She urges expansion of tax base, climate vulnerability weightage, permanent NFC secretariat at the governance forum
Senior Provincial Minister Marriyum Aurangzeb participating in the Pakistan Governance Forum in Islamabad. PHOTO: EXPRESS
Senior Provincial Minister Marriyum Aurangzeb participated in the Pakistan Governance Forum in Islamabad on Friday, organised by the Federal Planning and Development Division, where she presented a comprehensive analysis of the objectives, challenges and current fiscal realities of the National Finance Commission (NFC) Award while emphasising the need to protect the rights of smaller provinces.
She stated that the NFC is the constitutional backbone of Pakistan’s fiscal federalism and fundamentally a trust compact between the federation and the provinces, adding that it should operate as a true partnership between the federal government and the federating units, ensuring transparency, fairness and cooperation in all fiscal matters.
The minister noted that any future NFC framework must begin with a realistic assessment of national debt servicing obligations, defence financing requirements, climate vulnerability and water security challenges, which collectively place significant pressure on the federation’s fiscal space. She stressed that these structural pressures must be factored into any sustainable resource distribution model, and that fiscal strain at the centre cannot by default translate into fiscal compression at the provincial tier, particularly with respect to service delivery and human development infrastructure, including health, education and productivity sectors.
Highlighting mounting fiscal and data pressures, Aurangzeb underscored the importance of maintaining strong and sustainable defence spending, calling it indispensable for national security and stability. She called for a careful reassessment of defence expenditures and data-driven fiscal service financing to ensure sustainability without compromising essential national priorities.
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She stressed that the sustainability of the NFC does not mean redistributing scarcity but increasing the national revenue pie so that both the federation and the provinces benefit more equitably and sustainably. She highlighted that expanding the tax base, improving the tax-to-GDP ratio, encouraging provincial revenue generation and promoting economic growth are essential to ensuring long-term fiscal stability.
The minister also recommended that future NFC allocations incentivise provincial revenue generation, promote export growth, industrial expansion, formalisation of SMEs and human development outcomes, while encouraging public-private partnerships (PPPs) in service delivery frameworks at all levels to ensure efficiency, innovation and broader citizen access.
Emphasising future readiness, Aurangzeb advocated dedicated funding streams for climate resilience, forest conservation, preservation of archaeology and flood rehabilitation initiatives. She proposed institutionalising the NFC by establishing a permanent secretariat driven by data science, with a systematic review and report-back mechanism on performance indicators to ensure alignment of national and provincial priorities.
She also called for a review of the weightage of population in the NFC formula and the introduction of climate vulnerability as a formal indicator to make allocations more equitable and forward-looking.
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Aurangzeb further recommended introducing sectoral and periodic review mechanisms to ensure continuous evaluation and reform, alongside a consultative review of the population-based formula involving all stakeholders.
Reaffirming her commitment to safeguarding the rights of smaller provinces, she supported the adoption of a performance-based reward and incentive model to promote fiscal responsibility, governance improvements and strengthened service delivery through PPPs.
Concluding her address, Aurangzeb emphasised that a strong, unified and sustainable NFC is essential for national cohesion, and called for a coordinated strategy on water conservation and the construction of small and large dams to secure Pakistan’s long-term economic resilience. She added that national unity will be the natural consequence of a fairer, transparent and sustainable NFC.
