Ratio of distribution formula of Provincial Finance Commission (PFC) needs to be changed in the Second PFC Award from 80 percent based on population and 20 percent for undeveloped areas to 67:33, to cater to underdeveloped areas of the province.
Punjab Finance Minister Husnain Bahadur Dareshak said this, while talking to newsmen after the concluding session of a two-day workshop on "Concepts and practice of intergovernmental finance" here on Thursday
The workshop was organised by the Decentralisation Support Programme Punjab in collaboration with the Asian Development Bank (ADB).
The finance secretaries of all of the provinces, private members of PFC, senior officials of provincial local government departments and Nazimeen were also present in the workshop.
The minister said that change in formula would pose difficulties, as there was no reliable data of the underdeveloped areas. "Moreover, the data compiled by the Punjab Planning and Development Department was also incomplete, that was why it was laying heavy emphasis on "population-based" PFC distribution formula. However, he said, "I am hopeful that the distribution formula would change in the second PFC to advantage of the underdeveloped areas of the province."
He said similar formula could not be applied in the National Finance Commission (NFC), as its nature differs from the PFC. Meanwhile, the 6th NFC Award would be finalised by the next budget.
While addressing the audience, he said that the PFC, though still in a nascent state, have a vital function in the provincial support for local governments due to their role in determining formula based transfer to local governments.
He also said that the Punjab government recognises that the institutional development of the PFC would help them in performing their role of transfer of resources on time and in the process providing services at the grass roots level. "At the same time through transparency of provincial finances and transfer of resources to local governments the PFC would support political maturity at the local level. This would indeed place the local governments on financially stable footing," he added.
Earlier, Punjab Planning and Development Board Chairman Salman Ghani said that there was a delay in the full implementation of local government system and it would take time for them to mature. "The local governments has not fully built the capacity to handle projects independently, hence, both the federal and provincial governments were helping and guiding the local governments in various shapes, including through vertical projects," he added.
According to him, under the decentralisation process, the federal government's role was limited to sanctioning money, provincial governments acting as a monitoring institution, while the local governments become an implementing authority. This multifaceted system was widely supported by the political thinkers of the world.
He said that the local governments have been provided with extra grants and subsidies, especially in the education and health sectors, so that it could implement projects effectively.
Professor Roy Bahl, Dean of Economics and Public Administration of State University of Georgia, USA, and Musharraf Cyan, a public finance expert, gave lecturers to the participants on various issues pertaining to local government and its finances. Babar Yaqub, Project Director, Provincial Programme Support Office (PPSO) also spoke on the occasion.
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