The national pool

The attendees of the second meeting on the next National Finance Committee (NFC) award were in for a surprise         earlier this week       when the centre asked the provinces to give up three percent of the divisible tax pool for a National Security Fund. Finance Minister Ishaq Dar presented the proposal with three provincial ministers absent. It seems unlikely that the provinces are going to take the proposal easily. Every time the NFC Award has been announced, provinces have asked for a greater share of resources, which is a justified demand under the devolution of powers that was approved under the 18th    Amendment. While the government may have sound logic to offer, in terms of an increase in security expenditure, it is hard to see how the same security priorities did not exist when the aforementioned constitutional amendment was agreed to in 2010. This is clearly a case of turning the wheel back towards a stronger centre, and makes little sense when both the government and the security forces have declared victory in Operation Zarb-e-Azb time and again.

More talks are likely to occur, with provinces advocating a larger share in national tax revenue due to the additional responsibilities they have been charged with. The provision of security has always been a federal duty, which should be dealt with within the budget it already possesses. With the next NFC meeting set to take place in the third week of December, it is good to see the government taking the award seriously. The same cannot be said for the provinces, which kept their finance ministers away from the meeting for reasons that are not yet clear. Under the last NFC Award, 57.5 percent of the divisible pool is divided between the provinces. Eighty-two percent of this is distributed on the basis of population, which is something both the KP and Balochistan representatives asked to change. It would be better for the finance minister to avoid trying to take the national security fund contributions out of the NFC Award if he wishes to avoid a deadlock. The logic of the security fund was made even more flimsy when Dar brought up the need for CPEC security. The project has already received criticism for being Punjab-centric from the smaller provinces, who are unlikely to spare addition funds for it until their objections are removed. In fact, one could argue that provinces will need to create new resources for security under NAP, which is perhaps what the government’s priority should be. For now, the NFC Award committee will have to negotiate through a tedious process of demands and counter-demand. How much share should population get? Who should collect the GST? What percentage of revenue should be transferred to provinces? And should there be a National Security Fund? These are all topics that are likely to cause further controversy before they are resolved.