Frozen Award

KP’S petition before the Federal Constitutional Court, seeking Rs964bn as the province’s claimed share of tax revenues since the Fata merger in 2018, may well be a political move by the PTI-led government. Still, it raises larger constitutional and fiscal questions about Pakistan’s federal structure, a dysfunctional National Finance Commission and distribution of fiscal resources among the provinces.

The core issue is whether constitutional and fiscal arrangements can be left frozen indefinitely despite major changes in a province’s demographic and administrative realities. While the Fata merger increased KP’s responsibilities, the province’s share from the federal tax pool is unchanged, raising questions about fiscal rights, as well as the centre’s role under Article 160 of the Constitution.

Can an NFC Award, based on circumstances more than 15 years old, continue as it is indefinitely? And does a major constitutional change like the Fata merger alter provincial entitlements, or require formal amendments in the NFC before a revised share can be claimed? Is the president’s power to modify an NFC order discretionary? Or does that power become a constitutional duty when provincial demographics and territorial composition change? These issues lie at the very heart of fiscal federalism. The centre must do its duty and convene the Council of Common Interests so that stakeholders can discuss the issues raised by KP in its petition and resolve them.

The timing of the petition makes these questions even more important. The current budgetary arrangements have, in effect, locked provincial shares at last year’s level for the next three years to help finance critical federal expenditures. This raises broader questions about the meaning of provincial autonomy. If the provinces are constitutionally entitled to a defined share of the divisible pool, can a fiscal arrangement negotiated under IMF conditions effectively constrain that autonomy?

The debate is particularly significant amid indications of a desire in some quarters to revisit, dilute or reverse aspects of the 18th Amendment. The NFC and the 18th Amendment are closely connected to the question of how the federal system is meant to function. Any attempt to recentralise financial or administrative authority must be examined in the context of the constitutional balance between the centre and provinces. That said, KP should reconsider its decision to move the court to resolve issues that are essentially political in nature.

The fiscal implications of the Fata merger should have first been taken to the CCI, if the NFC process has become hostage to a deadlock. The courts can interpret the Constitution but they cannot be a substitute for cooperative federalism. The CCI must, therefore, be convened so that the centre and all federating units can discuss these issues and addresses KP’s legitimate demands.

Published in Dawn, July 22nd, 2026 ...