ISLAMABAD -  The federal government formally floated a proposal for cutting down the overall size of the federal divisible pool by seven percent to the provinces, allocating three percent for the National Security Fund (NSF) and four percent for Gilgit-Baltistan, Fata and AJK.

Every year, out of the divisible pool – meant for distribution of funds between the Centre and the four federating units – seven percent is be kept in this NSF and funds for the GB, Fata and AJK.

The KP is separately getting one per cent of divisible pool as compensation for impact of war on terror.

The federal government and four federating units would share 92 percent of the revenue if provinces agree with the proposal presented during the meeting of the National Finance Commission (NFC) held under Finance Minister Ishaq Dar yesterday.

The centre recommended that for the NSF and special areas, NFC may consider allocating 3% and 4% of the gross divisible pool respectively. The finance minister highlighted the extraordinary security situation and measures being adopted by the federal government.

He also explained that though the federal government is providing funds to the special areas, their financial needs are increasing year on year.

The provinces would discuss the proposals with their governments before giving their response in next month NFC. The provincial representatives need time for deliberation and consultations, so that they may come up with appropriate reply to the recommendations, which was accepted. It was also desired that the federal government may put forth a complete set of proposals ie details and modalities, for use of fund/allocation, particularly related to special areas.

According to Ishaq Dar, the Council of Common Interest (CCI) would finalise the modalities of the spending on NSF if the provinces accept the proposal.

“This is an extraordinary expenditure, which was not budgeted three years before. But now we are passing through special phase and it (NSF) will be required after next NFC award. As many as 57 civil armed forces wings raised and 44 wings would be further required.”

Dar said that government and provinces want to constitute fresh NFC award before announcement of the next budget. He said that NFC could not be constituted with new census. “Population census process will be started from March 15 and it will be completed in May,” he said and added that forty-two thousand Army personnel will assist to make the population census process successful.

Sources informed that federal government has presented only the aforesaid proposals in the meeting. “The finance minister spent large time on giving briefing on economic situation of the country, especially on soaring expenditures, paying way for the proposal of cutting down seven percent from the divisible pool,” a participant of the meeting informed The Nation.

The finance minister chaired a meeting on NFC, but not of the NFC because the commission would remain incomplete in the absence of two provincial finance ministers. Chief ministers/finance ministers of Sindh and Balochistan had not attended the meeting. Punjab has replaced its non-statutory member on the commission – Naveed Ahsan –with Ali Cheema.

The meeting was participated by the Members of the Commission namely Dr Aisha Ghaus Pasha, Finance Minister of Punjab, Mr Said Muzaffar Advocate, Finance Minister of KPK, Senator Saleem, Member of Sindh, Prof Muhammad Ibrahim Khan, Member KP, Dr Kaiser Bengali, Member from Balochistan and Dr Ali Cheema, Member from Punjab and other officials concerned.

The provincial governments and the federation agreed to push the process for completing the next NFC Award before the next budget. For this purpose, the commission agreed to convene next meeting in January. It was also proposed that, if all provinces agree, the next meeting of the commission may be convened at Lahore.

The 7th NFC Award expired on June 30 last but the federal government extended the 7th award for the previous as well as the ongoing financial years after failing to thrash out a new formula. Under the current NFC Award, Punjab gets 51.74 percent share, Sindh 24.55 percent; Khyber-Pakhtunkhwa 14.62 percent and Balochistan 9.09 percent.