Nomeen Kassi
The increasing population is an issue that concerns the entire world. It leads to a significant socioeconomic decline in a country and poses a threat to the world’s finite resources. It is challenging for a government to manage its resources and population accordingly. States with limited resources prioritize population control initiatives and resource management.
Admittedly, the developed world has implemented its population control policies more accurately, thereby successfully controlling its population. However, developing countries such as Pakistan have flawed policies and implementation mechanisms, leading to a rise in population rather than control.
Pakistan’s population is growing at a tremendous speed. Today, Pakistan stands as one of the world’s largest countries in terms of population growth, ranking as the fifth most populous country. Currently, Pakistan’s population is 241.49 million, a 1.96% increase in 2023. It is seriously affecting the socioeconomic well-being of the population. Regardless of having one of the oldest family planning programs in the country, the population increase is still at a tremendous speed. One of the major contributor is the resource distribution mechanism in Pakistan, known as the National Finance Commission Awards (NFC awards).
The NFC award is the financial formula of resource distribution between provinces and the federal government. The NFC series were initiated to regulate and control the financial imbalances between the provinces and the federal. It also aimed to equally manage the financial resources of four provinces to meet their expenditure liabilities.
The NFC awards are constituted under Article 160 of Pakistan’s constitution. After a series of six economic programs since 1951, the 7th NFC Award was signed on 30th December 2009. Before the 7th NFC Award, population was the sole criterion. The 7th NFC Award introduced the Multiple Indicator Criterion (MIC).
The recent NFC formula is: population 82%, poverty and backwardness 10%, inverse population density 2.7%, and tax revenue/generation 5%. Population indicator having massive weight, incentivizes population growth in Pakistan. Provinces rather want to have more population to get more resources from the federal than to have population control and receive limited resources. They neglect investments in family planning.
Currently, Pakistan’s economy is struggling. The rapidly increasing population is the key driver of the socio-economic backwardness of the country. With the tremendous population growth, Pakistan faces immense pressure on its resources. As a result, provinces want to acquire as many resources as possible. The NFC distribution mechanism also results in unequal distribution between the provinces, causing a rift among them.
Allocations based on a population-dominated formula often lead to economic disparities. Provinces with larger populations receive more funds, enabling better service and infrastructure. Meanwhile, smaller, less developed provinces, such as Balochistan and Khyber Pakhtunkhwa, receive lesser funds and, therefore face underdevelopment.
Additionally, disparities in resource distribution exacerbate regional inequalities as economically disadvantaged provinces struggle to finance infrastructure, health, and education. This uneven distribution hinders balanced economic growth, perpetuating poverty and social issues in the underfunded provinces, further widening the gap.
NFC Awards has given massive weightage to the population indicator. Resultantly, provinces are unserious about population control. Consequently, the population in Pakistan is increasing as more population indicates more resources. Also provinces have overstated the population figures to secure a larger fund from the federal. This approach can inadvertently encourage population growth as governments may prioritize larger populations over sustainable development.
Similarly, Population share is not considered a good indicator of fiscal distribution and is used only in a handful of countries. Even the countries that use population share as the criterion for revenue distribution typically record a rather low weightage. Nigeria is an exception as its transfer is 100% based on population. Pakistan too follows in the footsteps of Nigeria, with 82% weight, a huge percentage is dedicated to the population.
A debate on revising the NFC formula is essential to ensure equitable resource distribution. The current population-heavy criterion neglects poverty, backwardness, and infrastructure needs, deepening provincial disparities. Introducing broader metrics like development gaps and resource utilization or even population control can promote fairness and also help in sustainable development by controlling the population. NFC must foster balanced growth and reduce socio-economic inequalities among provinces.
The next NFC award should not only promote efficient provincial expenditure but also incentivize population control by reducing the population indicator to 2040%. Alternatively, the population weightage could remain at 82%. However, it should be divided into subparts such as population growth and population control. The NFC Award should incentivize population control so that provinces get a share for controlling the population. This will keep a check on the provinces.
Another recommendation is that Pakistan’s program and policies regarding population control, has no cost-and-benefit analysis for the individuals. Governments should give incentives to discourage the social behavior of an increased number of children. There should be positive reinforcement for fewer births and punishments for more births, a negative reinforcement.
Governments follow the ‘downstream approach’, focusing on the individuals. Instead, they should focus on the environment to discourage population growth in the ‘upstream approach’. It would promote an environment that discourages population growth. resultantly, the birth rate will decline.
Lastly, development and poverty should be given more weight in the NFC Awards. New indicators, such as area in absolute terms, not population, should be added. Additionally, infrastructure deficiency and development incentives could be indicators to promote development in the province and end disparities. Another could be population control efforts. Population control indicators would incentivize population control rather than increase.
The NFC Award is an outstanding initiative towards federalism and consolidating the fiscal positions of the federating units. However, it is largely lopsided, where an unreasonable and disproportionate weight is given to the population. It created a much-desired fiscal space for the provinces; however, it failed to redress the provincial disparities, given its skewed concentration on population as a major indicator. The NFC award formula is one of the major contributors to the population growth in Pakistan, thereby, it need to be changed and reduced.
Ms. Nomeen Kassi is a Research Assistant at Balochistan Think Tank Network (BTTN), Quetta.
