Article 5, Charter of Democracy: Provincial Consent and Consensus: In the spirit of Charter of Democracy and the PPP Manifesto, President Asif Ali Zardari re-constituted the National Finance Commission (NFC) on July 24, 2009. Authoritarian regimes had accentuated the horizontal and vertical imbalances over the years.
However, President Asif Ali Zardari's policy resolve to address these imbalances was translated into reality when the Seventh NFC Award was signed in Balochistan's port-city Gwadar on December 30, 2009. The signing ceremony was presided over by Prime Minister Yousuf Raza Gilani, and attended by the Cabinet Chief Ministers of all four provinces.
On March 16, 2010, the President of Pakistan Asif Ali Zardari signed and stamped the Award at a ceremony in the Presidency, which was attended, among others, by Prime Minister Yousuf Raza Gilani, Federal and Provincial Ministers, three provincial governors, and the four chief ministers.
The selection of Gwadar for the initial signing the NFC Award was symbolic and meant to express solidarity with the struggle of the Baloch people who have suffered a lot under the last authoritarian regime. The presence of Pakistan's democratic leadership in Gwadar was historic in a way to assure the Baloch people that the State of Pakistan under the democratic leadership has been transformed from a callous alien to a caring mother. It has been widely recognised that the hammering out of a consensus among the Centre and the provinces on the Seventh National Finance Commission award is a major achievement and a positive event for those who believe that the future of a vibrant Pakistan lies in a democratic federation.
Under the new NFC Award, the Federation has sacrificed its chunk of share along with reduction in collection charges from five to one percent. The Federation has slashed its 52.5 percent stake to 44 percent in this award, and if we include four percent point reduction in collection charges, the sacrifice is even greater. It is, indeed, the first NFC Award with a new national spirit to accommodate the demands of the smaller provinces.
The NFC Award 2009 has been widely appreciated by cross-sections of society, both domestic and international. It has been interpreted as a 'victory of democracy' and 'fruit of reconciliation'. Independent analysts and political parties have congratulated the People's Government on arriving at a consensus NFC Award after a long spell of 19 years.
Economic experts have observed that the Seventh NFC Award has laid down the firm foundations for 'fiscal federalism' in Pakistan. Former Chairman of NFC Award, Shaukat Tarin, termed it as 'a giant leap towards financial autonomy of provinces'.
Revenue Sharing Formula for 7th NFC Award (2009)
Percent share of provinces in terms of indicators
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Indicators Weight Punjab Sindh NWFP Balochistan
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Population share (SBP estimates)* 82.0 57.36 23.71 13.82 5.11
Poverty/backwardness** 10.3 23.16 23.41 27.82 25.61
Revenue generation/collection** 5.0 44.00 50.0 5.0 1.0
Inverse population density (SBP estimates)* 2.7 4.34 7.21 6.54 81.92
Total share 100.0 51.74 24.55 14.62 9.09
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-- Province-wise distribution of population and inverse population density is estimated on the base of data obtained from Pakistan Statistical Year Book 2008 published by Federal Bureau of Statistics Islamabad.
-- Distribution of Poverty/backwardness and Revenue generation/collection are taken from Daily The News, December 14 2009.
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