The federal government should depoliticise the National Finance Commission (NFC) award by appointing technocrats rather than politicians and revising the distribution formula, said noted economist Dr Ashfaque Hassan Khan.
The economist made these recommendations in his report “NFC Award and Population: Has It Distorted Pakistan’s Population?”
Currently, the President of Pakistan constitutes a Finance Commission for five five-year terms under Article 180 of the Constitution. The President may constitute the Commission consisting of non-political figures,“ the report states.
The proposed Commission will have a secretariat with professional and administrative staff to provide research and secretarial assistance to the chairperson and members of the Commission.
Weightage of population in NFC
“Once the Commission is constituted by the President, the government may provide the Terms of Reference (TOR) to the Finance Commission at the beginning of the Commission, based on the priorities of the government,” read the report.
Moreover, the Commission will have the authority to change the parameters as well as their weights for resource distribution between the federal and provincial governments and among the provinces to complete their assignments according to the TOR provided by the government, it added.
Dr. Ashfaque’s report highlights several flaws in the current NFC setup, particularly criticising the overreliance on population as the dominant criterion for resource allocation.
The report noted that from 1974 to 2009, population was the sole criterion, i.e. 100%, used to allocate funds among provinces.
However, the 7th NFC Award of 2010 introduced multiple criteria including, poverty/backwardness, revenue collection and inverse population density, but population remained the dominant indicator with 82% weight.
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The report proposed that the weight of the population is reduced to 25%, with 15% weightage given to the population of the 1998 census and 10% to the population of the 2023 census of each province.
Dr Ashfaque suggested using the income gap as the key indicator for the NFC award, with a 30% weight.
“The larger the income gap of the province with the richest province, the more resources are provided to the provinces to minimise the gap.”
