POLICY

 
1- NEXT BUDGET: HUMAN, PHYSICAL INFRASTRUCTURE TO BE FOCUSED
2-
6TH NFC AWARD
 
6TH NFC AWARD
PROVINCES SHARE TO BE INCREASED BY 50PC

 

All Chief Ministers agreed to the President's decision

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From SHAMIM AHMED RIZVI,
 Islamabad

June 06 - 12, 2005
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The Provincial Chief Ministers assisted by their Finance Ministers, attended a special meeting convened by President General Pervez Musharraf to resolve the deadlock over the 6th NFC Award, they finally reached a consensus to give full mandate to the President in making a decision on the issue.

The meeting which held at the Presidential House was also attended by the Prime Minister Shaukat Aziz and his advisor on Finance Dr. Salman Shah.

Expressing thanks to the participants for reposing confidence on his judgment the President has announced that he will make his decision within a couple of days and the judicious distribution of resources among the confederating units in the coming budget.

Prospects for a consensus on the 6th Award of the National Finance Commission (NFC) had brightened when the President General Pervez Musharraf declared that the share of the provinces in the federal pool of revenues should be increased to 50 percent. The ruling Pakistan Muslim League has also proposed that the population should not be the sole criterion for determining the share of the provinces in the divisible pool. Other factor such as poverty, backwardness and special needs of smaller provinces, particularly Balochistan should also be taken into consideration while fixing provincial shares in the divisible pool. Acceptance of these major demands of the small provinces it was expected, will lead to a consensus awards, which was to be announced before the budget.

The 6th NFC Award is being delayed for one or the other reasons for the last two years. Despite last minute intervention of Prime Minister Jamali in June last, the National Finance Commission failed to reach a consensus among the provinces compelling the authorities to request the President for extending the application of 5th Award for another (2004-05) year. The strict stance of Sindh and Punjab Chief Minister of revenue collection and population could not bring any results. Later then, Finance Minister Shaukat Aziz played his cards in the shrewdest manner by announcing to increase the provincial share from 37 to 47 percent against a demand of 50 percent. As a result the provinces were made to look responsible for the bickering over the formula of distribution of the divisible pool even though the federal government had not met their demand of 50:50 ratio in the distribution of proceeds between the center and the provinces

Earlier, the provinces other than Sindh had agreed to an 80 percent weight-age to be given to population while the remaining 20 percent to multiple factors minus revenue collection.

 

 

Sindh was, however, adamant that revenue collection should be given some weight-age also. Sindh Finance Minister Sardar Ahmad was quoted as saying after lengthy discussions that other provinces have refused to include revenue generation in the multi-factor formula. However, the situation took an ugly turn when Sindh's nominee on the NFC, Abdul Karim Lodhi resigned as a mark of protest. He alleged that the NFC was not allowed to operate in accordance with the constitutional provisions for the last many years.

Monday's meeting at the Presidential House could be termed as a serious attempt to resolve the issue prior to the budget 2005-06 due on June 6, as all the Chief Ministers have agreed on a single point that the President decision for distribution of resources from the divisible pool would be acceptable to all.

President Musharraf, while addressing the Chief Ministers and others said that all the provinces stand to gain from the recent economic turnaround. The allocations for development projects have registered a quantum leap. President said the provinces should avail this opportunity for an enhanced share, as the Federal Government was keen to give them additional resources. President said that judicious distribution of national resources amongst the provinces was unavoidable, especially to redress the sufferings on account of injustice in the past. For promoting an environment of harmony for development at an accelerated pace was inevitable to pass on the benefits across the country.

Prime Minister, in his remarks observed the government was committed to equitable distribution and pass on the benefits of economic gains to the common man. He said that substantial increase in the allocations for Federal Public Sector Development Program, this year were unprecedented. The Prime Minister observed that the launch of development projects would generate employment opportunities and thus contribute to poverty alleviation.

The provinces will see massive development activity and the benefits will go down to the people at the grassroots level through completion of development projects, he added.

Punjab Finance Minister Sardar Dareshak was optimistic that NFC issue would be resolved soon. "The President lent a sympathetic ear to the point of view of each province and assured that they would get due share from NFC award," he added.

However, identical views were expressed by the NWFP Finance Minister Sirajul Haq. He said that President who wisely intervened into the matter would resolve the controversy.