Assignment- 3

Pakistan Economic Policy

NFC Award
President Dr Arif Alvi has reconstituted the 9th National
Finance Commission (NFC) to work out a new resource
distribution formula between the Centre and the federating
units.
Pakistan is a federation and has four federating units, i.e.
Sindh, Punjab, Khyber-Pakhtunkhwa (K-P) and Balochistan,
as well as other territories including Gilgit-Baltistan and
Azad Jammu and Kashmir which come under the federal
government directly. The NFC award is meant to distribute
financial resources between the federal government
(vertical distribution), and the provinces (horizontal
distribution).
The new 10-member commission has Finance Minister Asad
Umar as its chair comprising federal finance secretary as the
official member, four provincial finance ministers (statutory
members), and their respective technical members (non-
statutory members). The NFC award includes the
distribution of taxes collected by the federal government
which form a divisible pool. This pool includes taxes on
income including corporate tax, sales tax and export duties,
etc. According to Article 160 of the Constitution, after every
five years the president will constitute the NFC for a period
of five years. The 9th NFC award is challenging because
provinces now have more subjects and more responsibilities
after the passage of the 18th amendment, and are
demanding greater resources.