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Provinces agree on resource distribution criteria

* Agree on multiple criteria for distribution of federal divisible pool

By Zakir Hassnain

PESHAWAR: The National Finance Commission (NFC) on Thursday achieved unprecedented consensus when all four provinces agreed on a multiple criteria for horizontal resource distribution.

The multiple criteria would be, however, separate from the population factor to be considered for resource allocation. The NFC meeting, held at the NWFP Governor’s House, discussed both the vertical and horizontal distribution formulae in detail and also considered several other mechanisms for resource distribution from the divisible pool.

The distribution of funds among the Centre and the federating units will be based on the vertical distribution, while fund distribution among the provinces will be based on the horizontal mechanism.

“The meeting was held in an accommodative atmosphere and all provinces presented their viewpoints and considerable progress was made on the vertical and horizontal distribution,” Finance Minister Shaukat Tareen told reporters after the meeting. Tareen said the two sub-committees, formed to devise formulae for vertical and horizontal resource distribution, would submit their drafts on all issues at the NFC meeting in Karachi on November 18 and 19 and a final decision would be made.

“The federation and the federating units have to generate as much revenue as possible to ensure development,” the finance minister said. Tareen said the provinces would be given their constitutional rights and due share from tax revenues to improve their incomes. “If the provinces are happy, the Centre will be happy,” he said. The finance minister said the attitude of the provinces towards other factors or areas for resource distribution, in addition to the population factor, was possible.

However, he added, there was a difference of opinion on some issues that could be resolved in the upcoming meetings. Tareen said the provinces were currently getting 50 percent from the vertical pool that could be enhanced to between 52 and 60 percent. He said all provinces had agreed to attribute the cost of war, including losses acts of terrorism, to the horizontal pool and the affected provinces would be paid after proposals in this regard are taken up.

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