Islamabad( The COW News Digital)The federal government has convened the 11th National Finance Commission (NFC) Award meeting on August 29, where critical discussions will take place on the distribution of financial resources between the federation and the provinces. The session will be chaired by Federal Finance Minister Muhammad Aurangzeb.
According to Finance Ministry sources, the federal government plans to highlight pressing fiscal challenges, including debt servicing, defense expenditure, counter-terrorism costs, and the financial burden of the Benazir Income Support Programme (BISP). Officials stress that provinces will be taken into confidence on these matters.
Historically, only four out of the ten previous NFC commissions have produced concrete outcomes. President Asif Zardari had recently constituted the 11th NFC, setting the stage for this upcoming meeting.
A major point of contention is likely to come from Khyber Pakhtunkhwa (KP), which has formally demanded changes in the existing resource distribution formula. Currently, 82% of resources are allocated based on population, while 10.6% are distributed on the basis of backwardness. KP Finance Minister Muzzammil Aslam, speaking at a seminar, argued that this model is outdated and inequitable. He called for reducing the weight of population and incorporating new criteria such as afforestation, environmental sustainability, and overall prosperity indices.
Federal Minister Ahsan Iqbal has previously suggested a similar revision, proposing to reduce the population share to 60%, while giving weight to climate change mitigation and forestation efforts in the new distribution model.
Under the existing NFC Award, 57.5% of divisible pool resources go to the provinces, with the remaining share allocated to the federal government. However, officials argue that after provinces receive their share, the federal government struggles to cover debt payments and defense needs.
KP has also voiced frustration over unfulfilled federal commitments, including funding for the Left Bank Canal project, while alleging that smaller provinces like KP and Balochistan are being sidelined in favor of Punjab and Sindh, especially in National Highway Authority (NHA) projects.
Meanwhile, business leaders such as Mian Anjum Nisar, former president of the Federation of Pakistan Chambers of Commerce and Industry, have stressed the need for investment in large dams to ensure water availability for agriculture. He argued that since agriculture falls under provincial jurisdiction, provinces must push for dam funding within the NFC framework.
The August 29 NFC session is expected to be heated, as provinces push for a more balanced and modernized formula that addresses climate challenges, equity, and development gaps, while the federation highlights its fiscal constraints.
