The fiscal aspect

Out of Baluchistan’s total budgetary revenue receipts of Rs 26.4 billion for an average financial year, about 94 percent come from the federal government as its share from the divisible pool of taxes, 28 percent as straight transfers and 22 percent as subvention grants for its backwardness.: Contribution of the province to revenues is around 6 percent which shows its heavy dependence on federal transfer of finances. This is partly due to centralized tax collection especially of the General Sales Tax. Distribution of tax revenues is done as per the provisions of 1997 National Finance Commission Award (NFCA). It considers population as the sole criterion for distribution of revenues among the provinces. Since Balochistan has a low population density, a high level of poverty and backwardness in terms of infra-structure development, population based’division of resources puts Balochistan at a distinct disadvantage.

If the backward regions are intended to be brought at par with developed regions then the distribution of resources should be linked to poverty indexation pertaining to various regions and productivity potential of each respective area. The concept of subvention grants to cater for the- special development needs of a province is not justified. Balochistan also receives direct transfers from the federal government on account of its gas fields. The federal government sets the rate and collects the tax and then transfers respective shares to the provinces. Since Balochistan has no role in this process it is unable to influence the federal government to fight for its rightful share.