Centre proposes forming National Security Fund from 3pc of divisible pool

ISLAMABAD: Federal Finance Minister Senator Ishaq Dar chaired the National Finance Commission (NFC) meeting and proposed to establish the National Security Fund (NSF) with three percent of the NFC divisible pool to cope with security challenges and to fight the war on terror.

Every year, out of the divisible pool meant for distribution of funds between the Centre and the four federating units, three percent will be kept in this NSF fund.

However, the establishment of the Fund would be finalised with the consultation of provinces, said Finance Minister Ishaq Dar while talking to the media after the National Finance Commission (NFC) meeting. He further said that according to the Constitution, no reduction could be made in the share of any province.

The divisible pool of the country for FY2016/17 is around Rs3.843 trillion, of which under the formula, 57.5 percent or Rs2.21 trillion has been allocated for the provinces, while 42.5 percent or Rs1.633 trillion for the Centre.

If the government starts deduction of three percent from the divisible pool, the amount for the current year would be around Rs115 billion.

Dr Kaiser Bengali, NFC member from Balochistan, when contacted, said from the divisible pool, one percent straight went to the Khyber Pakhtunkhwa government for the war on terror, and if this three percent more was deducted, it meant that out of 100 percent, only 96 percent would be divided between the Centre and the provinces.

He said that establishment of the National Security Fund (NSF) was proposed by the federal government in its study that it carried out last year. However, he said that the subject of the NSF would be discussed in upcoming meetings.

The commission received presentations from the four working groups which have been constituted to deliberate on specific areas and prepare recommendations for the 9th NFC Award: namely, resource mobilisation at federal and provincial level (Punjab), collection framework in Pakistan (Sindh), allocation efficiency and expenditure analysis at the provincial and federal level (KP) and rationalisation of subsidy and grants (federal government). The commission members appreciated the work done by the Working Groups which would provide a sound basis for the ongoing deliberations of the commission for the next NFC Award. 

The commission directed to update the reports of the Groups latest by December 10, 2016. The federal and provincial governments agreed to achieve the next Award at the earliest and meet regularly. In this regard, the NFC chairman and members agreed to meet during the third week of December for the next round of consultations.

Following the NFC meeting while talking to journalists, Ishaq Dar said that the NSF, if established, would only be used to meet security arrangements. However, he clarified that this was just a proposal not a decision.

He told the press that presently 28 civil armed wings of armed forces were working and 29 more wings would be established to meet security challenges. He further told that North Security Division was also being raised to meet security requirements of China Pakistan Economic Corridor (CPEC).

About the Punjab government’s claim on Ghazi Brotha royalty, Ishaq Dar told reporters that issue would be decided on the lines KP dispute with Ministry of Water and Power was resolved. “This is a constitutional right of the Punjab and we can’t deny it,” he said and added that the Punjab would not be given much or less than the criteria laid down in KP versus Ministry of Water and Power in hydel net profit case.

After the meeting, Finance Minister Ishaq Dar, Punjab Finance Minister Ayesha Ghaus Pasha and private members of Sindh, KP and Balochistan spoke to press and shared their views.

Responding to a question regarding increasing financial pressure on federal government which could result in decrease in provincial share in NFC, he said under constitution, decision taken under NFC could not be reversed but there were constitutional ways to meet federal government’s requirements and they would meet requirement only through constitutional way. The provinces from divisible pool could get 57.5 percent and it could not be decreased, Ishaq Dar stated.

About the federal government’s decision to write off Rs51 billion electricity bill which Sindh had to pay, he said this was a dispute between Ministry of Water and Power and Sindh government which had been pending for last six years. Now it had been resolved – the written off amount remained within the Pakistan and didn’t go India, Ishaq Dar replied. 

“Other provinces are resolving their differences on disputed electricity bill but Sindh didn’t resolve in last six years so it looked a big number. It means federal government has lessened its revenue and we are not worried about it, he said adding, “Smart electricity meters will be installed in Sindh in next three to four months then the issue of overbilling will be resolved forever.”

Senator Salim Mandaviwala told journalists that Sindh demanded powers to collect royalty on oil and gas production and was asking for jurisdiction over the collection of General Sales Tax (GST) on goods, as the GST on services was already being collected by the provinces. It also demanded that collection of the Capital Gains Tax should also be handed over to provinces as their record showed they had better recovery rate as compared to federal government. Then five percent excise duty should also be imposed on crude oil as was being collected on gas.

The sources told The News that Balochistan demanded at least 5 percent of all investments from China Pakistan Economic Corridor (CPEC), besides pushing its longstanding demand for more weightage for geographical area in the revenue-sharing arrangement with provinces. Qaiser Bengali representing Balochistan as private member told reporters that he agreed but Finance Minister Ishaq Dar had stated and hoped new NFC Award would be finalided soon.

KP Private Member Professor Ibrahim while talking to The news said his province wanted change in the revenue distribution formula among the provinces by reducing the weightage for population to 60pc, giving 15pc weightage to poverty and the remaining share to all other factors. Presently 82.5 percent weigtage given to population was too much, professor stated.