ISLAMABAD: The federal government is all set to convene the maiden session of the National Finance Commission (NFC) meeting next month in order to make efforts for evolving a consensus on the fresh resource distribution formula among the Centre and provinces.
The federal government, in its preparatory proposal, was expected to take a stance based on evidence that the NFC resource distribution formula of 57.5 percent in favour of the provinces resulted in accumulation of total public debt as a percentage of GDP over the last 15 years. The Centre wants a reversal or burden sharing with the provinces and will strive to strike a consensus because no decision can be taken without evolving a consensus between the Centre and provinces.
The federal government has communicated to the provinces about convening of the NFC meeting on November 18, but it is not yet finalised. Earlier, the proposed date for holding the NFC meeting was November 10, 2025, but Sindh conveyed its non-availability, due to which the new date of November 18 was proposed by the Centre.
The federal government had re-constituted the 11th NFC in August 2025 and the government also convened the maiden session of the forum but Sindh and Punjab asked the Centre to postpone it owing to devastating floods. The Centre had proposed some changes in the NFC formula among the Centre and provinces.
According to the proposals, the revenue-sharing formula between the federation and provinces may be revised. The federal government is expected to request a reduction in the provincial share, which currently stands at 57.5 percent. If no consensus is reached, the government may consider introducing a 27th Constitutional Amendment to alter the formula.
Under the existing NFC Award, provinces receive 82 percent of resources based on population, a share likely to be revised downward. Other proposals include transferring the Benazir Income Support Programme (BISP) to provincial governments and allocating new weights for factors such as population density, tax performance, forest cover and geographic area. The Annual Development Programme (ADP) may be partially devolved to provinces. Under the new framework, provinces would be required to enhance their own revenue or contribute to federal expenditures.
