Peshawar, December 1, 2025 — The University of Peshawar hosted a one-day seminar titled “NFC Share and Challenges Faced by Khyber Pakhtunkhwa” at the Sir Sahibzada Abdul Qayyum (SSAQ) Museum Conference Hall. The event brought together a diverse group of political leaders, journalists, academics, and students for an in-depth discussion on the province’s evolving fiscal landscape and its share in the National Finance Commission (NFC) Award.
The seminar was organized by the Development Insights Lab (DIL) in collaboration with the Society of Economics and Development Students (SEDS) and the Business Incubation Center (BIC) of the University of Peshawar. The session was moderated by Dr. Fahim Nawaz, Deputy Coordinator DIL and Coordinator SEDS.
In his welcome remarks, Professor Dr. Johar Ali, Vice-Chancellor, University of Peshawar, underscored the importance of evidence-based debate on fiscal federalism, especially at a time when the province is demanding a fairer share of national resources.
Delivering the keynote address, Dr. Sajjad Ahmad Jan, Chairman, Department of Economics and Coordinator Development Insights Lab (DIL), provided a conceptual and technical overview of fiscal federalism and the NFC Award. He explained the division of resources between the federation and provinces, the structure of the divisible pool, the criteria used in the 7th NFC Award (including the 82% weight assigned to population), and the implications of the FATA–KP merger for the province’s rightful share. He also highlighted the distinction between NFC-based transfers, straight transfers from natural resources, and other federal grants, and showed how delays in updating the NFC have constrained KP’s fiscal space.
A distinguished panel of political leaders — Mr. Ahmad Kundi (PPP), Ms. Shagufta Malik (ANP), Maulana Jalil Jan (JUI-F), Mr. Kamran Bangash (PTI), Mr. Taimur Jhagra (PTI), Mr. Inayat Ullah Khan (JI), and Mr. Salah ud Din (ANP) — shared their perspectives on KP’s fiscal rights, the impact of delayed NFC awards, the financial implications of the merged districts, and the need for a transparent and equitable distribution formula that reflects KP’s security burden, underdevelopment, and ecological contributions.
Senior journalists — Mr. Lihaz Ali, Mr. Fida Adeel, and Mr. Mehmood Jab Babar — brought in a strong media and public-interest lens, stressing the importance of clarity in public communication, consistent advocacy at the national level, and sustained accountability around federal–provincial resource sharing.
In his concluding remarks, the Vice-Chancellor expressed gratitude to all speakers, organizers, and participants for contributing to a meaningful and timely dialogue on one of the most critical financial issues facing the province. The seminar concluded with a lively question-and-answer session, followed by group photographs.
Key Issues Highlighted
Based on the keynote presentation and the panel discussion, several core concerns emerged:
- Outdated NFC Formula: KP’s share in the NFC still reflects pre-merger population and area, despite the constitutional merger of the erstwhile FATA districts with the province.
- Over-Reliance on Population: The 7th NFC Award assigns 82% weight to population, which disadvantages less populated but poorer and more vulnerable regions such as KP and its merged districts.
- Underfunding of Merged Districts: The merged districts have high poverty and infrastructure deficits, yet have not been fully integrated into the NFC formula, leading to a persistent financing gap.
- Security Burden and Reconstruction Needs: KP continues to bear the brunt of the war on terror — in terms of lives, infrastructure, and economic disruption — while receiving only 1% additional share from the divisible pool.
- Revenue Attribution Issues: Economic activity originating in KP often generates revenues collected elsewhere, particularly in cities where corporate headquarters or ports are located, resulting in an underestimation of KP’s fiscal contribution.
Recommendations for the Upcoming NFC Award
Drawing on the analytical framework presented by Dr. Sajjad Ahmad Jan and the consensus emerging from the seminar, the following recommendations were emphasized for consideration in the upcoming NFC Award:
- Recalculate KP’s Share Post-Merger
- Update KP’s NFC share to fully incorporate the population and area of the merged districts.
- Consider treating the merged districts as a distinct unit within the NFC framework, to ensure predictable and protected funding for their long-term development.
- Reduce the Disproportionate Weight on Population
- Lower the 82% population weight and introduce a more balanced formula that includes poverty, backwardness, area, security burden, climate vulnerability, and forest cover.
- This would bring Pakistan closer to international best practices in fiscal equalization.
- Enhance KP’s Security-Related Allocation
- Increase KP’s additional security allocation from 1% to 3% of the undivided tax pool to support reconstruction, law-and-order expenditure, and the social and economic rehabilitation of conflict-affected communities.
- Integrate the Merged Districts into the NFC Framework
- Move beyond ad hoc or short-term packages and formally include the merged districts within the NFC Award, with a clear, multi-year resource commitment aligned with their development needs.
- Recognize KP’s Environmental Role
- Introduce an environment/forest cover criterion in the NFC formula to compensate provinces like KP that maintain a large share of Pakistan’s forests and bear the cost of environmental protection and climate resilience.
- Correct Revenue Collection Distortions
- Adjust the revenue collection / generation criterion so that provinces receive credit for where economic activity actually takes place, not only where revenues are recorded or collected.
- Ensure Regular, Timely NFC Awards
- Adhere strictly to the constitutional requirement that NFC Awards be finalized every five years, and establish institutional safeguards to prevent prolonged delays and interim arrangements that disadvantage provinces.