Khyber Pakhtunkhwa (KP) presented a series of significant demands during the inaugural session of the 11th National Finance Commission (NFC) on Thursday. The province’s proposals focus on increasing its financial share and addressing constitutional questions regarding the former Federally Administered Tribal Areas (FATA).
The provincial government has formally demanded an increase in its aggregate share from the existing 14.62% to 19.62%. A central argument is the inclusion of the former FATA region into the NFC award. The KP government stated, “The existing NFC has not been in accordance with Article 160; it has been constitutionally contentious owing to the non-inclusion of the former FATA region.”
Furthermore, KP seeks to triple the weightage assigned for the fight against terrorism from 1% to 3%, recognising its prolonged role as a front-line province in the conflict.
Beyond the share increase, KP’s demands include several specific fiscal and constitutional revisions. The province has called for resolving outstanding issues related to Article 161 of the Constitution, which concerns royalties on natural resources.
Read: New NFC Formula to Cut Punjab’s Share, Boost KP & Balochistan
It has also recommended an amendment to the excise duty distribution formula and a review of the excise duty imposed on gas. Additionally, KP has proposed resolving ongoing disputes regarding the windfall duty levied on oil and gas. To ensure consistent progress, the provincial government has demanded the establishment of a monthly schedule for NFC sessions.
In line with Sindh, Khyber Pakhtunkhwa has opposed any move to reduce the overall provincial share in the vertical distribution of resources. Currently, the resource distribution formula allocates 57.5% of the divisible pool to all provinces collectively, with the federal government retaining 42.5%.
Under the present horizontal distribution among provinces, Punjab receives 51.74% of the provincial pool, Sindh 24.55%, Khyber Pakhtunkhwa 14.62% (including an additional 1% for the war on terror), and Balochistan 9.09%.
