The disagreement between the federal government and the provinces over the distribution of net federal tax revenues this fiscal year hampered the presentation of the National Budget in Parliament for debate and approval. The centre-provinces controversy over the distribution of divisible resources is not a new phenomenon. This highly contentious issue dates back to the early years of independent Pakistan, when the former East Pakistan and West Pakistan were often at loggerheads over financial resources. This ultimately became one of the main factors driving Bengali nationalism to the point of no return.

The 18th Amendment was passed in April 2010. This paved the way for the 7th National Finance Commission (NFC) Award. The credit for this NFC Award goes to the post-Benazir regime of the Pakistan Peoples Party. The shares of the provinces and the federal government from the divisible pool of resources were fixed at 57.5 and 42.5 per cent, respectively. This distribution was made according to a multi-factor formula, with population accounting for 82 per cent, followed by poverty/backwardness (10.3), revenue collection (5), and population density (2.7).

Taking these criteria as the basis, the share of each province was fixed. Punjab received the major share of 51.74 per cent, followed by Sindh with 24.55 per cent. The shares of the smaller provinces, Khyber Pakhtunkhwa and Balochistan, were fixed at 14.62 and 9.09 per cent, respectively.

The centre and the provinces were to formulate their Public Sector Development Programmes (PSDPs) or Annual Development Plans in accordance with their net provincial tax revenues and shares from the central divisible pool as delineated above. It was believed that the chronic controversy over the distribution of resources had been resolved once and for all, and that there would be no opportunity for centrifugal forces to exploit such centre-province disputes to fuel separatism. However, our incompetence and extravagance returned........

© The Friday Times