KARACHI, Nov 8: The federal government is understood to have given approval to the name of Dr Gulfaraz Ahmad as non-statutory private member of Balochistan on the National Finance Commission, sources at the NFC directorate in Islamabad informed Dawn by telephone.
The sources said that now that President Pervez Musharraf was back home from his tour to China and South Korea, a formal notification for the finalization of the NFC should be issued any day and a meeting be called next week.
Other three private non-statutory members on the NFC are Abdul Karim Lodhi from Sindh, Saeed Ahmad Qureshi from Punjab and Dr Zubair from NWFP. The NFC is headed by the federal finance minister and all the four provincial finance ministers are its members. The federal finance secretary is expected to be the technical member, while finance departments of all the four provinces provide secretarial support to their respective finance ministers and non-statutory members in the deliberations. Overall there are 10 or 11 members on the NFC.
The NFC is being constituted after the Sindh Assembly passed unanimous resolutions on three occasions during the last one year to demand a new arrangement for resources distribution. The Balochistan and NWFP assemblies also made similar demands through their resolutions. Finally, the chief ministers of the four provinces also made a unanimous call last month for the formation of a new NFC. It left little choice for Prime Minister Mir Zafarullah Jamali to make an announcement a day before in his home district Dera Murad Jamali that the NFC is being constituted and its first meeting will be held before Eidul Fitr.
According to the sources, the terms of the NFC remained same as that of the last NFC which agreed on three main points but could not deliver award for want of time.
The last NFC agreed: (i) To retain population as the basis of resources distribution in the award. A firm pledge was given that other criteria for resources distribution will be considered in the NFC to be constituted after five years. (ii) Resources distribution between the federal and provincial governments was changed from 62.5 per cent for Islamabad and 37.5 per cent for provinces to 58 per cent for Islamabad and 42 per cent for provinces. (iii) An annual subvention pool of Rs20 billion will be created for providing special grants to Balochistan, NWFP and Sindh and (iv) provinces will continue to receive direct transfer shares from royalty and development surcharge on oil and gas.
The agreement on these vital issues was reached during a two-day crucial NFC meeting at Karachi on August 30-31 last year. Final endorsement came in mid-September when the NFC met at Lahore.
Two issues had remained unresolved for which a final session of the NFC was called at Peshawar in October. These issues were (i) distribution of about Rs32 billion pool money of 2.5 per cent sales tax among the provinces. This pool was formed after abolition of octroi and zila tax in 1998 and had to be distributed among the provinces on the basis of octroi collection in each province and on population basis and (ii) the NWFP share in hydel power income.
The previous NFC could never hold its meeting in October last year and had to be wound up without giving any award after the formation of elected governments in Islamabad and in the provinces.
But subsequent developments led towards the resolution of issue pertaining to Rs32 billion pool of 2.5 per cent sales tax. The Punjab government had claimed a collection of Rs9 billion octroi initially in 1999-2000. Its audited accounts showed a mere collection of Rs6.11 billion octroi in 1998, which brought down its share from 52.24 per cent to 42 per cent.
Sindh’s share is now being assessed at 46 per cent instead of 38.37 per cent fixed initially. Share ratios of Balochistan and NWFP also increased. There is now a demand from Sindh and other two provinces to compensate them for the losses they suffered since 1999-2000 till 2002-03 on account of this low share ratio.
The new NFC will have to take a decision on this issue. In case the political leadership of the four provinces agree to show consensus on areas agreed in the last NFC they may demand the implementation of award from 2001-02 when the 1997 NFC award expired in terms of constitution. It will be interesting to watch how the political leadership in Islamabad reacts if provinces demand the implementation of new NFC award since 2001-02.
What will remain a hurdle will be difficulties of Islamabad in tackling NWFP’s share in hydel profits. The MMA leadership will demand a price for resolution of this issue and this price may be big for Islamabad.