KARACHI, Dec 26: Neither the National Finance Commission nor the Provincial Finance Commission of Sindh is coming out with any award of resource distribution between the federation and the provinces and between the 16 districts and the provincial governments before the end of this year.

The Sindh government has notified the mandate of the Provincial Finance Commission to work out inter-governmental revenue sharing mechanism between the province and the district by December 2001.

Officials say that this deadline will be extended by at least three months during which it is expected that the NFC will also give its resource sharing award between the federation and the provinces.

Earlier the government had announced that the NFC and PFCs in all the four provinces would declare their resource distribution awards before December 2001. A schedule declared at the beginning of this year by the National Reconstruction Bureau (NBR) had projected the functioning of all 106 district governments in the country by July next year when each district or city government would have its own budget.

After the NFC and the PFCs in the provinces would have declared their respective revenue distribution awards before the end of December 2001, the next six months would have been a sufficient period for the provinces to assess their anticipated resources in next fiscal year and would have facilitated the districts in preparing their budgets.

But the NFC has held only two meetings so far and a third meeting due in November at Jacobabad was reportedly deferred to December 28 (Friday) in Karachi. This meeting is also not being held. Enquiries made with the relevant quarters revealed that no date of meeting has been fixed as yet.

“The four groups formed in the first meeting of the NFC have not completed their work,” a well placed source confided, who said that there is absolutely no possibility of any NFC award in coming weeks.

The Sindh FC has so far held three meetings. The third meeting, held just before Eid, was asked to discuss the possibility of providing matching grants to those districts that were backward in delivery of social services.

An official document of Sindh government fears that the resource distribution arrangement between the provincial and the 16 district/city governments in Sindh will have to be on the basis of existing resources as the NFC award is not expected to be finalized before the end of December 2001.

The Sindh government now doubts the very sustainability of the 16 district/city governments in the province if fiscal decentralisation is taken up without adequate resources.

“Fragile financial position of the province would pose a serious challenge for the fiscal decentralisation,” an official document says which points out that at best it may result in a thin spread of resources between the provincial and the district governments “to the detriment of the future development of the province.”

“The present status of provincial finance is inadequate for the maintenance and operations of the existing services, making it difficult to meet the emerging needs,” the document says.

In the current fiscal year, the provincial government is handling Rs15 billion salary component of the budget. The non-salary component of Rs1.34 billion would have been handed over to the district governments had the Provincial Finance Commission finalised its resource distribution award.

The districts are reported to have been assigned only the Khushhal Pakistan programme while the Annual Development Programme (ADP) is being taken up by the line departments. The provincial government has for the first time indicated district wise allocation of development funds.

The terms of reference for the Provincial Finance Commission are: Expenditure requirements of provincial and district governments, quantum and formula of provincial transfers to the district governments, devolution of provincial taxes, correction of inter-regional disparities by means of equalisation grants from the provincial government, institutional arrangements and capacity building for financial management, accounting and auditing systems and working out a system for enforcing financial discipline at the provincial and district level.