The Pakistani government has proposed delinking the distribution of divisible pool resources among provinces from the population-based National Finance Commission (NFC). The move comes as the recently concluded seventh national census revealed a population growth of over 2.8 percent, positioning Pakistan as the “fastest growing country in the world.”
Minister for Planning and Development, Ahsan Iqbal, expressed concerns regarding the existing NFC formula, stating that it incentivizes population growth by allocating 80 percent weightage to population. Iqbal argued that the formula is regressive and fails to account for the diverse dynamics within provinces, such as the urban-rural divide in Sindh and the Baloch-Pakhtun divide in Balochistan.
During a meeting on the updates of the census, Punjab and Sindh provinces requested an extension for completing the re-verification process. Punjab proposed an additional five days, while Sindh proposed a grace period of three to four days. The monitoring committee on census, headed by Minister Iqbal, emphasized the need for evidence-based justification to ensure the accuracy and rectification of census data, which may prolong the completion of the census process.
The National Finance Commission award, responsible for the distribution of resources between the federal government and its federation units, has not been implemented since its expiration in December 2014. Despite constitutional obligations to renew the NFC every five years, successive governments have failed to reach a consensus on the matter. The 2009 award, which primarily allocated resources based on population, was criticized for favoring the provinces and leaving the federal government burdened with heavy debt servicing and defense expenditures.
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Minister Iqbal stressed that the authenticity of census data would remain unresolved unless it is disconnected from resource distribution. Citing India as an example, he highlighted the progress achieved by delinking population growth from resource allocation over the past two decades.
The census commissioner revealed that the population growth rate was actually 2.8 percent, with Sindh experiencing over 3 percent growth and certain districts in Balochistan, such as Punjgur, reporting a growth rate of 22.3 percent. These figures raise concerns about declining per capita income, a potential downgrade to lower-middle-income status, adverse effects on foreign direct investment, and deteriorating social indicators.
In response to these challenges, Minister Iqbal outlined the government’s focus on investment in education, healthcare, and population control to ensure equitable development among citizens. The forthcoming budget will revolve around the five Es: export growth, e-Pakistan, environment, energy, and equity.
Minister Iqbal also addressed concerns regarding the China-Pakistan Economic Corridor (CPEC) and the ML-1 railway project. He highlighted the government’s efforts to rectify past mismanagement, incompetence, and delays in Chinese investment, stating that the ML-1 project was in advanced stages with negotiations on financing and finalization of bidding firms underway. The project, worth $10 billion, aims to transform the 1,872-kilometer Karachi to Peshawar railway line in three phases.
With population growth identified as a critical challenge, the government remains committed to separating population dynamics from resource distribution, emphasizing the importance of incentivizing provinces to address demographic and social improvements.