The government was severely criticised in the Senate where the PPP has a majority for not only presenting the budget without first negotiating the National Finance Commission Award (pending since 2015) but also the Sharif administration's penchant for validating statutory regulatory orders (SROs) and notifications issued by the Federal Board of Revenue (FBR) through the Finance Bill and not through legislation as required in the light of the verdict of the apex court.
The issue of NFC award revolves partly around the federal government's suggestion that with rising costs of security, borne by the centre and its shrinking revenue base post-2010 NFC award, provinces agree to an additional 3 percent to meet security-related costs relating to the China Pakistan Economic Corridor (CPEC) projects; in addition the centre also suggested an additional 4 percent for the development of Federally Administered Tribal Areas, Gilgit-Baltistan and Azad Jammu and Kashmir. While the general perception is that the provinces refused this suggestion yet the provinces have a different story to tell. One provincial representative stated that in the last NFC meeting held on December 19 last year provinces did not reject the government's suggestion for additional resources for security or development but had instead requested a detailed presentation on these two proposals. The federal government, however, did not provide the necessary details that would have enabled the provinces to take an informed decision on the matter and nor did it hold another NFC meeting to be scheduled sometime in January 2017 as promised by the Finance Minister.
A provincial representative for the NFC stated that delaying tactics were used by the Federal Finance Minister by constituting four working groups to carry out thematic sectoral studies whose output could not possibly relate to an NFC award. Another lamented that the Finance Minister has failed to meet his commitment to the NFC members made late last year that the ninth NFC award would be announced before the end of the fiscal year 2016-17. While there is a month to go before the end of the fiscal year yet the budget for 2017-18 has been announced and it claims that "the 9th NFC was constituted on 24th April 2015 and its first meeting was held on 28th April 2015, the 9th NFC in its first meeting constituted four working groups to undertake thematic studies to assist the commission to make its deliberations meaningful. The reports of Working Groups were presented and discussed in the meeting of the NFC held on 19.12.1016. The deliberations for the new NFC award are under active considerations. It is expected that the new NFC award will be announced as soon as consensus amongst all stakeholders is arrived." Most of these claims are being challenged by the provincial representatives for the NFC.
The failure to evolve a consensus is having a negative impact on provinces and as per the Finance Minister of Khyber Pakhtunkhwa Muzaffar Saeed any delay in the NFC award is detrimental to a provincial government acquiring soft loans from international financial institutions as they routinely assess a province's financing needs on its revenue expectations and NFC determines each province's revenue expectations.
To continue the practice of including FBR issued SROs and notifications in the Finance Bill in spite of a Supreme Court verdict is simply baffling as it is going to be struck down in any event. True that the Senate's recommendations on the Finance Bill are recommendatory and non-binding but one would hope that the Sharif administration begins to show respect for the House of the federation, with equal representation from all provinces, and desists from not only confrontational practices but also those that are simply not likely to be implemented by the courts.