EDITORIAL: The Senate Standing Committee on Devolution was informed that the Centre spent Rs5 trillion on 17 subjects — including education, health, environment, agriculture, labour, and industries — that were devolved to the provinces in 2010 under the 18th Constitutional Amendment.
The outlay is therefore clearly violative of the constitution but, bafflingly, instead of removing lacunas that continue to persist sixteen years after the amendment was passed with consensus, notably building capacity in provinces to deal with the devolved subjects, all post-2010 administrations implemented the concomitant National Finance Commission (NFC) Award of the same year, which raised the provinces’ share in the federal divisible pool, thereby creating an acute shortage of federal funds to meet the Centre’s expenditures.
To meet this shortage till capacity was built in the provinces provincial surplus was agreed between the Centre and the provinces to enable the former meet its expenditure needs. In 2010-11, the very first year after the amendment was passed and the NFC agreed with consensus, the budgeted provincial surplus was 166.9 billion rupees though the revised estimates placed it at 119.8 billion rupees.
The budget for the current year has projected a surplus of 1,784 billion rupees – a 974 percent increase from what was budgeted sixteen years ago. Needless to add, Provinces complain about their share of the surplus, particularly those with a different political party in power than at the Centre, arguing that their share prevents them from undertaking social sector programmes for the people of their province.
The framers of the Eighteenth Constitutional Amendment and the NFC Award also envisaged a one-percentage-point annual increase in the Federal Board of Revenue’s tax-to-GDP ratio, which would eventually generate more than enough funds for the Centre’s expenditure needs.
To this day, that objective remains unmet, with the tax-to-GDP ratio standing at an appallingly low 10.3 percent last fiscal year, compared to 9.9 percent in 2011–12. Since 2010, Pakistan has entered six International Monetary Fund (IMF) programmes (including the one ongoing that year).
Except for the architect of the 2010 NFC Award, every subsequent finance minister—whether an economist, chartered accountant, or banker—has lamented the lack of federal resources to meet budgeted expenditures and suggested rolling back the agreed provincial share of the divisible pool, a position the IMF has supported in its documents ever since.
It is unclear whether the proposed constitutional amendment—which envisions new provinces and would therefore require a new NFC award—is also aimed at increasing the federal government’s share.
The Senate Committee has quite unrealistically given Prime Minister Shehbaz Sharif a mere two weeks to wind up 17 ministries—a task unlikely to be achieved in such a short period, given that only 6,700 of the more than 50,000 employees serving in these devolved ministries have been transferred to the provinces over the past 16 years, leaving 48,000 on the federal payroll.
One would urge the government to proceed with implementing the Eighteenth Amendment and the 2010 NFC Award in letter and spirit. This would, in turn, enable the Centre to meet its budgeted expenditures, allow the provinces to build capacity to administer devolved subjects through financial autonomy, and, last but not least, perhaps preclude the need for creating new provinces—a process that would require its own period of capacity building.
Copyright Business Recorder, 2026
Source: brecorder
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