FOR years, forces favouring a stronger centre have pushed for rolling back some aspects of the 18th Amendment to curtail provincial powers and revise the National Finance Commission in order to shore up the centre’s strained finances.

The debate — fuelled by Islamabad’s chronic fiscal stress — is sustained by the belief that reducing revenue transfers to the provinces would provide an easy, if contentious, fix to the federal government’s fiscal woes. It is argued that the centre has to bear major expenses such as debt payments, defence needs, large infrastructure development, subsidies, social protection, etc, while the provinces get the majority share from the federal divisible pool.

Many also say that the enhanced NFC transfers have lulled the provinces into a state of fiscal complacency, leading to weak revenue-generation efforts. There has also been criticism that the provinces spend the funds to gain political mileage for the ruling parties, instead of investing in the social sector or public service delivery.

It is against this background that PPP chairman Bilawal Bhutto-Zardari has demanded a new NFC award — in accordance with the 18th Amendment, which devolved several ministries, departments and functions from the centre to the provinces.

He said the previous award preceded the amendment, and that since devolution had increased the responsibilities of the provinces, they should have more resources. This implies a demand for further raising the provincial share from the divisible pool from the present 57.5pc. He also spoke about the deteriorating security situation in Balochistan to reinforce his case for a bigger provincial share from federal revenue transfers, and blamed the FBR’s incompetence for not collecting enough taxes to address federal fiscal woes, saying this burden could not be shared by the provinces.

Mr Bhutto-Zardari’s demand is consistent with his party’s politics: the PPP played a dominant role in both the 2009 NFC award and passage of the 18th Amendment, and deserves credit for resisting repeated attempts to reverse fiscal devolution and alter the existing revenue-sharing framework.

However, whatever differences of opinion there may be, there is no doubt that the NFC award does require an overhaul — not to shrink the provincial pie but to make the framework operate effectively and efficiently for citizens.

For this to happen, the centre and provinces must engage in meaningful discussions to devolve powers and transfer fiscal resources further down to the third tier of governance — the local governments. Equally important are changes in the formula for resource distribution among the provinces.

The disproportionate emphasis on population should be reduced in favour of indicators such as poverty, regional backwardness and disparities, and, more importantly, provincial revenue generation efforts to ensure quality public service delivery and promote more equitable and sustainable economic development.

Published in Dawn, August 14th, 2025