Pakistan reslices revenue pie: formula for unity?
The government resolved a two-decade conflict over how to share the nation’s revenue. Redistributing wealth – even by a few percentage points – is a first step toward easing the hostilities that have fueled bloody insurgencies and stalled important energy projects.
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Ethnic Pashtuns in and around the North West Frontier Province (NWFP) want their territory renamed “Pakhtunkhwa,” or Land of the Pashtuns. The area has have suffered the most in Pakistan’s expanding war against the Taliban – its moneymaking tourist attraction, the Swat Valley, was devastated in a military offensive this year, and a second offensive nearby has unleashed bomb attacks and a flood of refugees into its towns. Some fear the Taliban could exploit Pashtun grievances to recruit more fighters for their war against the state. NWFP will receive 1.57 percent more funds to help its people and economy cope.Skip to next paragraph
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Natives of Sindh Province had sought greater autonomy since 1917, under British rule. Though those efforts have died down, distrust of Punjab remains so strong that it has thwarted cooperation on projects that could benefit both sides, such as dams to generate badly needed power. Some Sindhis see the ongoing legal efforts to unseat President Asif Ali Zardari as yet another attempt to keep one of their own out of power. Under the NFC award, Sindh Province will get a 0.27 percent increase in money.
Small percentages, big impact
These three provinces had long argued for changing the criteria of the NFC award, which since its creation in 1973 had benefited Punjab, the most populous province, by distributing revenue based solely on population. Sindh wanted a bigger share because its port in Karachi generates a significant amount of revenue. Baluchistan needed help providing services and infrastructure to its impoverished, far-flung residents.
The provinces were supposed to come together and revise the NFC every five years, but from 1990 until now had been unable to agree on new criteria to accommodate everyone’s demands.
The 2009 NFC award, however, adds three new criteria: “Backwardness,” measured by factors such as life expectancy and literacy, will be weighted at 10 percent. Revenue collection will count for 5 percent. And inverse population density – or how far people are spread out – will count for 3 percent. The agreement also addresses issues such as tax collection fees and extra compensation.
As landmark legislation goes, these carefully negotiated tenths and hundredths of percentages don’t have “a lot of bling factor,” says Cyril Almeida, assistant editor at Dawn, a Pakistani daily. But “it’s important for the future of the country.”