NFC controversy

09 Jun 2020

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The writer is a lawyer.
The writer is a lawyer.

THE 18th Amendment is considered to be the personification of the federal form of government as it stands today in Pakistan. In much the same way, the National Finance Commission is its embodiment in fiscal terms.

The NFC is a body constituted in terms of Article 160 of the Constitution. It serves as the bridge between the federation and the provinces and inter se the provinces in relation to the distribution of financial resources. Its mandate is to determine the chunk of tax revenue to be included in the divisible pool, the vertical distribution of funds between the federation and provinces, and the horizontal distribution inter se the provinces.

As the forum is of utmost importance in addressing the financial concerns of the federation and provinces, it has always been imperative that the creation of such commission be inclusive and strictly in line with the Constitution.

Unfortunately, the recent notification issued by the president, by which the 10th NFC was constituted, leaves a lot to be desired. In fact, despite having been issued with much fanfare, the notification seems to have created more controversy than goodwill.

Did the president act on his own, or on the PM’s advice?

Firstly, at the very onset, there is ambiguity as to whether the president had acted on his own or on the advice of the prime minister. The notification appears to be silent on this matter, and it has been conclusively held by the Supreme Court already, the president is bound to act on the advice of the prime minister, who in turn may only render such advice upon the matter being put before and approved by the cabinet.

Secondly, there are a total of 11 persons notified to be a part of commission proceedings, with the first five members being the respective finance ministers for the provinces and the federation. The remaining six are non-statutory members who could only have been notified by the president upon consultation with the governors of the provinces, who in turn, could only have acted upon the advice of the cabinet or chief minister of the respective province.

However, no indication of direct and effective consultation is apparent. In fact, curiously, if the objections of the Sindh government are anything to go by, the president has appointed the adviser to the prime minister on finance and revenue as a member, and the finance secretary, government of Pakistan, as an ‘official expert’, without effective and direct consultation of any kind. In fact, Article 160 does not appear to even recognise or acknowledge the role of an ‘official expert’, a concept which appears to be entirely alien to the constitutional set-up in question.

Thirdly, the president has attempted to bring within the scope of the NFC matters which are clearly beyond its jurisdiction. For example, the president has defined as a term of reference the issue of ‘public debt’ and its repayment. However, the said subject matter is covered by Entry No. 8 of Part II of the Federal Legislative List, which clearly states that the Council of Common Interests is the appropriate forum in which discussions, recommendations, and policy decisions regarding public debt may be formulated, whereas parliament retains unfettered jurisdiction to pass any required legislation in relation to the same in terms of Entry No. 10 of Part I of the Federal Legislative List.

Furthermore, and amongst other things, the president has also sought that the commission recommend an allocation of resources/ budget for Azad Jammu & Kashmir and Gilgit-Baltistan, whereas in terms of the Constitution, the assessment and allocation of resources for the same is exclusively within the domain of the federation and parliament. On the whole, such matters do not appear to fall within its domain, and in defining terms of reference in relation thereto, the president appears to be in violation of clear constitutional provisions.

Finally, delegating pivotal positions within the commission to non-elected members appears to be in violation of the letter and spirit of Article 160 as well. The commission embodies the will of the federation and provinces, as can only be advanced by its elected representatives, and as such, it is imperative that such elected officials convene and chair the meetings. Hence, in the absence of the federation’s finance minister, in delegating the chair of the commission to the prime minister’s adviser on finance and revenue, the president appears to have erred.

In light of the above, it is clear that the notified commission has given rise to varying legal impediments which may handicap and impinge upon its ability to perform its functions. As the commission is important for maintaining cordial relations between the federation and provinces, the president would do well to revisit and realign it in line with the Constitution.

The writer is a lawyer.

basil.malik@rmaco.com.pk

Twitter: @basilnabi

Published in Dawn, June 9th, 2020