Rising expenditure on war on terror: NFC proceedings begin with Dar''s daring disclosure

Secretary Finance Dr Waqar Masood has said that a sub-committee will carry out a detailed study on the issues of revenue distribution, expenditure, subsides and grants as well as debt between federal and provincial governments. Talking to media persons after the inaugural meeting of the 8th National Finance Commission (NFC), he said there is growing pressure on the federal government in relation to security-related expenditure.
He added that the participants of the commission were given a detailed briefing on revenue position and subsequent expenditure in this regard. He said that the 7th NFC Award will be ending on June 30 and the President is empowered to extend the Award. Chief Minister Balochistan said that there is a need to decrease the share of population in the NFC Award while the representative of Khyber Pakhtunkhwa averred that the province''s share of war on terror should be increased from one percent to 3 percent in the 8th NFC Award. He also presented a case for the payment of an ''outstanding'' Rs 500 billion against net hydel profit and Rs 119 billion for water.
NFC member of Punjab Dr Aisha Ghaus Pasha said that Punjab has given too many sacrifices and no one should expect more sacrifices from it. She added that provincial government requires resources to take care of growing manpower in the province. A statement issued by Finance Ministry after the meeting noted that the inaugural meeting of 9th National Finance Commission was held here on Tuesday. Finance Minister Ishaq Dar chaired the meeting which besides Dr Abdul Malik Baloch, Chief Minister, Balochistan and Finance Ministers of Punjab, Sindh and Khyber Pakhtunkhwa, was attended by Prof. Muhammad Ibrahim Khan (Khyber Pakhtunkhwa), Dr Kaiser Bengali (Balochistan) and Dr. Aisha Ghaus Pasha (Punjab), Federal Finance Secretary, Finance Secretaries of the Provinces and officials of NFC Secretariat.
Dar underlined the need for taking into account significant expenditures being borne on fighting war on terror, including a significant enhancement in capacity building of Law Enforcement Agencies in the aftermath of a Peshawar carnage. He also emphasised the need for improving overall resource-base, so that these rising expenditures can be met. He also stated that there is a need to carefully improve the efficiency and co-ordination of recently constituted Revenue Authorities, so that businesses are not adversely affected due to jurisdictional issues.
The participants were given a detailed presentation on the constitutional status, history and evolution of the NFCs. The meeting was informed that the NFCs constituted in 1974, 1990, 1995 and 2005 had presented their recommendations, however, the NFCs constituted in 1980, 1985 and 2000 could not make recommendations for an Award. The 8th NFC set up in 2010 during its tenure monitored implementation of the 7th NFC Award.
A brief assessment of the 7th NFC Award was also placed before the Commission. The Commission was informed that during the 7th NFC period, transfer of resources from Federation to provinces increased substantially. The transfer of resources from federation to provinces was evident from the fact that against Rs.677 billion transferred to Provinces in FY 2009-10 (Pre-NFC last financial year), during the current financial year, provinces will be receiving close to Rs.1600 billion (which is more than double). As a result the fiscal position of provinces had been strengthened as compared to the federal governments. The Commission was also informed that the 7th NFC Award projected increase in overall revenues to 15% of GDP, but in fact this appeared to have remained stagnant if not decreased.
Secretary Finance Dr Waqar Masood Khan gave an overview of macroeconomic indicators. He informed the meeting that all major indicators are positive and the economy of the country is on the right track. Inflation is dropping while remittances from overseas Pakistanis are increasing. All the participants appreciated the improved economic outlook and expressed support for bringing about further improvement in the economy.
The Chief Minister, Balochistan, Provincial Finance Ministers as well as the expert members spoke on the occasion and appreciated the visible turnaround in economy. They expressed the hope that the Commission will succeed in arriving at a consensus recommendation at the earliest. The Commission agreed to undertake a detailed background work in the following areas through constituting Sub-groups on resource Mobilisation at Federal & Provincial Level, devolved versus Integrated Tax Structure - Evolution of Tax Collection Framework in Pakistan and allocation efficiency and expenditures analysis at the Federal and Provincial level, rationalisation of subsidies and grants. The Sub-groups were asked to complete their work in the light of which further work of Commission will proceed.