The NFC Award may look like a battle of percentages on paper, but in reality, it is about roads, classrooms, and security in some of Pakistan’s most fragile regions. Whether children in the province of Balochistan attend a functional school, whether flood-stricken areas in Khyber Pakhtunkhwa receive relief in a timely manner, and whether the police in border districts can address militancy, all these decisions are made by it. This is neither a monetary formula, it is the life-line of the federal compact of Pakistan.
The Stakes for Provinces
KP and Balochistan walk into this debate already carrying burdens that the centre cannot imagine: militancy spilling across porous borders, millions of Afghan refugees, and climate disasters that return with cruel regularity. Their economies are shackled by smuggling and underdevelopment, and their populations remain on the margins of national attention. To strip them of fiscal space now is to gamble with collapse in the very regions where Pakistan’s security challenges are most acute.
Islamabad argues that it is out of financial room. Debt repayments, defence, and federal obligations consume the bulk of the budget. These are undeniable realities, yet no provincial share reduction should occur without first correcting structural systemic leakages, which amounts to apply a band-aid to a wound that needs surgery. The real leakage lies in a dysfunctional tax system, in an underperforming Federal Board of Revenue (FBR), and in a bloated bureaucracy that bleeds resources. Reducing provincial transfers will not fix those systemic failures; it will merely postpone the crisis.
A Constitutional Red Line
The NFC is constitutional and not merely policy. Article 160(3A) clearly protects the provinces against any reduction in shares. Any backward move to circumvent these protections, through allocating slices to ICT, Gilgit-Baltistan, or AJK out of the divisible pool, can be easily construed as a constitutional subversion. In Balochistan and KP, where alienation already fuels extremist and separatist narratives, such moves risk worsening trust at a time when cohesion is already fragile.
Counter-Argument: The Centre’s Plea
The centre insists that without revisiting the NFC, it cannot service debt or sustain core state functions such as defense and foreign relations. IMF pressure has only hardened that stance. Yet relying on Bretton Woods directives on revenue sharing at the homefront is risky politics. It sends the message to provinces that the federation values lenders’ demands over the needs of its own people.
Yet the provinces, too, are not beyond reproach. Since the 18th Amendment, NFC transfers have often been treated as windfalls, feeding patronage rather than strengthening schools, hospitals, or local governments. Their own-source revenues remain dismal: agriculture and property, two of the country’s largest untaxed sectors, remain conveniently untouched. The result is a dependence on NFC transfers so deep that the award has become the only oxygen tube keeping provincial budgets alive. This reliance is unsustainable.
Cohesion, Not Division
The real issue, then, is cohesion, not just cash. Pakistan cannot afford a tug-of-war where Islamabad blames the provinces for inefficiency and provinces accuse Islamabad of encroachment. Both must step up: the federal government by widening the tax base, cutting waste, and creating transparent grants for regions outside the NFC; and the provinces by raising their own revenues, empowering local bodies, and proving that the money they receive is spent where it matters most.
It is false to present NFC as simple financial mathematics. This is a question of federal cohesion. In a land that is struggling to deal with militancy, extremism, and climate shocks, things like provincial squeezing will only create seeds of resentment, not unity.
Pakistan today stands at a fiscal crossroads. Any idea of fighting over resources in the provinces is tempting but myopic. The best reform is not to smash the constitutional compact. It is to reinforce it. What Islamabad will do is obvious keep applying patchwork band-aids or begin constructing a genuine fiscal federation. A federation survives not when the centre extracts obedience, but when the provinces feel they own the state, and the state, in turn, owns them.
