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Ameer Taimur Ali

Anum Iftikhar

Haroon Farid

Muniba Shoaib

Natasha Farooq

Shamail Arzoo
i Introduction

i List Of Previous Awards

i 7th Nfc Award

i How It Is Different From The Others

i Basis Of Distribution

i Recommendations

i References
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i ´NFC, under Article 160 of the Constitution, advices
the President of Pakistan on the matter of
¶distribution· of tax revenues between the
Federation and the Provinces and amongst
Provincesµ
i Horizontal distribution (Amongst provinces)
i Vertical Distribution (Federation and Provinces)
i The distribution formula is NFC award
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After the Partition of East Pakistan from West Pakistan, NFC was
constituted under article 160(1) of the 1973 constitution. The
main charter of it included:

1. The distribution of specified taxes, duties between federation


and provinces

2. The payment of grants to provincial governments

3. Borrowing powers exercised by federal and provincial


governments
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A List Of Other Awards That Have Been Constituted Since
1973 Has Been Formulated And Is Given Below:
NFC 1974 (Enforced)

Nfc 1979 (Ended In A Deadlock)

Nfc 1984 (Ended In A Deadlock)

Nfc 1991 (Enforced)

Nfc 1997 (Enforced)

Nfc 2000 (Failed To Reach Consensus And Ended In A


Deadlock)
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This award was signed in Gawadar on December 30, 2009 by

the finance ministers of the four provinces and the federal

government and will be implemented in the next financial

year (July 2010)


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i In the first year of NFC award the provinces will

get 227bn along with its financial resources of

550bn.

i In the following year the amount will increase

to 850bn and in the fifth year it will increase to

1250bn
     
      

 




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It has been suggested that Provincial share of the divisible
pool would increase from the present 47.5 per cent to 56
per cent in the first year of NFC (2010-2011) and 57.5 per
cent in the remaining years of the award under the
vertical distribution of resources

i Federal government has agreed to cut tax collection


charges from 5.0 per cent to 1.0 per cent and this
amount would also be added to the divisible pool
i Population

i Poverty/Backwardness,

i Revenue Collection/Generation and

i Inverse Population Density


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Out of 56% of total divisible pool financial

resources will be distributed among the

provinces as shown in the graph.


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i Equity

i Considering Revenue Generation and Collection


as a part of the distribution criteria

i A Small decrease of 4% doesn·t change the basis


of distribution

i Initially Centre was collecting 70 per cent GST on


services from Sindh and was distributing it among
the provinces on the basis of population so the
previous one was also based on equity rather
than efficiency
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i The criteria has finally changed, population is no longer

the sole indicator

i It is a unanimous NFC award. 19 years in the making.


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i Sindh has somewhat recovered from its loss
because of the new criteria

i Handing over GST on services to the provinces

i Federal government recognizing the demands and


claims of the provincial governments and providing
them with more autonomy
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i NWFP has been awarded a greater cut from
taxes, due to the special consideration of it as a
warfront against militancy

i The NFC award has been decided with the aim of


finally getting ahead on the planned but yet
unimplemented, Thar coal project, lakhra
project, and other development projects around
the country which have remained in a limbo for
over a decade
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The design of the award as it was planned by the


previous government has been abandoned, the
funds have been reassigned
   
i To achieve equity more variables like education
and crime rate should also be included in the
criteria
i The committee in charge of the NFC award should
be independent of the authority that has issued it
i Population is a necessary but not a sufficient factor
to be the sole basis of the resource distribution
criteria
   
i Development is of key importance

i As an addition to the benefits of development, this


will offer employment opportunities for the vast
number of unemployed. This will go some way in
reducing the crime rate as well, as most crimes are
being committed due to the desperate state of
affairs (with regards to basic amenities such as
flour, sugar, even WATER!)
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