So far, the Frontier government has not finalised its strategy for the proposed NFC deliberations, but there is a consensus on how the national resources should be distributed.
Prime Minister Yousuf Raza Gilani has re-constituted the NFC for finalising the seventh award that is pending since 2002 because of a deadlock over the horizontal distribution of resources among the provinces.
The sixth NFC award, which is still in place, was announced by former president Pervez Musharraf in June 2006 after the provinces failed to reach a consensus over horizontal distribution formula. The former chief ministers of the four provinces had authorised the president to announce the award.
As per the sixth award, horizontal distribution of resources was made on the basis of population only, which benefited Punjab as it got 52.54 per cent of the total resources. Sindh’s share was 25.2 per cent, NWFP got 14.91 per cent and Balochistan received 7.35 per cent.
The provinces are sticking to their known stand, making the job of the negotiators difficult in reaching a consensus.
NWFP and Balochistan are demanding resource distribution from the federal divisible pool on multi-factorial formula, giving due weightage to poverty and infrastructure. Sindh wants its distribution on the basis of total revenue collected by the provinces, whereas Punjab sticks to population as the sole criterion.
Senator Muhammad Adeel, NWFP representative to the commission, believes a consensus has to be reached over the distribution of resources to end the sense of deprivation among the smaller federating units.
The national resources, in his view, cannot be distributed merely on the basis of population as there are various other factors such as poverty, infrastructure and now the impact of militancy, and all these have to be brought into consideration.
Mr Adeel says he will lobby for transferring 60 per cent of the resources from the federal divisible pool to provinces, which, he believes, is likely to create severe resistance from the federal government.
The provinces have long been demanding greater financial autonomy. In previous talks, the provinces had an agreement that half of the federal divisible pool should be given to the provinces.
The interim NFC award in June 2006 had raised provincial share in the divisible pool from 42.7 per cent to 45.33 per cent with a further one per cent increase each year so it should reach 50 per cent in five years.
Apart from pressing the demand for increasing provinces’ share in vertical distribution of resources, the Frontier government is also going to slightly modify its stance on horizontal distribution.
The Frontier province, in previous round of talks, had demanded 80 per cent weight for population, 19 per cent for backwardness and one per cent for inverse population density that was supported only by Balochistan.
The current geo-political situation in the NWFP and its adjoining tribal belt is going to dominate the NFC deliberations because the coalition government wants to incorporate the impacts of insurgency and militancy into the resource distribution formula.
Mr Adeel argues that the NWFP had been and was still bearing the brunt of international politics being played in this region whether it was Russian invasion in Afghanistan or now the war on terror, saying “Special interventions are needed to offset such impacts on NWFP.”
There has been an increase in subversive activities in NWFP since 2004. Militancy has spilled over from adjoining tribal areas to the settled parts of the province, which has badly shaken its already fragile economy, resulting in closure of business and rendering thousands of people jobless, he laments. He says, “this factor has to be taken into account in the next NFC award.”
To give due weightage to poverty, infrastructure and industrial base are other factors, which, according to Mr Adeel, will be discussed in the next NFC parleys and NWFP will strive to convince other provinces over it.
Socio-economic indicators place NWFP as the poorest province because of higher incidence of poverty both in rural and urban areas. According to the World Bank, poverty headcount for NWFP is 46 per cent as compared to 37 per cent for Pakistan in 2001-02.
Only 40 per cent adults in the province are literate, whereas half of its population does not have access to safe drinking water. This justifies the provincial government’s stand for channeling greater financial resources from centre to the province.
Mr Adeel argues that Punjab and Sindh, being comparatively developed provinces, have to soften their stances. Their demands have no rational and it will further add to regional imbalances.
Punjab sticks to population as the sole criterion for distribution of national resources, which, Mr Adeel believes, is a self-contradictory demand. “On the one hand we are advised to control population; while on the other it is made the basis for the distribution of national resources,” he argues.
Similarly, Sindh stands for distribution of resources on the basis of revenue collection which is also not justified as its tax collection is mainly due to the seaport, which serves as transit hub for the whole country and not for Sindh alone.
The consensus, in his views, on a multi-factorial formula has to be achieved for which the big provinces have to show flexibility in their demands to ensure fair distribution of national wealth.