With the constitution of the 10th National Finance Commission (NFC) by the president of Pakistan, a new resource-sharing formula between the provinces and the centre is on the cards. Though it is called the 10th NFC, it is noteworthy that the Eight and the Ninth NFC Awards were just a continuation of the Seventh NFC Award delivered in 2010 during the PPP government. That was perhaps the best award since the inception of Pakistan, as it incorporated the recommendations made after the consensus of the 18th Amendment. It is unfortunate that in the 10 years since the Seventh NFC Award, the stakeholders have failed to improve it. By improvement we mean a better and improved formula where the concerns of all federating units are paid due attention and human development takes precedence over all other considerations. In the prevailing Covid-19 crisis, this dimension of human development has become even more imperative. As the new clauses introduced by the president are likely to set the agenda for deliberations, there appears to be a strong desire within the federal government to reformulate the award, not for human development but to meet its debt obligations.
The government has been on a borrowing spree ever since it came to power in 2018, even before Covid-19 hit the country. Now it is struggling immensely to meet its debt obligations. It has been a matter of grave concern that most of the funds of the federal government are spent on non-development expenses. After debt-servicing and defence, it hardly has any financial freedom to undertake other projects. The Covid-19 crisis and our inability to handle it properly has once again exposed our poorly funded health sector. We should be spending much more on our health and education rather than competing with our neighbours in non-development expenses that have been sapping the strength of our economy for decades. The federal government must not try to cut provincial shares to fill the financial gaps created by ill-planned policies and mismanagement. There are well-defined constitutional parametres in place that are part of the 18th Amendment.
There are clear outlines for all branches of the state to function in accordance with their own jurisdiction, and parliament is the only appropriate forum for any legislation that affects the constitution. The NFC is bound by constitutional rules and any Terms of Reference (ToR) that tend to violate the constitution will create more hurdles than harmony. In any case, the NFC has limited scope and is not a supra-constitutional body. Loss-making public-sector enterprises (PSEs) such as Pak Steel and PIA are the responsibility of the federal government and the provinces must not be burdened to share these losses. Let us hope that the new NFC Award is an improvement on the Seventh Award and does not result in even more regressive resource allocations.