Name : Kazim Raza Memon ERP # 17702

Assignment # 02

Council Of Common Interests (CCI):

A body that is procreated under the premises of constitution is called a constitutional body or authority.
Bodies which are not based on constitution are called statutory bodies or authorities. Statutory bodies
include the Federal ombudsman Office, Federal Public service commission, Security and Exchange
commission and etcetera. The constitutional bodies and institutes include the senate ( upper house ),
National assembly ( lower house ) and the Council of Common interests ( CCI ). The Council of Common
Interests ( CCI ) is the constitutional body of the government of Pakistan.

The fundamental working of council of common interests is the settlement of disputes between
provincial and federal units. It is a dispute resolution forum. It is a common feature of federation around
the globe. Across the earth, many countries have such bodies which settle the conflicts of indigenous
people representing different cities, states, communities, and governmental bodies. It is created under
the article 153 of the constitution of Pakistan. After the 18 th amendment in the constitution of 1973,
after every 90 ninety-day time-period, council of common interests must have a sit in. Chief Minister of
all the provinces of Pakistan, President, and Prime Minister are the part of sit in. President has the
authority to appoint three members to be the part of sit in. Prime Minister chairs the meeting. Besides,
other member of cabinet, are also the part of the meeting. Members of cabinet include Abdul Razzaq
Dawood, Fehmida Mirza and Abdul Hafeez. Article 154 of the constitution of 1973 further defines the
functions and procedures of council of common interests. The article advocates few obvious workings of
the constitutional body which are: Resolving Disputes, economic planning, tasks assigned by the
parliament. Before 18th amendment, parliament did not have much authority to authorize council of
common interests, but now CCI is obliged to follow the orders of parliament.

The first ever council of common interests was called inter-provincial coordination ( IPC ). Inter-
provincial coordination was created under the constitution of 1956. But IPC could not last longer and it
was abrogated in 1958 because of the Martial Law which was imposed by General Ayub Khan. The new
constitution was procreated in 1962 but there was not any mention of council of common interest in it.
The name of federal was de facto missing in the constitution of 1962. The critics elaborated the need of
council of common interest in the constitution of 1962. They described how the loopholes got stronger
in the absence of CCI. There was not any forum that could get diversity and disputes among diverse
clans and communities resolved. The CCI could cater the downsides but it did not exist. This could be
one of reasons why the East and West Pakistan collapsed for forever. The political technocrats felt the
need of this constitutional body, Council of common interests, to be entrenched again. And it was re-
procreated in the constitution of 1973. CCI was unfortunately disbanded from 1977 to 1985 because the
government thought that it could not resolve the issues of provinces and federal. After the ban was
lifted, different amendments were made to make council of common interest more beneficial, so
different laws and rules of procedure were introduced in 1991. It was again disbanded in 1999 because
of the martial law imposed by the General Musharaf. It was again given the governing authority in 2003.
Then the 18th amendment of 2010 changed the status of council of common interests. The key focus of
CCI is part 2 of the Federal Legislative List which include the electricity, water and etcetera. Because
most of the issues happen to be on the basic matters of electricity, water, and other natural resources.
Resolving all such issues, economic planning, implication of the policies is all in the working sphere of
council of common interest.

From 1974 till 2010, Council of common interest could only hold 11 eleven meetings which is very
upsetting. In all those meetings, different resource stealing from small provinces to large provinces was
one of the issues that centered the tables of Council of Common Interests. As Sindh generates the
largest revenue but Punjab gets the highest revenue. Baluchistan is enriched with natural resources like
gas, chromite, but it gets almost nothing of it. CCI has tried to tackle these issues but because of political
involvement, it could not achieve the objects which it was created for. Pakistan, a deep state, has
remained a handicap to few transparent constitutional and statutory bodies like Council of common
interests ( CCI ).

National Finance Commission Award ( NFC ) :

Under the article 160 of the constitution of 1973, a commission was entrenched to cater the financial
imbalances between Federal and provinces. It was a lucrative initiative put forth by the first prime
minister Liaqat Ali Khan in 1951. The commission was named National finance commission Award or
NFC. Its fundamental workings are to manage the resources for all the provinces to meet their
expenditures. National finance commission enables all the provinces to meet their expenditure liabilities
while alleviating the horizontal and vertical fiscal imbalances. According to the article 160 of the
constitution, the national finance commission formulates different economic, non-economic, and tax
collecting policies for both provincial and federal bodies. It provides the economic strategies yearly for 5
five consecutive years of any government in power. Total of seven 7 national finance commission
awards have been reimbursed since 1971 and 10 national finance commission awards are held since
1951 founded on the premises of All India government act of 1935. The latest 10 th national financial
commission award was constituted which was rejected by Sindh provincial government. The latest
national finance commission which was unanimously accepted by every level of federal and provincial
government, was constituted in 2009 by the Pakistan’s People’s Party ( PPP ). Before 2009 – 2010
amendment of the constitution of 1973, resource sharing and budget allocation was based on the one
and only factor which is population. Commission in practical terms would initially take out the
percentage of resources to be given to provinces, say, 40 percentage, then the national finance
commission would give the bigger part to the provinces with larger population. But in 2009-10 further
factors were introduced in the national finance commission to base the rule for resource allocation. It is
also called the Multiple Factor formula.

The multiple factor formula included some new factors which are : the poverty and level of destitution
in the region of the country. Revenue generation was the key point because before the seventh national
finance commission award constituted of the 18 th amendment, the provinces were generating lesser of
revenue but were getting more resources like Punjab which was getting the highest revenue, but Sindh
was generating the highest. Population was also one of the obvious factors that followed the seventh
national finance commission award. Backwardness was another important factor added in 7 th NFC
award. Regions which were backward in education, educational institutions and infrastructure, health
institutions and technological advancement were given extra care in the form of extra resource
allocation. The one last factor added in the new ordinance of 7 th national finance commission award
was Inverse Population Density. As Baluchistan is less Population Dense whereas it is humungous in
area, so national finance commission decided to offshore extra resources to Baluchistan.

The national commission award is chaired by the president of Pakistan. President supervises all the
functioning of the commission. President advocates commission on taking measures regarding fiscal
transfers to cater to the horizontal fiscal imbalances and vertical fiscal imbalances between all four
provinces. Fiscal imbalances are occurred when revenues and expenditures mismatch. Horizontal fiscal
imbalance is when revenues do not match the expenditures of different regions of a country. Vertical
imbalance describes a situation in which expenditures and revenues mismatch for different reasons for
different level of governments.

Transfer of economic resources among governments of provincial and federal is handled by the
president of Pakistan in accordance with the constitution of All India Act 1935. The commission owns
some financial experts, mathematicians, and economists who are technocrats in their respective fields.
All such political and financial technocrats and economists analyze different trends and data of revenues
and expenditures and then recommend some policies and formulas to the provincial and federal
governments for five consecutive years of a government. In 2010, the seventh National finance
commission award was enacted after successive political coalitions and agitations, which influenced the
distribution formula of revenues. Shaukat Tarin, the finance minister released a statement, “ the inverse
population density, and the derivative poverty rate has become a new parametric factor in calculating
the program’s award. “

The resources or revenues are largely generated from the two popular ways which are Tax revenues and
Non- tax revenues. Tax revenues constitute the Divisible Pool. Resources in the pool are divided among
federal and provincial governments. Taxes are collected by Federal Board of Revenue ( FBR ) and all of
them are part the Divisible Pool. The taxes are mainly sales tax, corporate tax, excise duty, custom tax,
income tax, and excise tax. All these taxes are included in the Divisible Pool. 57.5 percentage of the
whole goes to provincial governments after the 7 th NFC award. That 57.5% is further divided into four
provinces based the Multiple Factor formula which was devised in the 7 th NFC award. 51.7% of 57.5%
goes to Punjab, 24.6% goes to Sindh, KPK receives 14.6%, Baluchistan gets 9.1%. The remaining 42.5
percentage of tax revenue stays with federal government. Provincial governments and federal
government compete to get highest share of revenue and budget by national finance commission based
on achieving more stability of financial, economic and harmonical status.