VER SINCE the PML-N government came to power, it has back-pedalled from the spirit of the last NFC award. In the latest budget, it has announced a step to disallow the inclusion of sales tax on services paid to the provinces as an input adjustment.

This is the latest in a series of measures that takes the economic management of the country away from what was envisioned by the NFC award. In addition, the provinces have been full of complaints that their share of the funds collected under the federal divisible pool an amount that comes to almost 44pc of gross federal revenue receipts this year is usually not released on time. The growing transfers to the provinces each year since the NFC award was announced in 2010 have weighed on federal finances, creating a perverse incentive to find ways to roll back the gains made by the provinces in that historic award. It is crucial though that the spirit of that award be advanced rather than rolled back, and provincial governments be strengthened rather than disempowered, for the federation to become stronger.

The present government is moving in the opposite direction though. Since provincial transfers, once agreed in the NFC award, cannot be reduced as per the Constitution, they have found new and innovative ways to chip away at the edifice envisioned in the eighth award. They have withheld the transfers on various pretexts, or asked provinces to run obligatory surpluses. Last year, the budgeted surplus estimated from the provinces was Rs297bn, which was then revised up by 13pc to Rs336bn. This year the budgeted surplus is Rs339bn, which will also inevitably be revised upward. These are largely forced surpluses and they come on top of administrative delays in the release of provincial funds.

The Sindh government has rightly raised alarm over another measure in the finance bill this year, the effect of which will be to prevent the collection of sales tax on services by the provincial revenue authorities. The KP government has similarly been concerned over the failure to release net hydel profits, and protested how these have been pegged to a paltry amount of Rs6bn per annum.

The biggest evidence though of the government`s reluctance to advance the spirit of the eighth NFC award lies in its failure to even hold the meetings required for the next award. The first meeting took place on April 28 this year, when working groups were formed, almost three years into the government`s term. Building a working relationship with the provincial governments can burnish the political credentials of the PML-N, which has suffered under the perception of being a party from Punjab. But thus far it appears they are not interested in broadening their support beyond the province they control.