allocated under the 7th NFC award. It’s like a broken record, replaying the same conversation every few years. And here we are again, only a few months after the last round of discussions. Cutting off your nose to spite your face? Well, that’s kind of what’s happening with the idea of taking money away from the provinces; being struggling financially and does not have enough money coming in to cover all the expenses so to take money away from the provinces, which get a share of the national tax revenue.

It was august 2023 when this idea of rolling back NFC was surfaced during the transition of power to the interim setup; now once again, it’s making resonating again, fired by reports suggesting the IMF’s nudging for a revisit to the NFC Award to stabilize fiscal matters. Advocates of rolling back allocated shares of NFC are being arguing that provincial allocations in the previous NFC Award were unrealistic.  Their argument was that provinces lean on the federal government for revenue while making minimal efforts to mobilize resources locally, like taxing agriculture or real estate transactions. Essentially, they contend that provinces enjoy the perks without putting in the work.

Besides, critics point fingers at provincial spending, citing staggering increases in payroll and development expenses since the NFC Award’s activation. Former finance minister Miftah Ismail even questions whether these expenditures truly contribute to development. Need to analyze these arguments. While it’s challenging to compare exact figures across years, a glance at federal spending shows exponential growth in various sectors since the implementation of the NFC Award. Stepping down allowances, pensions, and executive expenses have skyrocketed. Development expenditure has also seen a significant uptick.

Now, let’s investigate deeper into the numbers. If government allocates federal taxes according to the old NFC formula from the Musharraf era, there’s a considerable difference in provincial shares compared to the current formula. Than too the real question remains, does a reclaiming NFC allocation solve more problems than it creates? Scratching back from the NFC award is similar to the state consuming itself to escape a fiscal constraint. It’s parallel to cutting off own self to flee a trap. The real trap is not the NFC award but the state’s shrinking resource pool due to inadequate economic documentation and revenue capture mechanisms. This shortsightedness jeopardizes the federation’s stability.

Fiscal restriction is tightening around Islamabad due to a failure to reform tax policies and administration. Islamabad’s inability to draft or adhere to a medium term fiscal framework worsens the problem. Massive deficits highlight fiscal irresponsibility. Closing these gaps requires more than short term solutions like rolling back NFC allocations. The cost outweighs the benefits. Instead, emphasis should be on comprehensive tax reforms. Islamabad must need to focus on sustainable solutions to address fiscal challenges. Rolling back NFC allocations is a temporary fix to a deeper-rooted issue. It’s time for a more holistic approach to fiscal management.

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