ISLAMABAD: The Khyber Pakhtu­nkhwa government failed to finalise the sixth Provincial Finance Commission (PFC) award over the last four years in spite of committing to doing so at the time of the passage of the Local Government Act (LGA) in 2013.

In the absence of the award, the PTI-led coalition government continues with the interim arrangement for the distribution of resources among 25 districts. The current practice only suits the powerful, elite districts at the cost of others.

The KP government has announced five PFC awards since 2002. The first three awards were of an interim nature for one year each. However, the fourth and fifth awards were announced for three years each and covered 2005-11.

An official source in the KP finance department said the provincial government is least interested in the finalisation of the much-awaited sixth PFC award as the interim arrangement gives more fiscal space for the ruling government to manoeuvre in the distribution of resources.

This is reflected in data that the share of 11 districts exceeds the actual development funds as per the interim formula. These districts are Peshawar, Mardan, Mansehra, Swat, Swabi, Charsadda, Abbottabad, Nowshera, Dir Lower, Haripur, and D.I. Khan.

The districts that did not even receive their due share as per the existing interim order were Tank, Hangu, Chitral, Battagram, Karak, Shangla, Buner, Lakki Marwat, Kohat, Dir Upper and Kohistan.

Under LGA 2013, the KP government gave assurance that 30 per cent of the province’s development budget would be distributed among its 25 districts.

In this regard, the only step the provincial government took was the notification for the composition of the PFC. The commission was tasked to come up with a new formula to ensure that development resources reached the less-developed districts equitably.

It is worth mentioning that for the first time in the composition of the commission, equal representation was given to the opposition through a transparent manner.

The official said an extensive exercise has already been carried out under the Sub-National Governance programme to design options for the PFC award. All these options with detailed workings were already submitted to the finance department, the official said. But these have been placed on the back burner, the official added.

Many options were devised for the distribution of resources under the proposed sixth PFC award, which was heavily based on the population criteria. For the first time, it was suggested that the horizontal distribution formula be changed to multiple criteria.

The official said five new options were given under the proposed working. The new parameters include revenue, area, inverse population density, compensation for terrorism and conflicts.

In the first three awards, the horizontal distribution formula was 50pc for population, 25pc for backwardness and 25pc for the lag in infrastructure. The next two awards witnessed slight changes.

Under the fourth and fifth awards, the weight of population was raised to

60pc, while that of backwardness and lag in infrastructure was reduced to 20pc each. This award has been operating since 2011.

Data shows that the major beneficiary of this formula is the district of Peshawar, followed by Mardan, Charsadda and Swat. The affected districts that received fewer resources are Tor Ghar, Tank, Hangu, Chitral, Malakand and Battagram.

Published in Dawn, December 31st, 2017