ISLAMABAD, Sept 4: The federal government has agreed, in principle, to increase the revenue share of the provinces from 37.5 per cent to about 42 per cent in the new National Finance Commission (NFC) award.

Official sources told Dawn here on Wednesday that certain “benchmarks” have been agreed upon between the centre and the provinces to increase the revenue share of the provinces.

Minister for Finance Shaukat Aziz would now preside over a meeting of all the four provincial finance ministers in Peshawar on Sept 15 to finalize all the details of the new NFC award.

Later, sources said that the new resource distribution formula between the federal government and the provinces and among the provinces will be sent to the president and provincial governors for final approval. Under the present resource distribution formula, centre retains 62.5 per cent share and 37.5 per cent are offered to the provinces. The government retains major share by saying that it has to look after the bigger issues like debt servicing and the defence expenditure.

The new NFC award will also include 2.5 per cent general sales tax (GST) income being offered to the provinces and more fresh grants and subventions.

“With the addition of 2.5 per cent GST income to provinces means the increase of revenue share for the provinces from 37.5 per cent to about 40.5 per cent which is expected to be further enhanced by another 1.5 per cent”, said a senior official of the ministry of finance.

When contacted he said that new resource distribution formula was being finalized on the basis of revenue collection as demanded by Sindh, backwardness as sought by NWFP and areawise as asked by Balochistan. Punjab is kept saying that the new formula should be carved out on the basis of population. “But let me tell you that Punjab has conceded a lot to arrive at some mutually acceptable new resource distribution formula”, he said.

Sources said that NWFP and Balochistan were already getting additional Rs3.9 billion and Rs4.8 billion respectively in the shape of subventions. They said now Sindh, NWFP and Balochistan will get more subventions in the new NFC award.

The finance minister has directed all the four provincial finance ministers to give their point of view in writing by 12th of this month so that certain consensus could be achieved in Sept 15 meeting at Peshawar.

Sources denied that the government did not want to finalize the new NFC award and wanted to leave the issue to the next government. “Of course there are political issues involved in the new award but we will resolve them”, a source said adding that the new award will be announced before elections.

“As more devolution takes places, the provinces will get more shares”, he said.