MGT 111 Ass Solution#1

What was the reason behind the incredible amendments of the
7th NFC Award?

The National Finance Commission is held every 5 years later. The reasons behind the incredible amendments in the 7th NFC award were that from 1999 to 2008. It was the reign of a military dictator in which the provinces especially NWFP and Baluchistan could not feel any provincial autonomy.
This award is also known as a first step in removing the Baloch people sense of deprivation.
Provinces earlier argued that single criterion of distribution i.e. population is not suitable as in such a case most of the share went to Punjab.
Therefore, multiple criterions have been used this time for the distribution of the resources.
Baluchistan was given the arrears of sui-gas.
Secondly the Baloch were unhappy due to Nawab Akbar Bugti issue and they wanted their rights.
In the NWFP the infrastructure was badly damaged due to war on terror, therefore the quota was increased.
Another reason was that Pakhtoons wanted the royalty of electricity.
In short the Government tried to overcome the grievances of the people of the NWFP and Baluchistan. The reason was that in the past two decades these two provinces has faced a lot of bad time. Now their threshold level was reached and it was very important because if the govt. had not taken this step the anti-Pakistan forces would have got the opportunity to divide us. (And they were trying their best)






Analyze the terms of the 7th NFC Award & elaborate how it will
Affect different provinces individually and collectively?
If we look behind towards the earlier NFC award i.e. of 1990, the provincial share in the divisible pool was as follows:
Punjab 57.88%
Sindh 23.28%
N.W.F.P 13.54%
Baluchistan 5.30%




But in the current NFC award it changed to the following:
Punjab 51.74%
Sindh 24.55%
N.W.F.P 14.62%
Baluchistan 9.09%

Provinces would get Rs227 billion in the first year under the new NFC award in addition to their current share of Rs550 billion in financial resources. The amount will increase to Rs850 billion the following year and to Rs 1, 250 billion by the fifth year.
The demand for NWFP for the compensation of the areas affected in the war is also approved. The province would get one percent from non-divisible pool.
Baluchistan share in the provincial pool had been increased to 9.09 per cent, which will amount to Rs83 billion in the first year.
As mentioned that multiple criteria are used for the resource distribution. Therefore, Resources from the federal divisible pool would be distributed on the basis of population 82%; poverty and backwardness 10.3%; revenue collection and generation 5% and inverse population density 2.7%.
The multiple criteria used will help the backward provinces in development. Especially poverty will be alleviated in Baluchistan and NWFP and Southern Punjab and Sindh should get something to alleviate poverty. Next provincial autonomy is the main focus of this award, which has made the provinces realize that the federation do think about them.
The AAGHAZ-E-HUQUQ-E-BALUCHISTAN Package is the first step towards all this.



Bibliography:
http://www.balochistan.gov.pk/index.php?option=com_content&task=view&id=935&Itemid=123
http://www.sananews.com.pk/english/2009/12/12/center-provinces-reach-consensus-as-7th-nfc-award-announced/