A long spell of heavy rainfall has wreaked havoc in Balochistan. Flash floods have displaced thousands of people and destroyed infrastructure in many districts. The provincial government has mobilised its resources to rescue and rehabilitate flood victims. However, there are limits to what the provincial government can do because it does not have many resources.
Balochistan, the most under-developed province of Pakistan, is currently running a budget deficit of Rs62 billion. It is not in a position to even fund its annual development plan. A major source of revenue for the province is the federal transfers received from the centre through the National Finance Commission (NFC). In this context, Balochistan’s government is pressing hard for a raise in its share of the NFC award.
The NFC award is the mechanism through which taxes and revenues collected by the federal on behalf of the provinces are distributed among these provinces. The last NFC award was approved in 2010, which increased the share of Balochistan from 5.11 percent to 9.09 percent. This substantially increased the resources of the provinces but soon the expenditures also rose and this resulted in resource deficit for the province.
The Pakistan Tehreek-i-Insaf (PTI) government reconstituted the ninth NFC in January and the first meeting of the commission was held in February. In this NFC, Balochistan’s government is making a case for a raise in its share. There are several arguments that government is making for the raise.
Through interviews with government official and other experts, The Friday Times has learnt the Balochistan’s government is arguing that the province should get an additional share due to damages caused by terrorism. In the seventh NFC, one percent of the undivided divisible pool was allocated to Khyber Pakhtunkhwa because it was affected by terrorism. Now, the situation has changed and the arena of terrorism has shifted to Balochistan. Losses suffered due to terrorism and resources used on combatting terrorism are much higher in Balochistan compared to Khyber Pakhtunkhwa. The provincial government wants additional funds to deal with this situation. If this demand is not met, the government would have to cut its development budget to fund its security apparatus, which will hamper the development agenda in Balochistan.
The second argument is based on rampant poverty in the province. In the seventh NFC award, 10.3 percent of the resources were allocated among the provinces based on poverty and backwardness. However, manipulation of poverty figures neutralised this component because in the seventh NFC award calculations, equal poverty levels were shown for all provinces. This was a distortion, proven by a report on Multidimensional Poverty 2016 by the Ministry of Planning and Development. According to this report, Balochistan had the highest poverty rate among provinces - 71 percent. Moreover, Balochistan falls on the bottom of the Human Development Index, Food Insecurity Index and Hunger Index. In this context, the government will use poverty figures to demand an in increase its share.
The third talking point for the NFC negotiations is to give more weight to land mass in resource distribution. Currently, 2.7 percent of resources are allocated on the basis of population density. However, this percentage is too less according to officials in the government. They argue that the province makes up 43 percent land area of Pakistan. The population is scattered across the province. Long distances make it difficult to develop remote districts of Balochistan. Hence, the geographical disadvantage of Balochistan needs to be taken into account while distributing resources among provinces. Balochistan government plans to argue vehemently on this point in the negotiations.
In addition, the government has other demands from the federal government for ensuring fiscal equity. It wants to enter into loan agreements with foreign lending institutions without involvement of the federal government. This will allow the province to get more loans and at better terms. The province is also contemplating demanding an increase in its share in foreign development financing. In 2017-18, Pakistan received Rs334 billion as external development financing. Balochistan only got 1.6 percent from this, despite being the most impoverished province. The government wants the distribution of foreign-funded development projects to change.
Likewise, Balochistan is not getting a fair share in federal government jobs. There are more than 500,000 employees in federal autonomous bodies and at least six percent of them should have been from Balochistan. However, this is not the case. Hence, the provincial government plans to press the federal government to ensure that Balochistan gets its due share in jobs and also be compensated for violation of the quota in the past.
Leading Balochistan’s efforts is Mehfooz Ali Khan. He served as finance secretary of Balochistan during the seventh NFC negotiations. Now retired from government service, he is still enthusiastic about further increasing Balochistan’s share in ninth NFC award. However, he is a one-man army without any support staff or an office. The government must realise that NFC is a tricky subject and it needs to provide adequate resources to its non-statutory member so that he can perform his job effectively.
The author is a journalist and researcher based in Quetta. He can be reached on Twitter @iAdnanAamir
Balochistan, the most under-developed province of Pakistan, is currently running a budget deficit of Rs62 billion. It is not in a position to even fund its annual development plan. A major source of revenue for the province is the federal transfers received from the centre through the National Finance Commission (NFC). In this context, Balochistan’s government is pressing hard for a raise in its share of the NFC award.
The NFC award is the mechanism through which taxes and revenues collected by the federal on behalf of the provinces are distributed among these provinces. The last NFC award was approved in 2010, which increased the share of Balochistan from 5.11 percent to 9.09 percent. This substantially increased the resources of the provinces but soon the expenditures also rose and this resulted in resource deficit for the province.
The Pakistan Tehreek-i-Insaf (PTI) government reconstituted the ninth NFC in January and the first meeting of the commission was held in February. In this NFC, Balochistan’s government is making a case for a raise in its share. There are several arguments that government is making for the raise.
Through interviews with government official and other experts, The Friday Times has learnt the Balochistan’s government is arguing that the province should get an additional share due to damages caused by terrorism. In the seventh NFC, one percent of the undivided divisible pool was allocated to Khyber Pakhtunkhwa because it was affected by terrorism. Now, the situation has changed and the arena of terrorism has shifted to Balochistan. Losses suffered due to terrorism and resources used on combatting terrorism are much higher in Balochistan compared to Khyber Pakhtunkhwa. The provincial government wants additional funds to deal with this situation. If this demand is not met, the government would have to cut its development budget to fund its security apparatus, which will hamper the development agenda in Balochistan.
The second argument is based on rampant poverty in the province. In the seventh NFC award, 10.3 percent of the resources were allocated among the provinces based on poverty and backwardness. However, manipulation of poverty figures neutralised this component because in the seventh NFC award calculations, equal poverty levels were shown for all provinces. This was a distortion, proven by a report on Multidimensional Poverty 2016 by the Ministry of Planning and Development. According to this report, Balochistan had the highest poverty rate among provinces - 71 percent. Moreover, Balochistan falls on the bottom of the Human Development Index, Food Insecurity Index and Hunger Index. In this context, the government will use poverty figures to demand an in increase its share.
The third talking point for the NFC negotiations is to give more weight to land mass in resource distribution. Currently, 2.7 percent of resources are allocated on the basis of population density. However, this percentage is too less according to officials in the government. They argue that the province makes up 43 percent land area of Pakistan. The population is scattered across the province. Long distances make it difficult to develop remote districts of Balochistan. Hence, the geographical disadvantage of Balochistan needs to be taken into account while distributing resources among provinces. Balochistan government plans to argue vehemently on this point in the negotiations.
In addition, the government has other demands from the federal government for ensuring fiscal equity. It wants to enter into loan agreements with foreign lending institutions without involvement of the federal government. This will allow the province to get more loans and at better terms. The province is also contemplating demanding an increase in its share in foreign development financing. In 2017-18, Pakistan received Rs334 billion as external development financing. Balochistan only got 1.6 percent from this, despite being the most impoverished province. The government wants the distribution of foreign-funded development projects to change.
Likewise, Balochistan is not getting a fair share in federal government jobs. There are more than 500,000 employees in federal autonomous bodies and at least six percent of them should have been from Balochistan. However, this is not the case. Hence, the provincial government plans to press the federal government to ensure that Balochistan gets its due share in jobs and also be compensated for violation of the quota in the past.
Leading Balochistan’s efforts is Mehfooz Ali Khan. He served as finance secretary of Balochistan during the seventh NFC negotiations. Now retired from government service, he is still enthusiastic about further increasing Balochistan’s share in ninth NFC award. However, he is a one-man army without any support staff or an office. The government must realise that NFC is a tricky subject and it needs to provide adequate resources to its non-statutory member so that he can perform his job effectively.
The author is a journalist and researcher based in Quetta. He can be reached on Twitter @iAdnanAamir