Revisiting NFC Award beating about the same bush.

Published date17 April 2024

With the reported advice of IMF to revisit the NFC (National Finance Commission) Award, certain quarters inclined towards centralisation have kick-started a new debate by trying to find faults in the award, considering it to be responsible for the deplorable fiscal situation in the country. Is that really so?

The fact remains that the Constitution of the Islamic Republic of Pakistan had been drafted and promulgated with consensus, carrying the collective wisdom of chosen representatives, and had long ago settled the administrative, legislative and financial authority of the Federation and federating units.

Most importantly, fiscal federalism has set arrangements for the collection and distribution of revenues accruing from different sources, including natural resources. However, through an organised campaign, attempts are being made to build public opinion against the NFC, trying to develop an impression as if NFC and the 18th Amendment are the causes of all Ills of the economy. Such attempts may upset the equilibrium, with snowball effects, and disastrous consequences.

The same elements are trying to make us believe that NFC Awards were the outcome of the 18th Amendment. But history of the awards is a testament to the fact that Article 160 of the Constitution of Pakistan regarding National Finance Commission was already there in the original Constitution of 1973. Date wise awards were: NFC, 1974 (1st award); NFC, 1979 (2nd NFC) 11th Feb, 1979 (Remained Inconclusive): NFC, 1985 (3rd NFC) (Remained Inconclusive); NFC, 1990 (4th NFC) 23rd July, 1990 1st July, 1991; NFC, 1995 (5th NFC) 23rd July, 1995 Reconstituted on 10th Dec, 1996 1st July, 1997. The 6th NFC was constituted on 22nd July 2000, re-constituted on 13th November 2003 by the President of Pakistan which could not reach a consensus decision and thus the matter was referred to the President of Pakistan for exercising his powers under Article 160 (6) of the Constitution. The President passed an order called 'Distribution of Revenues and Grants-in-Aid (Amendment) Order, 2006', President Order No.1 of 2006. The Award Issued under Article 160 (6) as Presidential Order No. 1 of 2006 revised vertical and horizontal distribution of divisible pool.

The historic 7th NFC Award was announced on 18th March 2010 resolving the longstanding issue of distribution of resources between the Federation and Provinces of Pakistan. In this Award, the share of provinces in vertical distribution was increased from 49% to...

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