By Engineer Hassan Ali Shah, DGIPR
Introduction
The National Finance Commission (NFC) Award is a critical mechanism in Pakistan’s fiscal federalism, designed to ensure that the resources collected by the federal government are distributed equitably among the provinces. The objective of the NFC Award is to provide provinces with the financial resources they need to fulfill their constitutional responsibilities, such as health, education, and infrastructure development.
For the province of Khyber Pakhtunkhwa (KP), the NFC Award holds significant importance. It is a tool that directly affects the province’s ability to meet the growing demands of its population, improve public services, and enhance overall development. However, despite the intent of the NFC Award, Khyber Pakhtunkhwa has been consistently subjected to an unjust and inequitable distribution of resources, which has hindered its progress.
In this article, we will examine the NFC Award, its historical context, and how Khyber Pakhtunkhwa has been treated unfairly by the federal government despite the promises made under the Award.
Background: The Need for Equitable Resource Distribution
Khyber Pakhtunkhwa has faced historical challenges, including its geographical location, socio-economic underdevelopment, and security concerns. The province, which has borne the brunt of militancy, natural disasters, and the influx of refugees, requires special attention in the resource distribution process. The NFC Award was designed to ensure that provinces with higher needs, like Khyber Pakhtunkhwa, receive a fair share of the national resources to address these challenges.
However, despite these pressing needs, Khyber Pakhtunkhwa continues to receive a disproportionately small share of the federal revenue, which has severely hampered its development and the provision of essential services to its citizens. This inequitable allocation is not only a violation of the constitutional framework but also a denial of justice to the people of Khyber Pakhtunkhwa.
The NFC Award: A Historical Perspective
The first National Finance Commission Award was established under the 1973 Constitution, which mandates that the federal government distribute its revenues among the provinces in a fair and just manner. Over the years, successive NFC Awards have sought to adjust the formula for resource distribution to reflect the changing needs of the provinces.
The 7th NFC Award, signed in 2009, marked a significant shift in the resource-sharing mechanism. The formula included factors such as population, poverty, and backwardness, aiming to ensure that provinces with higher needs received a more substantial share of the federal revenue. For Khyber Pakhtunkhwa, which has historically faced low levels of development, the introduction of these factors was seen as a positive step toward rectifying the imbalances in resource distribution.
The Injustice Faced by Khyber Pakhtunkhwa
While the 7th NFC Award was hailed as a progressive step towards equitable resource distribution, the reality has been far from satisfactory for Khyber Pakhtunkhwa. The province has consistently received a smaller share of the divisible pool compared to its needs and contributions.
Despite the inclusion of poverty and backwardness as criteria in the formula, Khyber Pakhtunkhwa’s share has remained insufficient to meet its development goals. The province’s share of the federal revenue has been less than other larger provinces, especially when considering its unique challenges, including the ongoing security situation, the integration of former FATA, and the high percentage of its population living below the poverty line.
The injustice is further compounded by the fact that Khyber Pakhtunkhwa has been excluded from the full benefits of the NFC Award due to delays in the implementation of the financial commitments made by the federal government. The federal government has failed to ensure timely and consistent allocations, leaving the province with insufficient resources to carry out critical development projects.
The Impact on Khyber Pakhtunkhwa’s Development
The underfunding of Khyber Pakhtunkhwa has had far-reaching consequences for the province’s development. Despite the promises made under the NFC Award, the lack of adequate resources has resulted in delayed infrastructure projects, insufficient healthcare and education services, and a lack of basic amenities in many parts of the province.
The people of Khyber Pakhtunkhwa have borne the brunt of this injustice. The province has a young and growing population that requires substantial investment in education, healthcare, and job creation. However, without adequate financial resources, the provincial government has been unable to fully meet these demands, leading to rising unemployment, poverty, and a lack of access to essential services.
Furthermore, the federal government’s failure to honour its commitments under the NFC Award has made it more difficult for Khyber Pakhtunkhwa to cope with the integration of former FATA. The merger of FATA with KP was a momentous step that required additional resources for infrastructure, governance, and social services. However, the promised resources to support this merger have not been fully allocated, leaving the province with the heavy burden of integrating these areas without sufficient support.
The Need for Justice: A Call for Fair Allocation
The government of Khyber Pakhtunkhwa firmly believes that the provincial share of the NFC Award must be based on fair and just criteria that take into account the unique challenges faced by the province. The current distribution does not adequately reflect the socio-economic realities of Khyber Pakhtunkhwa, and as such, it is a denial of justice to the people of the province.
Khyber Pakhtunkhwa’s government calls for a more equitable distribution of resources that considers the province’s high poverty levels, the challenges posed by the merger of FATA, and the ongoing security issues that continue to affect the province. The federal government must fulfil its constitutional obligation and ensure that Khyber Pakhtunkhwa receives its rightful share of the NFC Award.
Recommendations for Fair Resource Distribution
To address the ongoing injustice, Khyber Pakhtunkhwa calls for the following actions:
- Review the Resource Allocation Formula: The current formula for resource distribution must be reviewed to ensure that Khyber Pakhtunkhwa’s unique needs are adequately addressed. Special consideration must be given to the province’s poverty levels, security challenges, and the integration of former FATA.
- Timely and Consistent Allocations: The federal government must ensure that Khyber Pakhtunkhwa receives its share of the NFC Award in a timely and consistent manner. Delays in financial allocations only serve to exacerbate the province’s development challenges.
- Special Financial Support for FATA Integration: The federal government must fulfil its commitment to provide adequate financial resources to support the integration of FATA into Khyber Pakhtunkhwa. This is a critical step in ensuring that the people of FATA have access to the same level of services and development as other parts of the province.
Conclusion
The National Finance Commission Award is intended to be a tool for equitable resource distribution among Pakistan’s provinces. However, Khyber Pakhtunkhwa has long been subjected to an unfair and inadequate allocation of resources. Despite the promises made under the NFC Award, the federal government has failed to fulfil its constitutional obligations to ensure that Khyber Pakhtunkhwa receives a fair share of the divisible pool.
Khyber Pakhtunkhwa’s government urges the federal government to review the NFC formula and ensure that the province’s unique needs are taken into account in future allocations. Only by providing Khyber Pakhtunkhwa with the resources it needs can we ensure that the people of the province have access to the services and opportunities they deserve.