST was excluded, the provinces' share would not be more than 43 per cent.
NWFP Finance Minister Sirajul Haq told reporters that a consensus NFC award would have been a success of the federal government but the deadlock would strengthen the hands of centrifugal elements and anti-federation forces.
He said the provinces had pinned high hopes on the prime minister and he could have increased the provinces' share because he had the powers to prevail upon the federal government but the outcome was disappointing.
He said the provinces had objected to an increase in defence expenditure; it was against the internationally recognised principles to make substantial increases for defence in one go.
He deplored that while disabled people and even dogs were being educated abroad, people in his province were without basic education and were forced to eat animal-food.
He said Punjab, NWFP and Balochistan were ready to give inverse population density and backwardness some weight in horizontal distribution of resources with a major share to population, but Sindh was insisting on the inclusion of revenue generation as well.
Syed Sardar Ahmad said that like electricity in the NWFP and oil and gas in Balochistan, the presence of two ports in Sindh was a nature's blessing but deplored that Sindh's demand for a rock-bottom two per cent weightage for revenue generation was not acceptable to other provinces.
He said Sindh's offer to give Rs2 billion higher share to Balochistan on account of the GDS was also rejected by Balochistan that demanded 100 per cent GDS collection.
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