Pakistan is witnessing renewed tensions over the National Finance Commission (NFC) Award, with the Senate Standing Committee on Finance preparing to summon all four provincial finance ministers. This move comes amid growing discontent among provinces—particularly Khyber Pakhtunkhwa (KP)—over delays in updating the award and what they claim is an unfair distribution of federal funds.
According to inside sources, a crucial meeting of the Senate Standing Committee on Finance is expected to be held next week to address the issue. The aim is to bring federal and provincial representatives to the table and clarify the long-standing concerns regarding population-based resource distribution and the constitutional requirement to revise the NFC award every five years.
Federal Reluctance and Provincial Claims
Sources reveal that the central government is reportedly hesitant to allocate funds to departments that have already been devolved to provincial administrations under the 18th Amendment. This reluctance has deepened the trust deficit between the federation and the provinces.
The Khyber Pakhtunkhwa government has been especially vocal, arguing that their share of the NFC award must increase due to the demographic shift that followed the merger of the Federally Administered Tribal Areas (FATA) with the province. KP officials claim that the population surge post-merger justifies a larger slice of the federal resource pie.
Ali Amin Gandapur’s Warning and Political Pressure
The issue has taken a political turn with Khyber Pakhtunkhwa Chief Minister Ali Amin Gandapur stepping in forcefully. He has issued warnings that if the province’s rightful share is not ensured, he will march to Islamabad with the support of all provincial institutions, including the police. In a dramatic escalation, Gandapur has also written a letter to the President of Pakistan, requesting his intervention and demanding a review of the NFC award in light of KP’s changed population status.
Gandapur’s warnings signal the seriousness of the matter and reflect the broader frustration of the provincial leadership with the federal government’s approach toward resource allocation.
Understanding the NFC Award: Constitutional Mandate and Delays
The National Finance Commission Award is a constitutional mechanism designed to ensure equitable distribution of financial resources between the federal government and the provinces. According to the Constitution of Pakistan, a new NFC award must be finalized every five years to reflect demographic changes, economic needs, and development priorities across provinces.
However, the last NFC award was officially agreed upon in 2009, and since then, it has merely been extended annually without a comprehensive review. This has led to growing dissatisfaction among the provinces, who believe the current distribution formula no longer reflects the ground realities.
Current Allocation Formula: A Decade of Continuity Without Reform
Under the existing NFC formula:
- 57.5% of divisible federal resources are allocated to the provinces
- 42.5% are retained by the federal government
While this distribution once seemed fair, evolving challenges—such as increased populations, post-merger integration needs (especially in KP), and inflation—have made this outdated model less effective in addressing provincial demands.
The KP government is particularly affected, as it now bears additional financial responsibilities for the newly integrated tribal districts without a proportional increase in its share from the center.
Why the Delay? Political and Economic Concerns
Experts believe that the delay in finalizing a new NFC award is driven by multiple factors:
- Political disagreements between provinces and the federal government
- Economic challenges at the national level, including fiscal deficits
- Federal desire to retain more control over financial resources
- Security spending, which often diverts funds from development to defense
All these elements contribute to the inertia surrounding NFC updates, even though constitutional provisions mandate regular revision.
The Way Forward: Dialogue or Deadlock?
The upcoming Senate Standing Committee meeting is expected to serve as a crucial platform for dialogue. Bringing all four provincial finance ministers face-to-face with federal authorities could provide a much-needed opportunity to re-negotiate terms based on present realities.
However, if the meeting fails to produce concrete outcomes, it could lead to further protests, institutional pushback, and legal challenges. KP’s warning of mass mobilization signals a possible political crisis if their demands continue to go unheard.
Time for a Fair and Updated NFC Award
The growing NFC award dispute underscores the urgent need for an updated, transparent, and equitable financial distribution formula in Pakistan. With Khyber Pakhtunkhwa demanding justice based on population growth and added responsibilities post-FATA merger, the federal government must act swiftly.
Ignoring the constitutional requirement of reviewing the NFC award not only undermines provincial autonomy but also threatens national unity. All stakeholders must come together to ensure that Pakistan’s financial future is balanced, just, and inclusive for all provinces.
