THE NFC Award has long been in need of an overhaul. The government’s proposal to bring down the weightage of population in the distribution mechanism is a welcome one. For too long, the disproportionate emphasis on population size — an overwhelming 82pc of the formula — has incentivised unchecked population growth while no meaningful improvement is witnessed in public welfare, particularly health and education. A more balanced approach, which considers factors such as poverty, revenue generation and regional backwardness, is essential for equitable and sustainable development. Pakistan has one of the world’s highest population growth rates at 2.8pc and cannot afford a distribution system that encourages further expansion at the expense of progress. Our dilapidated health infrastructure highlights the failure of our approach. Instead of reinforcing an outdated model, a revised NFC formula must ensure that resources are allocated where they can yield the greatest impact.

While the need to disincentivise rapid population growth is undeniable, merely adjusting the NFC formula will not curb birth rates. Social determinants such as poverty, illiteracy and inadequate healthcare will need policy interventions. That said, reducing population weightage can impose fiscal discipline on provinces and compel them to expand their revenue base rather than solely relying on federal handouts. Critics may argue that changing the formula represents an attempt by the centre to claw back resources from provinces. However, one must also consider that a recalibrated NFC Award would reduce the financial burden on the centre to play a more effective role in national health and population policy. Moreover, as these pages have previously noted, provinces themselves would be willing to renegotiate provincial-sharing criteria. The desire for adjustment is not the issue. It is the government’s reluctance to convene comprehensive NFC talks since 2015. It is time for the centre and provinces to engage in meaningful dialogue to craft a fairer, more efficient resource distribution framework.

Published in Dawn, March 19th, 2025