7TH NFC AWARD - REVENUE SHARING FORMULA

PROF. DR. KHAWAJA AMJAD SAEED
(feedback@pgeconomist.com)

Mar
1 - 7, 2010

NATIONAL FINANCE COMMISSION AWARDS IN RETROSPECT
AWARD FOCUS
First 1974 Population was used as criterion for resource distribution among the provinces.
Second 1979 Not announced.
Third 1985 Not announced.
Fourth 1990 Divisible pool was expanded and special grants were also provided to the provinces. The provincesí right on net hydel profit, development surcharge on gas, and excise only on crude oil was also admitted in the award.
Fifth 1996 All taxes, royalties and development surcharges were included in the divisible pool.
Sixth 2000 No consensus formula was announced.
Seventh 2006 No consensus formula was announced. However, the President of Pakistan promulgated an Ordinance for resource distribution in 2006. Accordingly, the provincial share was revised upward 45% which would reach 50% with a subsequent increase of 1% per annum. Net proceeds equal to 1/6th of sales tax were given to the provinces to transfer it further to district government and cantonment boards with Punjab receiving 50%, Sindh 34.85%, NWFP 9.93% and Balochistan 5.2% shares. It was decided to distribute the remaining balance among the provinces on the basis of their respective population.

 


 

REVENUE SHARING FORMULA FOR 7TH NFC AWARD (YEAR 2009)

DISTRIBUTION ON THE BASIS OF POPULATION & WEIGHT COMPARISON

PROVINCE POPULATION %

WEIGHT AS BASIS OF ABOVE AWARD %

VARIATION %
1. Punjab 57.36 51.74 -5.62
2. Sindh 23.71 24.55 +0.84
3. NWFP 13.82 14.62 +0.88
4. Balochistan 5.11 9.09 +3.98
. 100.00 100.00 .

 


 

PROVINCE SHARE IN TERMS OF INDICATORS (IN PERCENTAGES)

INDICATOR WEIGHT PUNJAB SINDH NWFP BALOCHISTAN
Population share (SBP estimates) 82.0 57.36 23.71 13.82 5.11
Poverty/backwardness 10.3 23.16 23.41 27.82 25.61
Revenue generation/collection 5.0 44.00 50.00 5.00 1.00
Inverse population density (SBP estimates) 2.7 4.34 7.21 6.54 81.92
. 100.0 51.74 24.55 14.62 9.09