AFTER a gap of many years, discussions on the next National Finance Commission award are finally moving forward again, and the finance minister’s announcement that the aim is to have a new award by December is an indication of serious intent. The timeline is realistic and the talks have acquired structure and momentum since they restarted in February, while the second meeting concluded yesterday.
The most important thing to keep in mind for the federal government, the curator of the entire process, is that the NFC operates on the principle of consensus. Nothing should be done to undermine the spirit of consensus in pushing towards a final outcome.
This award is being negotiated exactly 10 years after the last consensus-based NFC award was announced, and success on this front will be an important and lasting part of the PTI’s legacy. But should the federal government depart from the principle of consensus in pushing for its demands, it is likely to lead to the breakdown of talks, which would only cement the growing perception of the PTI as a party that is unable to carry the others along.
More than any other forum, this is the place where the finance minister and his team need to demonstrate a delicate touch and their prowess in the subtle of art of negotiation. The provinces are entitled to press for their demand to continue the process of devolution further in the face of the federation’s desire to reclaim fiscal space at the expense of the provinces. Whether or not they choose to press ahead, this entitlement is a political choice each provincial government will make, nothing more.
The sharp erosion of fiscal space at the centre has been under discussion during these talks, and indications suggest that Sindh alone, being the only province ruled by a party from the opposition, is putting up a spirited fight against the strong appeals coming from the centre to arrest and reverse the growing transfer of resources to the provinces. The federal authorities at the table must realise that those responsibilities that belong to them, whether funds for Fata, Azad Kashmir and Gilgit Baltistan or for bodies like the Higher Education Commission, are squarely theirs to discharge. They can request the provinces to share the burden of the expenses associated with these. They can press their case with data, with appeals to patriotic duty, perhaps even invoke moral obligation. But they cannot demand these resources as a right or something they are entitled to, nor can they seek to take them from the provinces in a non-consensual manner. Rather than using the NFC as a forum to only seek a new formula for how the resources of the state will be distributed among the federating units, the government should steer the talks towards how the revenue and the governance responsibilities of the state will be shared.