- Advertisement -
ISLAMABAD, Jul 15 (APP):Director General NIPS and Renowned economist Dr. Ashfaque Hassan Khan on Tuesday delivered a special lecture on Pakistan’s existing National Finance Commission (NFC) Award framework, calling for urgent reforms, depoliticization of census processes, and a shift toward a performance-based resource distribution formula.
He was chief guest at the distinguished lecture series of the Islamabad Policy Research Institute (IPRI), said a press release.
Tracing the origins of fiscal distribution in Pakistan, Dr. Khan reminded the audience that the first award in 1951, known as the Raisman Award, was crafted by British civil servant Sir Jeremy Raisman under Prime Minister Liaquat Ali Khan. However, subsequent NFC Awards were disrupted by the 1965 war and the 1971 East Pakistan crisis.
Highlighting flaws in the historical framework, he noted that resource distribution between East and West Pakistan was based on GNP and tax collection, with population never initially considered. Ironically, post-1971 awards placed disproportionate emphasis on population, making it the dominant parameter, a trend he believes has distorted national statistics and incentivized provinces to inflate census figures.
“No federation in the world gives such overwhelming weightage to population in fiscal distribution,” Dr. Khan stated, drawing comparisons with countries like India, the US, Canada, Germany, Australia, and South Africa, none of which treat population as the primary criterion. He pointed out that while Pakistan allocates 82% weight to population, India has reduced it to just 15%, linking future allocations to demographic performance, offering incentives for population control.
Dr. Khan criticized the politicization of both the NFC and the census, calling Pakistan’s population statistics “grossly exaggerated” and citing independent research by PIDE (Pakistan Institute of Development Economics) that debunked the 1972 census figures. “Pakistan’s population doubling in 25 years defies global demographic trends,” he remarked, contrasting it with growth rates in Egypt (31 years), India (36), and Asia (33).
To replace the outdated and politicized framework, Dr. Khan proposed a new, balanced, performance-based NFC formula that reduces the weight of population and introduces multiple socio-economic indicators: Income Gap – 30%, Population (1998 Census) – 15%, Population (2023 Census)– 10%, Demographic Performance (Fertility Rate) – 17.5%, Human Development Index (Health, Education, Income)– 10%, Area – 7.5%, Tax Effort – 5%, and Forest Cover – 5%.
Under this model, provinces would need to “earn” their share through performance and responsible governance. Dr. Khan emphasized that no province would be worse off under the proposed formula.
Dr. Khan stressed the need to depoliticize the census and suggested that the President, under Article 168 of the Constitution, could appoint a non-political NFC Commission composed of eminent economists, retired justices, and civil servants. This independent body should have a dedicated secretariat and technical support to function transparently and efficiently, he said.
“Tinkering with the system won’t work. Structural reform is inevitable,” he warned, calling on the political elite to embrace change for the nation’s future. He also recommended transforming administrative divisions into new provinces to improve governance and reduce disparities. “Punjab alone, with 128 million people, is larger than Japan and Canada. One province cannot remain this disproportionately large and governable.”
Dr. Khan, who has presented his proposals to chief ministers and officials across all four provinces, expressed optimism that with political will, the new framework could be implemented within three years, restoring economic normalcy and strengthening the federation.
He criticized the prevailing narrative shaped by what he termed the “IMF Ecosystem Brigade,” which insists Pakistan needs massive debt bailouts. “Despite limited reserves, the country is running. What we need is governance, not gimmicks.”
The lecture ended with a Q\&A session, followed by IPRI President presenting a memento to Dr. Ashfaque Hassan Khan in recognition of his service and insight.