Dr Qaisar Rashid<\/p>\n
Pakistan\u2019s former Finance Min\u00adister Dr Miftah Ismail is spear\u00adheading the case for revisiting (and reversing) the National Finance Commission (NFC) Award, the 7th one, to make it centre-friendly. Ismail has writ\u00adten a series of articles to vent his standpoint.
\nHis central point is this: \u201cThe root issue with our NFC Award is the fact that the federal government gets to keep less than Rs 40 for every Rs 100 of additional tax revenue. So, no matter how much taxes it raises, 60 percent goes to the provinces.\u201d This point is in reference to the division of the share of revenue between the Centre and provinces. That is, the provinces are now getting a 57.7 percent share. However, the Cen\u00adtre is getting currently 42.3 percent share. That is, the share of the prov\u00adinces is higher than the share of the Centre. Ismail wants to reverse the share in favour of the Centre.
\nTo support the central point, Ismail has raised several arguments. Six of them need to be mentioned here. First, federal expenditures are in\u00adcreasing fast in the area of pensions, which are also rising in the provinc\u00ades. In the coming eight years, pen\u00adsions would be a major liability of the Centre. Here, Ismail overlooks the fact that, in the federal budget for the financial year (2023-2024), out of a total of Rs 714 billion earmarked for pensions, just Rs 154 billion was related to civilian pensioners. The rest of Rs 560 billion was related to the defence pensioners. Some years before 2009, the head of defence pensions was credited to the civilian ledger. Consequently, there erupted discontentment, which added to the passing of the 7th NFC Award by con\u00adsensus on December 30, 2009, pro\u00adtected under the 18th Constitution\u00adal Amendment, 2010. Apparently, the provinces are ready to own only those pensions which are meant for retired civil servants.
\nSecond, as the provinces have not so far devolved power to the local governments, which were made by General Pervez Musharraf, the prov\u00adinces are not entitled to the devolu\u00adtion of funds from the Centre. This is a flawed argument. General Mush\u00adarraf\u2019s local government system of 2001 was based on the principle of city governance personifying the model of Karachi. The model weak\u00adened the provincial governments and undermined provincial auton\u00adomy. General Musharraf also fun\u00adnelled funds from the Centre to city governments, thereby bypassing the provincial governments and forging a nexus between the Centre and cit\u00adies. This state of affairs (tantamount to erecting a parallel system of gov\u00adernance and authority) remained unacceptable to the provinces, which asserted themselves through reinforcing provincial autonomy, enshrined in the 18th Amendment. Soon the provinces may legislate to amend the Musharraf\u2019s model of city governance, as per their needs.
\nThird, the federal government\u2019s responsibility for running FATA, Gil\u00adgit-Baltistan and Azad Jammu and Kashmir (AJK) is overburdening it with expenses. This is also a flawed argument. FATA stands merged with Khyber Pakhtunkhwa, which is grad\u00adually shouldering the responsibility for running the fused area. Both Gil\u00adgit-Baltistan and AJK have their own revenue collection systems, which need to be evolved further. Corrup\u00adtion has to be reduced and work cul\u00adture be introduced. The Centre may give grants to help them sustain, and not to subsidize their economies.
\nFourth, the federal government needs funds to run the Islamabad capital territory. This point cannot be an excuse. Just look at Islamabad, it is not a city anymore, it is swelling like a province. In a federation, the expanse of such a city-cum-province is difficult to sustain financially.
\nFifth, the revenue sources of the federal government are less than those of the provincial governments. For instance, \u201cprovincial sales tax on services is growing faster than the federal sales tax on goods\u201d. Certain\u00adly, this should be the case, and not an excuse to revisit the 7th NFC Award. The reason is that embodying the concept of federation, the 18th Amendment reduced the adminis\u00adtrative responsibilities of the Cen\u00adtre. Following it, ministries (except a few) should have shown up presence in the provinces and not at the Cen\u00adtre. With that, the Centre\u2019s low ex\u00adpenditure would match its reduced revenue sources. However, this could not happen. If the bureaucra\u00adcy is still sticking to Islamabad, it is not the fault of the provinces, which are reluctant to spare funds for the bureaucracy that ensconced itself in the capital. Further, after the 7th NFC Award, it was expected that the Cen\u00adtre would reduce its spending, but it did not do that. Hence, the public debt in the Centre kept on soaring.
\nSixth, the rising number of stunt\u00aded and wasted children necessitates the need for allocating more funds to the Centre which would take care of these children. This is another flawed argument. Refuge is sought in the malnourishment of children, without referring to the fact that overspending of the Centre on non-development projects has reduced funds available for nourishing and educating children in the domain of development projects. A relevant question is this: before 2010, why did the Centre fail to address the is\u00adsue of stunted and wasted children? Why is the issue important now, if not for achieving political mileage, to condemn the provinces? Never\u00adtheless, if provinces require it, they can own the responsibility of BISP.
\nGenerally speaking, many people in Pakistan find it difficult to under\u00adstand the concept of federation. It is the provinces that join hands to make a federation. It is the provinc\u00ades that construct a Centre and not vice versa. What power and revenue sources the Centre should hold are at the discretion of the provinces.
\nUnfortunately, the ongoing NFC de\u00adbate emanates from the attempt to find a solution in the given financial context, overlooking the fundamental concept of federation. Political auton\u00adomy alone means nothing without se\u00adcuring financial autonomy. Through the 7th NFC Award, the provinces said clearly: that the Centre must reduce its expenditure. To elaborate, the Cen\u00adtre has to shun the habit of spending more than it gets. The spending must be in line with the earnings.<\/p>\n
The writer is a freelance columnist. He can be reached at qaisarrashid@yahoo.com<\/p>\n","protected":false},"excerpt":{"rendered":"
Dr Qaisar Rashid Pakistan\u2019s former Finance Min\u00adister Dr Miftah Ismail is spear\u00adheading the case for revisiting (and reversing) the National Finance Commission (NFC) Award, the 7th one, to make it centre-friendly. Ismail has writ\u00adten a series of articles to vent his standpoint. His central point is this: \u201cThe root issue with our NFC Award is […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[1683],"class_list":{"0":"post-399108","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-article","7":"tag-dr-qaisar-rashid"},"yoast_head":"\n