The share of provinces in the distribution of tax revenue from the federal divisible pool was increased from 49 percent to 57.5 percent under the 7th National Finance Commission (NFC) Award of 2010. On the contrary, governments of small federating units did not succeed in expanding the capacity of national building departments to ensure judicious utilisation in time of additional resources that are transferred from the center to them.
Before the announcement of 7th NFC Award, all government departments used to submit excess and surrender statements to finance departments in the closing month of each financial year, giving justification of expenditure in excess and surrender of unutilized funds. Perhaps that standard procedure is no longer mandatory, if one looks at lapsing of 75 percent development funds in Khyber Pukhtunkhwa.
The provincial government has instructed 25 government departments not to include new development schemes in the Annual Development Programme of next financial year, focusing more on the completion of ongoing projects. Government intends to slash public sector development programme, allowing the departments of Agriculture, Health, Elementary and Secondary Education, Higher Education and Industries to include new development projects in their annual development programmes. Funds allocations shall also be increased to these departments. It remains to be seen as to whether Higher Education Department addresses the financial crisis of old public sector universities so that these institutions are not compelled to abnormally increase admission and tuition fee of students. The management of Abdual Wali Khan University has already approved 10 percent increase in admission fee of BS and M. Phil study programmes.