Given the lingering demand of federating units for greater financial autonomy a way forward is in sight with Islamabad said to be agreeing to give them around 55 percent share of resources in the Federal Divisible Pool (FDP). It may go still higher with federal government accepting the provinces' demand for reduction in collection charges.
But that is a minor breakthrough; the major breakthrough is the acceptance by the provinces, particularly Punjab, of a multi-criteria basis for horizontal distribution between the provinces. The daunting task before the National Finance Commission now is securing some kind of consensus on distribution on the basis of each criterion among the provinces.
The issue of horizontal distribution of resources has become a moot point, more now than ever before for the reawakening of ubiquitous demand for greater provincial autonomy in the wake of revival of democratic order in the country. Since the secession of East Pakistan the criterion for province-wise allocation was population based; that is no more acceptable to Sindh, NWFP and Balochistan.
New realities have unfolded, generating demand for a multi-factor criterion approach towards distribution of FDP among the provinces. Take the case of Balochistan, its share in the FDP is very little because its population is much smaller than the other three provinces. But it is a huge landmass and its population is scattered all over the place stretching very thin the province's meagre resources.
The NWFP is presently facing a situation of war, which has caused massive damage to its infrastructure. It needs extensive additional allocations to rebuild. And Sindh of course is the largest collection centre for the national exchequer. It wants that the point of collection should be one of the benchmarks for the NFC Award, in addition to incidence of poverty, backwardness and other socio-economic parameters.
But how one can trivialise the Punjab's case that the horizontal distribution should be population-specific - for, individual is the focal point of democracy. But then wouldn't such an argument tend to suggest that bigger the population the better when already the rate of population growth is alarmingly high. The challenge before the National Finance Commission is indeed daunting for there is no set formula to deal with such a complicated situation.
The way out of this is intensive interaction between the four stakeholders in an ambience of provincial harmony. Let each province come up with its own perceived criterion. Then all the criteria are added and percentages allocated to each criterion following mutual discussions and debates. For instance, it should be figured out how much of the FDP should go towards elimination of poverty, irrespective of incidence of poverty anywhere.
Such an exercise would help reduce chances of bickering which always is pregnant with the danger of stalemate and possible postponement of the Award. No doubt clinching a consensual NFC Award has never been an easy task but the need for national unity was never as crucial as today. It is hoped each province is committed to national unity and if need be it would willingly round off some of the hard edges of its demands in the larger national interest.