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BR Research

Tenth National Finance Commission

Pakistan’s 10 th National Finance Commission (NFC) is not off to a great start. The ink on President Alvi’s notific
19 May 2020

Pakistan’s 10th National Finance Commission (NFC) is not off to a great start. The ink on President Alvi’s notification constituting the NFC had not even dried up that the battle lines were drawn, marked clearly with what seems to be irreconcilable differences.

For one, it does seem strange that Islamabad has tasked an advisor (Dr. Hafeez Shaikh) to represent the centre, constitutional position of which is uncertain at best, if not unacceptable.

If the PM himself were to lead the centre in addition to the presence of the advisor, then it would increase centre’s representation at the NFC. Granted that the NFC is a forum where majority decision is irrelevant, higher representation of any of the parties is not deemed judicious. Yet if the advisor is not made a part of the NFC, the PM alone may not be able to lead the discussion on fiscal affairs given his lack of subject matter expertise and day to day involvement.

The second bone of contention is the good old question of distribution. The NFC has been given additional terms of reference relating to the sharing of losses of federal state-owned enterprises, and the centre’s expenditure on security, natural disasters, and debt repayment. These are thorny issues responsible for the consistent delay or deadlock in the NFC since the passing of the 2010 award.

By making these a part of the terms of reference for the first time in the history of NFC, Islamabad has set itself up for inertia, instead of setting the ball in motion. Unsurprisingly, the move has begun to set up another political battle, which will turn out to be as futile as PTI’s obsession with corruption. (Read also: ‘NFC Award: deadlock or delay’ May 4, 2020 & NFC negotiations: round one, Feb 6, 2019)

There is no denying the need for Pakistan’s federating units to discuss important and long unresolved concerns relating to federalism; the list includes both areas of revenue and expenditure as well as governance. But the NFC is not the forum for it.

The NFC is envisioned to be a forum to distribute taxes and grant and discuss borrowing powers. The constitution’s Article 160 (2d) also allows the inclusion of “any other matter relating to finance referred to the Commission by the President.” But that does not mean that the NFC shall be given the mandate to thrash out agreements and decisions on the long pending laundry list of issues relating to Pakistan’s federalism.

There are limits to which the meaning of the word ‘finance’ in Article 160 (2d) can be stretched. Almost every item under the scope of federalism has fiscal implications. That does not mean that the country’s fate on those items be decided by behind-the-doors discussions of the NFC. There are other platforms where broader issues relating to Pakistan’s struggling federalism ought to have been raised by the PTI, even if settling those are no easy feat. The parliament, for example, is a nice place to visit and engage! (Read: Is strengthening of federation on PTI’s agenda? Jul 30, 2018)