K-P moves FCC against post-merger NFC extension

K-P moves FCC against post-merger NFC extension

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ISLAMABAD:

The Federal Constitutional Court (FCC) has admitted for hearing a petition filed by the Khyber-Pakhtunkhwa (K-P) government, seeking its due share in the National Finance Commission (NFC) Award based on the population of the merged tribal districts and the payment of Rs964 billion in arrears accumulated since 2018.

Muzammil Aslam, finance adviser to the K-P government, told a press conference that the provincial government had challenged the continued extension of the 7th NFC Award following the merger of the erstwhile Federally Administered Tribal Areas (FATA) with the province.

The K-P government turned to the court after its attempts to resolve the issue politically proved fruitless. Aslam said the petition was admitted for hearing after the FCC chief justice overruled objections raised against it.

"The court has been requested to declare that the President of Pakistan is constitutionally bound to promulgate an amendment and Modification Order under Article 160(6) of the Constitution, and that the federal government is constitutionally bound to advise the president to do so, in order to give effect to the province's revised share," he said.

In 2018, the 25th Constitutional Amendment merged the erstwhile FATA with K-P. The merger added more than five million people to the province and expanded its geographical area by one-third, however, there was no corresponding increase in the province's financial resources, Aslam said.

Aslam, the province's de facto finance minister, said the court had also been requested to declare the extension of the 7th NFC Award beyond 2018 as ultra vires. He added that if the petition succeeded, K-P would receive Rs964 billion in additional resources.

"The province is asking the court to determine whether its share under the NFC should be increased to reflect its expanded size and responsibilities following the 25th Constitutional Amendment," the finance adviser said.

Aslam revealed that the minutes of the last National Economic Council (NEC) meeting noted that if the 11th NFC failed to agree on a new formula, the president would issue an order amending the 7th NFC Award to provide K-P with its due share.

"The NEC meeting minutes have further strengthened the province's case before the FCC," Aslam said. He also welcomed the announcement that a meeting of the Council of Common Interests (CCI) would be convened next month.

"A widening inter-provincial disharmony requires regular meetings of the CCI," he said.

Aslam argued that ignoring the province's demand violated the globally recognised principle that "finance follows functions", resulting in an under-allocation of resources for the additional population of the merged districts.

He said that, for the first time, a province was seeking implementation of a "living NFC" and questioned why the commission had remained stalled. If the petition succeeded, it could significantly weaken criticism of the 18th Constitutional Amendment, he added.

He said the provincial government was not seeking to reopen the NFC Award but was asking for its fair application by ensuring K-P received its rightful share. The Rs964 billion had already been distributed among the provinces, and those funds should now be returned to K-P, he said.

Elaborating further on the petition, Aslam said the court had been asked to determine whether, in light of Article 160 of the Constitution, the federal government's claim of a constitutional deadlock was justified or whether it had failed to fulfil its constitutional responsibilities.

At stake is not just K-P's share, but the integrity of Article 160 itself: whether the NFC remains a periodic, evidence-based and responsive constitutional mechanism, or whether national resource distribution can continue to rely on outdated assumptions after a province's population, territory and responsibilities have fundamentally changed, he said.

The formula continues to be applied, but the figures used in that formula still reflect pre-merger K-P. As a result, the population, geography and development indicators of the merged districts have not been incorporated into the province's share, even though they became part of K-P on May 31, 2018, the petition states.

The K-P government further argued that the case does not seek to undermine the federation or turn the NFC into an adversarial contest among the provinces. Rather, it approached the court because "the constitutional mechanism requires clarity, discipline and good-faith implementation".

The petition also seeks clarity on the relationship between Article 160(4) and Article 160(6) of the Constitution, including whether the president's power to amend an NFC Order is a power coupled with a duty when constitutional, demographic or fiscal circumstances materially change.

Aslam said the provincial government had not committed to providing a grant to the federal government to help meet additional expenditures. Although the federal budget includes Rs1.035 trillion in reverse cash grants from the provinces, only Sindh and Punjab have allocated a combined Rs806 billion for that purpose in their budgets.

He added that the federal government had not approached the K-P government again regarding the grant.