DLP Report
PESHAWAR
The Khyber Pakhtunkhwa government has approached the Federal Constitutional Court, challenging the continued application of the 7th National Finance Commission (NFC) Award formula after the merger of the former Federally Administered Tribal Areas (FATA) with the province.
According to an official statement issued here on Monday, the provincial government has argued that the 25th Constitutional Amendment, enacted in 2018, fundamentally changed the province’s demographic, geographic and administrative profile, making a revision of its NFC share necessary under Article 160 of the Constitution.
The government contends that despite the merger of the former FATA, the NFC formula has continued to rely on pre-merger data, excluding the population, area and development needs of the newly merged districts from the calculation of the province’s share in the divisible pool.
The petition stated that the principle of fiscal federalism requires that when constitutional responsibilities are transferred, corresponding financial resources must also follow. According to the provincial government, retaining outdated data for resource distribution is inconsistent with the spirit of the Constitution and internationally recognised principles of public finance.
The KP government has clarified that it was not seeking a change in the existing NFC formula but wants the same formula to be applied in accordance with the constitutional realities created after the 25th Amendment. It argues that the province’s share should have been recalculated from May 31, 2018, the date on which the merger took effect.
Chief Minister Muhammad Sohail Afridi said the case was not merely about financial resources but concerned constitutional rights, federal obligations and the status of the merged districts. He said that since the people and territory of the former tribal areas had become part of KP under the Constitution, they could not be excluded from the province’s financial entitlements.
“The province is not seeking any favour or special concession; it is only asking for implementation of the existing constitutional framework according to the changed realities after the 25th Amendment,” the chief minister said.
The petition argued that the NFC was a dynamic constitutional mechanism and cannot remain disconnected from major changes in population, territory and financial responsibilities. It questions whether an old NFC award can continue indefinitely without fresh recommendations from a new commission despite significant constitutional changes.
The provincial government has estimated that failure to revise KP’s NFC share since the merger has resulted in a financial gap of around Rs964 billion, which, according to the petition, represents the province’s unpaid constitutional share due to the exclusion of merged districts from the calculations.
The government has also argued that Article 160 requires the National Finance Commission to be constituted every five years so that resource distribution can reflect changing constitutional, demographic, economic and development conditions. It maintains that prolonged reliance on the 7th NFC Award has created a constitutional and fiscal imbalance.
The petition seeks clarification on several constitutional questions, including whether the NFC is required to reassess resource distribution after major changes in provincial status and whether the federal government is constitutionally bound to advise the President to issue amendments or modifications to the NFC Order under Article 160(6).
KP has requested the court to declare that the President is constitutionally empowered and obligated to issue the necessary amendments to ensure implementation of the province’s revised share, while the federal government must provide the required advice.
The provincial government has further clarified that the petition is separate from the demand for additional development funds for merged districts, including the previously promised annual allocation of Rs100 billion or three per cent of the divisible pool. It said the present case relates only to KP’s constitutional share under the NFC framework.
The government said its move was aimed at strengthening cooperative federalism and ensuring that Pakistan’s fiscal system operates according to constitutional principles. It expressed hope that the court’s interpretation of Article 160 would provide guidance for the federation, provinces and future NFC commissions.
