7th NFC Award may be extended by one year

Seventh National Finance Commission (NFC) Award is likely to be extended by one year due to delay in mooting a proposal for the constitution of National Finance Commission, it was learnt. The Finance Minister recently sent the proposal to the President through Prime Minister for constitution of National Finance Commission and the President has yet to constitute the NFC. Sources stated that leave alone the approval, a meeting on NFC is highly unlikely before the budget, which means that federal and provincial budgets would be prepared and passed in line with the allocation of resources under the 7th NFC Award.
Qaiser Bengali, technical member of the NFC and advisor to Balochistan government, also stated that the award is going to be extended by one year and termed the delay in constitution of the new NFC as the primary reason for one year extension in the current award. Bengali said that federal government and provinces had reached an agreement on NFC in December 2009 but it was implemented from 1 July, 2010 simply because it was not possible for federal government and provinces to redo their budgets as per a new NFC. Moreover, he said that all the five finance ministers are busy in preparation of next fiscal year's budget and even a token meeting on NFC seems unlikely. He said the 7th NFC is going to expire on June 30, 2015 and new one would be due from July, 1 2015.
Saleem Mandviwala, former Finance Minister and now member of NFC nominated by Sindh government, said he would be taking up a host of issues in the NFC meeting after the budget. "There is no possibility of NFC meeting before the budget," he said adding that the first issue to be taken up by him would be delay in releases from divisible pool to the provinces. Mandviwala said that he would also take up 5 per cent sales tax imposed by the federal government on goods. He claimed that it was not the domain of federal government.
An official on condition of anonymity said experience of 7th NFC Award was not good for Finance Ministry which believes that the flow of resources has been skewed towards provinces. This may have been the reason that Finance Minister has reached a tacit understanding with provinces on generating budget surpluses to help federal government deal with the challenge of fiscal deficit against monetary incentives.