How will the PML-N government handle it?
The government faces the challenging task of formulating a new NFC Award by the middle of this year. The last Award was the result of a landmark consensus and was announced after a gap of 19 years of bickering. The consensus on the 7th NFC Award included major adjustments in vertical as well as horizontal distributions between the centre and the provinces and between provinces themselves. The PPP government considered it a great achievement. The Award particularly received a warm response from smaller provinces and the nationalist parties. Would the Award under the PML-N government also meet with universal approval?
There are signs of a centre versus provinces tussle restarting over the distribution of resources. The federal government has assured IMF that it would strike a deal with the provinces to balance revenue and expenditure responsibilities. The provinces on the other hand are putting up new demands for increasing the divisible pool and for hike in the weightage for lack of infrastructure and compensation for violence. The KP provincial finance minister has warned that any attempt by the federal government to minimise provincial resources or asking it to finance federal expenditures would be resisted.
After the 7th Award, both the federal government and provinces needed to observe strict financial discipline which they have failed to do. Extra-large governments during 2008-13 necessitated by exigencies of alliances led to wastage of resources. The government spent recklessly over the years, a tendency that continues to persist under the PML-N government also. Rising debt servicing and defence and security related expenditures have further reduced financial space for the federation. Despite being cash-strapped the PML-N government is pursuing Nawaz Sharif’s pet mega projects which cannot be implemented without foreign investment and external debt. It has also launched ambitious youth schemes. It has shown increasing appetite for foreign credit and loans borrowing Rs611 billion just in 40 days from the State Bank of Pakistan, against Rs507 billion for the full year 2012-13. There is a need on the part of federation to reduce its expenses, cut losses, revise its fancy projects and bring down defence expenses by cultivating friendly relations with neighbours and through an effective diplomacy.
The last NFC Award authorised the provinces to raise taxes from agriculture, property and services. It granted 57.5pc of most revenues to the provinces. Expectations that the provincial governments would use the resources efficiently to improve the living standards of their people were not fulfilled. The provincial governments meanwhile continue to depend heavily on receivables from the divisible pool. Political exigencies stop them from raising provincial taxes. With attitudes of the sort it would be difficult to balance the competing demands being made by the federation and the provinces.
He said the Taliban-proposed committee was not in contact with the terrorists ever since the talks ended in deadlock after Taliban claimed to slit throats of 23 FC soldiers last week.
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