11th NFC notified amid reports of plans for tweaks to last award

ISLAMABAD: President Asif Ali Zardari Friday constituted the much-awaited 11th National Finance Commission (NFC) Award with seven TORs for distribution of the net proceeds of taxes between the federation and the provinces.

Federal Minister for Finance and Revenue Muhammad Aurangzeb will be the chairman of the 9-member forum, while the finance ministers of provinces and one member from each province will be the members.

Fiscal federalism has become a hot topic in Pakistan in the context of increasing fiscal constraints faced by the federal government in the aftermath of 7th NFC Award whereby the federating units secured a major chunk of resources out of the Federal Divisible Pool (FDP) in the range of 57.5 percent.

In totality, the provinces got almost 62 percent share in the FDP after incorporation of subvention and grants on per annum basis.

A notification — issued by the Ministry of Finance in pursuance of Clause (1) of Article 160 of the Constitution, and in supersession of its Notification No. S.R.O. 635(1)/ 2020 dated the 21stJuly, 2020 — said the president was pleased to constitute the 11th National Finance Commission (NFC) with immediate effect, consisting of federal minister for finance, Punjab minister for finance, Sindh minister for finance, KP minister for finance, Balochistan finance minister, Punjab government member Nasir Mahmood Khosa, Sindh government member Dr. Asad Sayeed, KP government member Dr Musharraf Rasool, and Balochistan government member Farman Ullah.

In terms of clause (2) of Article 160 of the Constitution, the Terms of Reference for the 11thNFC are to make recommendations to the president for the distribution of the net proceeds of taxes between the federation and the provinces mentioned in clause (3) of Article 160 of the Constitution; the making grants-in-aid by the federal government to the provincial governments; the exercise by the federal government and the provincial governments, of the borrowing powers conferred by the Constitution; issues relating to the sharing of financial expense incurred or to be incurred by the federation in respect of subjects and matters falling within the domain of the provinces; issues related to the sharing of financial expense incurred or to be incurred by the federation or the provinces or both in respect of trans-provincial matters; issues related to financial expense for national projects to be shared by the federation and the provinces; and g) any other matter related to the finance referred to the Commission by the president.

The Finance Division shall, as per the Rules of Business, 1973, provide secretariat support to the Commission. The National Finance Commission was constituted vide Notification No. S.R.O. 635(1)/2020 dated the 21st July, 2020 shall stand dissolved with immediate effect. No. F. 2(1) NFC/2025.