Horizontal distribution of resources: Centre, provinces agree in principle to evolve new formula

The Centre and all the provinces have agreed to adopt a new formula through which area-backwardness, collection and generation of taxes would be considered as criteria while distributing the national resources besides population, said Federal Finance Minister Shaukat Tareen talking to the media persons after conclusion of two-day meeting here on Tuesday.
Discussing the horizontal integration of distribution of the resources, all the provinces adopted elastic and positive attitude and proved that the central and the provincial governments were serious to resolve all issues amicably and with consensus, Tareen said.
He said since the subject was provincial therefore, a sub-committee of the commission comprising all the provincial finance secretaries with the federal finance secretary in chair would exact and determine weightage for every criterion and submit its findings with the commission before its next meeting scheduled to be held at Peshawar on October 29 and 30. He however assured that the federation would play a positive role to help the provinces amicably reach consensus.
He said as the first step the commission has recommended equalisation of Gas Development Surcharge (GDS), gas royalty and wellhead prices in order to remove the reservations of some provinces. Tareen said the commission has also considered and endorsed the recommendation of Balochistan regarding GDS and would recommend to the federal government to pay the GDS arrears to Balochistan from 2001-02 onward.
Moreover, on the demand of Balochistan, the commission would also recommend to the federal government to compensate Balochistan for its GDS arrears from 1960 to 2002 and include the same in the Balochistan package which would be announced by the Prime Minister in a couple of weeks.
The minister said after hearing the stance of Sindh, the Federation and an independent expert, the meeting agreed to surrender the General Sales Tax on Service and in Excise Mode to the provinces. While focusing on the vertical integration of the resources, the meeting agreed to work more as the conservative data in hand would result in increased deficit financing.
He asserted that a sub committee formulated to benchmark expenditures would work out a formula, which would help the federation to ascertain resources for its requirements and needs of the provinces. Formula for vertical integration would be presented in Peshawar moot. To a question, the minister said any delay in funds under the Kerry-Lugar Bill would not affect the external accounts, adding that the IMF loans were merely for increasing reserves only.