PESHAWAR: The Khyber Pakhtunkhwa government is set to raise issues of historical lag of development of tribal districts and backwardness of the region at the recently-constituted 11th National Finance Commission (NFC).

On August 22, federal government notified the 11th NFC to draw up a new award for sharing of federal divisible resources among the Centre and provinces.

Dr Musharraf Rasool Cyan, the member of NFC from KP, told Dawn that following merger of erstwhile Fata into KP, the province had not received share of the region in funds under 7th NFC, which was currently effective.

“We have to correct this,” he said. He said that getting due share of merged districts was their first priority. Besides, he said, the region was also underinvested as Fata for about 70 years and its per capita investment was less than half of the rest of the country.

Member of commission blames FBR for Centre’s resource crisis

Dr Cyan said that investment in merged districts was in the interest of everyone as it would lead to peace and security in the region as well as the rest of the country. He said that special development package on the pattern of Aghaz Tahaffuz Huqooq Balochistan could be put in place for merged districts. He said that they initially worked out Rs1.2 trillion funding shortage for merged districts.

To a question regarding calls for curtailing province’s share in the upcoming NFC, He said that all parties would place their proposals before NFC, which had to decide on them through consensus.

However, Dr Musharraf said that the argument that the Centre was left with too little after transferring most of the resources to the province had another dimension, which was failure of Federal Board of Revenue to meet its targets. “If FBR manages to improve its tax collection, there would be no issue of less resources for federal government,” he added.

The adviser to chief minister on finance, Muzammil Aslam, told Dawn that from 7th NFC to 10th NFC, vertical and horizontal distribution remained intact despite 25th Amendment (merger of Fata into KP).

He said that it was need of the hour to align NFC with the change in population, geography and backwardness.

He said that Chief Minister Ali Amin Khan Gandapur for many months had been raising the issue and demanding re-profiling the existing NFC with new realities and for that purpose the province had organised a national level seminar in Islamabad in the current year.

He said that Mr Gandapur had also raised the NFC Award issue in Council of Common Interests and National Economic Council where the prime minister promised to call meeting of NFC in August.

Earlier in January this year, the KP government had informed the federal government that it wouldn’t accept any extension of the 7th NFC without making the funding for tribal districts part of the province’s share in federal divisible pool.

The KP government had requested Federal Finance Minister Mohammad Aurangzeb to ensure that any future iteration of NFC arrangements should duly reflect the post-merger province and include its complete geography and population.

In addition to this, the KP government had also pointed out that from 2019 to 2024, the federal government had paid the province its share in NFC Award at a rate of 14.62 per cent, amounting to Rs3.046 trillion. However, based on the revised NFC share of 19.64 per cent, its share amounted to Rs4.092 trillion, resulting in a shortfall of Rs1.046 trillion.

The KP government was of view that after accounting for federal grants of Rs437 billion provided for tribal districts during this period, the net shortfall exceeded Rs609 billion over the last six years.

Besides, there was also a cumulative shortfall of Rs568 billion under Accelerated Implementation Programme against the federal commitment of annual Rs100 billion over 10 years as part of ‘tribal decade strategy’ to bridge development disparities in merged districts.

Similarly, since 2019, the KP government had spent Rs372 billion on operational expenditures in the region, while the federal government had released Rs331 billion, leaving a deficit of Rs41.4 billion.

Published in Dawn, August 25th, 2025