KARACHI, Oct 27: A number of questions are being asked about the government decision to put off the final meeting of the National Finance Commission (NFC) which was scheduled to be held on Friday (Oct 25) at Lahore.

After 27 months of the formation of the sixth National Finance Commission, it suddenly dawned upon the decision-makers in Islamabad that resource distribution formula between the federal and provincial governments should best be formulated by the elected government.

The NFC formation was notified in July 2000. Its formation was completed in December 2000 when all the four provinces nominated one statutory member each. It moved very slowly initially and could hold hardly three meetings in 2001. It picked up pace only in 2002 when four meetings were held in quick succession. President Gen Pervez Musharraf presided over one of these meetings and instructed quick finalization of the award.

The last NFC meeting has been cancelled with a statement from Finance Minister Shaukat Aziz that the next government should benefit from the spadework done by the sixth NFC team and work out a consensus formula.

The decision to put off the final session of the NFC has come as a big shock and disappointment for the Sindh government which was more than eager for award’s announcement before elections. The Sindh Finance Minister, Abdul Hafeez Sheikh, is not ready to talk on this issue. But there are people in Sindh secretariat who do not conceal their disappointment and one of them remarked rather loudly that “it is not for the respect of the elected government that the NFC award has been put off.”

He blamed bureaucrats in Islamabad and Lahore, who, according to him, were not happy on the setting up of a Rs20 billion subvention pool for Sindh, Balochistan and NWFP. The proposed distribution formula for Rs32 billion of 2.5 per cent GST among the provinces was also not being endorsed by the axis of Islamabad-Lahore bureaucrats.

Government circles estimate that Sindh’s share in the divisible pool should have been between Rs45 and Rs50 billion in the next fiscal year’s budget based on the new NFC formula as against Rs36 billion in the current fiscal year.

Hopes were also pinned on a significant increase in tax and non-tax revenue of the province. In short, the financial managers of Sindh were looking towards a beginning of a new era of clearing development backlog at a faster speed.

But an abrupt cancellation of the NFC meeting has brought to naught all its plans. The only relief obtained by Sindh is of about Rs600 million or so from the change in population ratio.

Sources in the Sindh government recall that the representatives of the Punjab government in the NFC remained hostile towards Sindh from the very beginning. This hostility became much more pronounced after the federal budget was announced in June in which the federal government’s development plan incorporated a few mega projects of Sindh on the interference of President Pervez Musharraf.

In the final rounds of NFC session (Aug 30 and 31 in Karachi and then mid September in Peshawar), the representatives of the Punjab government were said to have made reference to the allocation of relatively more development funds for Sindh in the current fiscal year’s budget.

Responding to this observation, the Sindh representatives proposed to take into account decades-long deprivation of Sindh rather than focussing on a single year allocation of funds.

The sources said the Sindh finance minister proposed the formation of a commission with Saeed Qureshi as its chairman to determine allocation of resources to all the four provinces during the last 30 years to judge which province had benefited most in all the NFC awards.