The federal government is considering a shake-up of the National Finance Commission (NFC) Award, with plans to cut the provinces’ current share of federal revenue from the divisible pool. At present, provinces receive 57.5 percent, but officials say Islamabad is preparing to formally ask for a reduction.
If provincial governments resist, the center is mulling a constitutional route—possibly through the 27th Amendment—to push through the changes.
Rethinking the Formula
Currently, 82 percent of the revenue share among provinces is distributed according to population. That formula has long been criticized for overlooking other factors. The new proposal looks to add criteria such as taxation performance, vulnerability to climate change, and development progress.
This shift would reward provinces that raise their own revenue more effectively and tackle environmental or infrastructure challenges, rather than relying solely on headcount as the deciding factor.
More Burden on Provinces
Another part of the federal plan includes transferring responsibility for major social and development initiatives. The Benazir Income Support Programme (BISP) could soon fall under provincial control, along with the Annual Development Plan (ADP).
Such moves would force provincial administrations to expand their revenue streams and manage welfare and development projects directly, reducing their reliance on federal transfers.
What’s Next?
The Finance Ministry has tasked officials with drafting a detailed framework to operationalize these changes. While no final decision has been made, the government appears set on pushing provinces toward financial self-reliance, even if it means testing political consensus through constitutional amendments.
