January 18, 2006	Wednesday	Zilhaj 17, 1426

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LAHORE, Jan 17: The Punjab Provincial Finance Commission (PFC) on Tuesday proposed a formula based on multiple indicators, with population getting a weightage of 70 per cent, to the Punjab government for the distribution of the (financial) resources (for development) among the three tiers of the local governments.

The recommendation was made in the formula approved by the PFC at a meeting held here to finalize mechanism for the distribution of funds for development among district governments, TMAs and union councils.

The new formula will remain effective for three years starting from the next fiscal (06-07) after its approval by the provincial cabinet, according to a source.

While hefty 70 per cent of the funds have been recommended to be transferred to the three tiers of the local governments on the basis of population, the remaining resources would be distributed on the basis of under-development, fiscal requirements, etc, said a member of the PFC on the condition of anonymity.

It may be mentioned that the interim formula being used by the Punjab government for the distribution of resources among three tiers of local governments also gives 70 per cent weightage to population.

Under the agreed PFC formula, which will shortly be put before the Punjab cabinet for approval, pledges to also provide funds to “equalize” the local governments (in addition to the resources to be transferred to them under the PFC formula).

“Similarly, another grant would be given to (local governments) to implement the (provincial) government’s policies. The local governments will be taking share under tied grants, the donations and schemes funded by foreign agencies. The institutions showing excellent performance will be given incentive grants. However, this grant will be implemented from the next year,” said a handout issued by the government.

The Asian Development Bank will help the province appoint a financial adviser in each district for providing guidelines to ensure transparency and discipline in financial matters, it said.

The 10-member body of the PFC, which met to approve the formula, is chaired by Punjab finance minister Hasnain Dreshak.