Session 3 – NFC — A Central Nervous System or Noose for Federalism?

The fiscal structure of Pakistan saw dramatic changes with the announcement of the 7th National Finance Commission Award. The Award increased the size of the divisible pool, transferred a majority of revenues from the federal government to the provinces and introduced measures for a more equitable horizontal distribution. A decade later, however, there is prevailing discontent at the federal level, which raises concerns regarding unsatisfactory provincial revenue generation and a lack of resources to meet federal costs. The federating units, on the other hand, have closely guarded this devolution of powers and seem unlikely to accept any changes without significant political turmoil.

In this session, Tabadlab will seek to answer questions such as: how legitimate are the grievances of the federal government? What are some other solutions to Pakistan’s fiscal woes besides digging into provincial pockets? How well have the provinces managed their finances during the past decade and what can they do to improve this mechanism going forward? Why has consensus after the 7th NFC Award been elusive? How effective is it as a resource distribution mechanism and how closely linked is it to the very essence of Pakistan’s federal structure?