KARACHI: In a recent meeting between Sindh Chief Minister Syed Murad Ali Shah and a delegation from the United Nations Fund for Population Activities (UNFPA), the potential for a revised approach to the National Finance Commission (NFC) award formula was discussed. The discussions focused on incorporating factors such as income disparity, demographic performance, human development, tax efforts, and forest cover into the financial distribution framework.

According to a statement by Sindh Governor House, the meeting, held at the CM House, included senior officials such as Health and Population Minister Dr. Azar Fazal and representatives from UNFPA. The discussion emphasized a need for equitable resource distribution and sustainable economic growth through a reformed NFC Award.

Chief Minister Shah highlighted the importance of adopting multiple criteria for resource allocation under the 7th NFC Award and reiterated the Pakistan People’s Party’s stance on granting provinces full authority over sales tax collection. He noted that provinces are more efficient in tax collection due to their proximity to consumers but are heavily reliant on federal allocations since the bulk of taxes are collected at the national level.

Dr. Ashfaque Khan from the NUST Institute of Policy Studies provided insights into the historical aspects of the NFC and the need for a reformed revenue-sharing approach. The meeting underscored Pakistan’s reliance on population size for resource allocation, a practice that has shifted slightly since the introduction of the 7th NFC Award in 2009, which considered multiple factors.

The discussion also drew comparisons with international practices, particularly India’s financial management model, which incorporates demographic performance into resource allocation. Participants noted the politicization of Pakistan’s NFC structure and the need for an equitable, data-driven approach to financial distribution.

Proposals for future NFC Award criteria included weights for income disparity, population, demographic performance, human development, tax effort, and forest cover, aiming to create a balanced and fair allocation mechanism.