President Asif Ali Zardari on Saturday approved a change in the constitution of the 11th National Finance Commission (NFC) after Balochistan revised its nomination, a statement by the president’s secretariat said.

The 11th NFC was constituted on August 22 to prepare a new award for sharing federal divisible resources between the Centre and the provinces.

Chaired by Finance Minister Muhammad Aurangzeb, the NFC includes four provincial finance ministers and four non-statutory members, one from each province.

Its inaugural session, however, was postponed on the request of the Sindh government “due to the impending flood situation”.

As per the statement released today, the change became necessary after the “Government of Balochistan revised its nomination, recommending Mahfooz Ali Khan as its non ex-officio member in the 11th NFC”.

The statement added that the president has given the nod to this nomination, superseding the earlier approval.

The terms of reference set under clause 2 of Article 160 require the 11th NFC to distribute between the federation and provinces the net proceeds of five major tax categories as explained in clause 3 of Article 160.

These include: taxes on income (including corporation tax but excluding salaries paid out of the Federal Consolidated Fund); taxes on the sale and purchase of imported, exported, produced, manufactured, or consumed goods; export duties on cotton and other duties as specified by the president; excise duties; and any other taxes specified by the president.

The notification for the 11th NFC also mandates recommendations on grants-in-aid by the federal government to the provinces, and on the exercise of borrowing powers by both tiers of government.

The new NFC is further tasked with considering sharing of expenditures incurred, or to be incurred, by the federation in respect of matters falling within the provinces’ domain; expenditures on trans-national issues; and financial responsibility for national projects to be shared by both the Centre and provinces.

This apparently indicates the Centre’s intention to push for provincial contributions toward natural calamities, horizontal health programmes, major dams, highways, and motorways. The federal government has also been advocating for an end to population-based incentives, replacing them with social sector performance, along with activation of local governments.

The NFC will also determine grants-in-aid from the Centre to the provinces, set borrowing powers and conditions for both, and assess resources required to meet expenditures of Azad Jammu and Kashmir, Gilgit-Baltistan, and the newly merged districts of Khyber Pakhtunkhwa (erstwhile Fata).