Session Deferred on Sindh’s Request
The Centre postponed the inaugural meeting of the newly formed National Finance Commission (NFC) after Sindh’s request. The provincial government cited the approaching floods, saying precautionary measures were urgently needed. The meeting, earlier rescheduled from August 27 to August 29, will now be held later.
Composition of the 11th NFC
Constituted on August 22, the 11th NFC is chaired by Finance Minister Muhammad Aurangzeb. It includes four provincial finance ministers and four non-statutory members, one from each province. Its task is to recommend a fresh award for sharing federal divisible resources between the Centre and provinces.
Terms of Reference Defined
The NFC will decide on the distribution of five major tax categories listed under Article 160. These include income tax, sales tax on goods, export duties, excise duties, and other taxes notified by the president. It will also recommend borrowing powers and grants-in-aid between both tiers of government.
Centre Seeks Shared Responsibilities
The federal government wants provinces to share costs of natural calamities, healthcare programmes, dams, highways, and motorways. Islamabad also seeks to replace population-based allocations with performance indicators in social sectors, while stressing the activation of local governments.
Previous Awards and Failures
The 7th NFC award of 2009 increased provincial shares to 57.5pc, lasting 15 years despite a five-year mandate. Provinces, however, failed to meet commitments to enhance revenues by 0.5pc of GDP annually. The 9th and 10th NFCs remained ineffective due to political changes and lack of sustained dialogue.
Calls for Rebalancing Remain Unanswered
The finance ministry, IMF, and armed forces repeatedly urged rebalancing under the 7th NFC. Yet, consensus among all stakeholders has proven elusive. Meanwhile, the Centre compensated its shrinking share through petroleum levies and provincial cash balances. The 2009 award continues under annual extensions.
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Spectrum Auction, Satellite Internet, and Submarine Cables to Revolutionize Connectivity
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