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Friday, January 15, 2010

7Th National Finance Commission Award-2009 Gwadar. (2010-01)

7Th National Finance Commission Award-2009 Gwadar:- Commemorative Postage Stamp:- 11Th January 2010:-

Pakistan has a federal democratic form of Government having four provinces viz Balochistan, NEFP, Punjab and Sindh as federating units along with special areas which include Gilgit, Baltistan, FATA and AJK. Most of the revenues are collected by the center and then distributed vertically between the federal and provincial governments and horizontally amongst the provinces. The resource transfer paradigm has been a major bone of contention among the federation and the federating units.

Financial resources play a key role in development. Its judicious and equitable distribution is necessary to build up any under developed or under privileged areas. The current state of resources distribution has been evolved over a period of time and various improvements have been made in the resource sharing mechanism among the federal and provincial governments. In Pakistan fiscal federalism has always remained a focal issue of the federation. Out of all the seven Commissions (constituted after 1973 Constitution), only four have come up with additional parameters to distribute the resources among the federating units.

Under article 160 (1) of the 1973 Constitution, the NFC is to be set up at the intervals not exceeding five years. Its members are Federal Finance Minister (Chairman), Provincial Finance Minister and other concerning experts which the President may appoint after consultation with provincial governors [Constitution of Pakistan (1973)]. As per law, NFC is intended to have an amicable mechanism for resource sharing formula between the federation and federating units as well as amongst the provinces. The National Finance Commission (NFC) has undergone many changes and has dynamically grown to its present shape. The NFC is established by law for smooth and judicious re-distribution of resources collected by Center according to the needed goals for development of federation and the federating units. There have been three Awards (recommendations), in the last 34 years by the National Finance Commission.

The much awaited award was finalized in Lahore on 12, December 2009 and was inked by the members of the Commission in Gwadar. The historic signing ceremony of the 7th NFC Award was held in the sea port city of Gwadar on 30th December, 2009. The Prime Minister of Islamic Republic of Pakistan Syed Yusuf Raza Gilani, Chief Ministers of the Provinces, Members of the Federal Cabinet, MNAs/Senators as well as General Public of Gwadar witnessed the historic event.

According to the new criteria set for the 7th NFC Award, 1% of the Divisible Pool taxes have been assigned to NWFP province fo War on Terror. The Federating units would receive 57.5% share of the balance Divisible Pool taxes, while 42.5% share would go to the Center. As per the horizontal distribution among the provinces, the Punjab would now get 51.74% , Sindh share will be 24.55%, NWFP will receive 14.62% share while Balochistan will get 9.09%. The criteria agreed upon includes population, backwardness poverty, revenue generation/collection and inverse population density. Population has been allocated weightage of 82% in the horizontal distribution formula, backwardness 10.3% revenue 5% and inverse population density 2.7%.

It was Shaheed Zulfiqar Ali Bhutto, Ex Prime Minister who had introduced bicameral democratic system, aimed at safeguarding the rights and interests of all the provinces, particularly the smaller ones. The consensus on the NFC Award is a monumental historic decision which would pave the way for more similar decisions. The provincial governments in Pakistan have agreed upon a new national formula, on reaching a financial consensus for the first time in 19 years. Resolving the most politicized issue with consensus is the result of democracy. The federal government wants to strengthen provinces. The Award distribution formula is historic and will definitely help in the unity of the federating units.

On 7th National Finance Commission Awards-2009 Gwadar, Pakistan Post is issuing a Commemorative Postage Stamp of Rs.8/- on 11the, January 2010.