Preparations Underway to Revise Revenue Formula for National Finance Commission

The federal government is preparing to revise the revenue-sharing formula for the National Finance Commission (NFC). A proposal is under consideration to reduce the provinces’ share of 57.5% in the divisible pool, sources told ProPakistani. According to sources, the federal government plans to formally request the provinces to agree to a reduction in their share. In case of disagreement, the government is considering introducing the 27th Constitutional Amendment to implement changes to the revenue-sharing formula. One of the key proposals under discussion is to reduce the provinces’ share of revenue based on population from the current 82%. Instead, quotas will be allocated based on factors such as population, taxation performance, climate change impact, and development achievements. Additionally, the federal government is planning to transfer the responsibility of the Benazir Income Support Program (BISP) to the provinces. Preparations are also underway to shift the Annual Development Plan (ADP) to provincial governments. Under the new NFC framework, provinces will be required to enhance their own revenue generation capabilities. Sources from the Ministry of Finance have indicated that provincial governments will need to take greater responsibility for their financial sustainability. To finalize these proposals, officials from the Ministry of Finance have been directed to prepare a detailed working plan.