NFC award: CM Shah says Constitution doesn’t allow reduction in provincial share

Published March 16, 2024
Sindh Chief Minister Syed Murad Ali Shah talks to the media in Karachi on Saturday. — DawnNewsTV
Sindh Chief Minister Syed Murad Ali Shah talks to the media in Karachi on Saturday. — DawnNewsTV

Sindh Chief Minister Syed Murad Ali Shah on Saturday said the Constitution did not allow a reduction in the share of provinces in the National Finance Commission (NFC) award amid reports that the International Monetary Fund (IMF) was seeking a reassessment of the award.

Under the 7th NFC Award, the share of provinces in vertical distribution was increased from 49 per cent to 56pc during 2010-11 and 57.5pc during the remaining years of the award.

The traditional population-based criteria for the horizontal distribution of resources amongst the provinces was changed to a multiple-criteria formula. According to this criteria, 82pc distribution was made on population, 10.3pc on poverty and backwardness, 5pc revenue collection/generation, and 2.7pc on inverse population density.

Recently, there have been reports of the IMF asking Pakistan to reopen discussions on the NFC award, seeking to address the ongoing imbalance in the distribution of fiscal resources between federal and provincial governments.

The IMF reportedly emphasised the need to reassess the NFC award, citing disparities in resource allocation betw­een federal and provincial authorities.

Addressing the matter while talking to the media in Karachi today, Sindh CM Shah said the government could not reduce the allocation to the provinces in the NFC award due to IMF pressure. “It is written in the Constitution about the NFC award that the share of the provinces [in resources] cannot be reduced [but] it can be increased,” he added.

Shah said the government must have likely intimated the IMF about this, adding that he was not even sure if the reduction was a condition in the IMF talks or not since he was not part of them.

The chief minister said provinces were given additional responsibilities after the 18th Amendment and, thus, the NFC award should be changed accordingly to reflect them instead of continuing the 7th NFC Award.

He reiterated that it was the PPP and Sindh government’s demand from the federal government to bring in a new NFC award since the old no longer applied after the 18th Amendment.

Article 160 of the Constitution governs the NFC award. Section 3A of the article says: “The share of the provinces in each award of National Finance Commission shall not be less than the share given to the provinces in the previous award.”

In July 2020, the then-opposition had thwarted a move to amend the constitutional provision barring any reduction in the previous year’s share of the provinces in the NFC award, following a heated debate on the issue.

The house by a 25-17 majority vote had disallowed leave to introduce a bill seeking to amend Article 160 (3A) of the Constitution to Barrister Muhammad Ali Saif of the Muttahida Qaumi Movement-Pakistan.

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