Minister for Planning Ahsan Iqbal has recommended restructuring the 15-year-old National Finance Commission (NFC) Award and proposed freezing the population at 241.5 million for the distribution of funds among federal units.
In his recommendations, he urged Prime Minister Shehbaz Sharif that the NFC Award, constitutionally valid for five years, is still functioning due to the lack of consensus on a new formula between the federation and provinces. As a result, the President has been extending it annually. Given the intense pressure on the federal government, restructuring is essential.
He also proposed freezing indicators such as water and climate-related risks. This recommendation has come at a time when the 10th NFC expired on July 21, and the Ministry of Finance is forming a new commission.
For the 11th commission, Sindh has retained Asad Saeed, Balochistan has nominated Mr. Farman, Musharraf Rasool Siyal is expected to represent Khyber Pakhtunkhwa again, while Nasir Khosa may represent Punjab.
The planning minister has suggested a new multidimensional development-based formula instead of relying solely on population. Currently, 82% of resources are distributed based on population, which encourages overreporting and contradicts efforts to control population growth.
He also recommended making provincial revenue a new standard for resource distribution, stating that provinces with higher tax-to-GDP ratios and stronger digital tax infrastructure should receive more resources. Due to heavy reliance on the NFC share, provinces avoid expanding their local tax base.
Ahsan Iqbal further proposed linking resource distribution to outcomes in education, health, gender equality, reforestation, climate adaptation, and sustainable water infrastructure investments.
He noted that out of the 42.5% share, the federal government spends more than Rs 150 billion annually on Azad Kashmir, Gilgit-Baltistan, merged districts, and other federal regions, which also deserve a share in the divisible pool like provinces.
Similarly, the federal government allocates Rs 716 billion for the Benazir Income Support Program, although social protection became a provincial responsibility after the 18th Amendment.
He warned that without adequate financial space for the federation, the implementation of key national initiatives like Special Economic Zones, Digital Pakistan, National Grid, dams, and human resource development will remain challenging.
He emphasized that under the Constitution, all five governments must unanimously agree on a new formula; even one dissenting government can prevent any change in the Award.
Meanwhile, addressing the opening session of a conference in Karachi, Ahsan Iqbal stated that creative industries and the cultural economy are not just sources of entertainment but also strategic assets of power, identity, and economy.
