Reformulating the NFC Award.

The 18th Amendment and the NFC Award have been a hot topic of debate in the country since the Federal Minister for Planning and Development Asad Umar called for revisiting this significant constitutional amendment after pointing out some flaws during a TV talk show last week. Responding quickly to this development, the opposition parties have warned the government against any move to reverse or repeal this historic amendment. At the moment, one can't precisely comment on this matter as the government has yet not officially proposed any amendment to the Constitution to alter or undo the 18th Amendment. It is advisable that the government must not indulge in unnecessary controversies regarding a constitutional amendment which essentially shapes the contours of federalism in Pakistan. However, there are many reasons why the government should carefully revisit the current disposition of the NFC Award and the dispersal of economic resources under this arrangement in the country.

The National Finance Commission (NFC) is an important peculiarity of the federation of Pakistan. It is formulated every five years and it is meant to distribute resources between the centre and provinces (vertical distribution), and among the four provinces (horizontal distribution). Under the last NFC Award, the centre gets 42.5 percent of the divisible pool while the remaining 57.5 percent is distributed among the provinces on the basis of multiple indicators. The formula includes the population (82 percent), poverty and backwardness (10.3 percent), revenue collection (5 percent), and inverse population density (2.7 percent). As the federal government is going to constitute the 10th NFC to finalise an award for the next five years, there should be some serious deliberations on the vertical distribution side with a view to enhancing the federal government's share in the divisible pool.

Pakistan's accumulated public debt has more than doubled during the last 5 years. The total debt and liabilities have crossed Rs41 trillion that are now almost 95 percent of the country's GDP. The federal government is obviously responsible for debt servicing and repayment of this massive debt. The government usually has to go from pillar to post to get its debt liabilities rescheduled from international lenders, particularly the IMF. Sometimes, while doing this, the country's economic sovereignty is also compromised. Similarly, over a period of time, there has also been a substantial...