The 7th NFC Award 2009 has brought significant changes in the
resource distribution mechanism to the satisfaction of all units of the
Federation. The Federal Government has agreed to increase the share of Provinces
in the divisible pool to 56% in the first year of NFC and to 57.5 per cent in
the remaining years of the Award from the level of 47.5%. The Federal Government
also agreed to reduce the collection charges from 5% to 1%. The 7th
NFC Award was signed in Gawadar on December 30,2009 on the recommendations of
the seventh National Finance Commission (NFC) constituted by President Asif Ali
Zardari on July 24, 2009 under Article 160 of the Constitution.
Highlights of the 7th NFC Award:
Federal and Provincial Government developed a
The new award to come into effect from FY
Population to be given 82% weightage, poverty
10.3%; revenue collection 5% (2.5% revenue generation, 2.5% revenue collection);
and area 2.7 %.
The provincial share of the Divisible Pool would
increase from the present 47.5% to 56% in the first year of NFC, and 57.5% in
the remaining years of the award.
Punjab would give up 1.27%, Sindh 0.39%, and
Khyber- Pakhtunkhwa 0.26%, while Balochistan will gain.
In monetary terms, the award translates into
Rs.471 billion for Punjab, Rs.223 billion for Sindh, Rs.133 billion for Khyber-
Pakhtunkhwa, and Rs.83 billion for Balochistan. These are the projection for FY
2010-2011 and based on 56% share.
Sindh would receive an additional transfer of
Rs.6 billion from the Federal Government, which is equivalent to 0.66% of the
provincial pool. The Commission also decided to devolve sales tax on services to
the provincial level.
The Federal and Provincial Governments pledged
commitment to bear all expenditures incurred by Khyber Pakhtunkhwa Government on
the war on terror.
Thus as a gesture of support by all provinces and
the Federation, 1% of the total divisible pool has been earmarked for Khyber-
Pakhtunkhwa as an additional resource for war on terror during the award period.
This would be equivalent to 1.83% of the provincial pool.