THE seventh National Finance Commission award has made the four provinces richer and the federation poorer. This could be good news for the provinces' quest for financial autonomy but not such good news for the non-provincial units of Gilgit-Baltistan (GB), Azad Jammu and Kashmir (AJK) and the Federally Administered Tribal Areas (Fata), that depend on the federal kitty to make their ends meet.

Now with an even bigger chunk of revenue from the centre to the provinces, the non-provincial units will have an emptier federal basket to draw from. Leaving the three units out in the cold will not only deepen their sense of deprivation, the socio-economic 'malnutrition' of the non-provincial entities could exacerbate the ongoing crises.

Friday's landmark consensus on the distribution of financial resources involving multiple factors is indeed a major development in inter-provincial as well as province-centre relations. Since the loss of East Pakistan there has been a history of Punjab wanting population as the sole criterion of resource distribution, whereas the three other provinces have been gritting their teeth to have other factors such as poverty, backwardness, revenue generation and geography included. It seems that the explosive Balochistan, the edgy Sindh, the angry NWFP, the Taliban and other insecurities teamed up to force a change of mind in Islamabad and Lahore.

As the four chief ministers and the federal finance minister were celebrating the NFC in a 'brotherly' atmosphere, another historic event was taking place as Syed Mehdi Shah of the PPP took oath of office as the first chief minister of Gilgit-Baltistan administered by federal minister-cum-governor

Qamar Zaman Kaira. It is now up to the versatile Mr Kaira to make sure that his chief minister — regardless of the ambiguous constitutional status of Gilgit-Baltistan — is received as a younger brother, and not a stepbrother, by the other four chief ministers.

It will take some special effort to get the GB chief minister, AJK prime minister and a representative of Fata into the big boys' NFC club. But this is what is required to right the wrongs caused by outdated policies. Needless to say, the sooner Fata, AJK and GB are involved in national decision-making forums, the better the federation will function as a coherent entity.

Gilgit-Baltistan is currently following the universal principle of 'no representation, no taxation' in letter and spirit. It is clear that people there are not going to pay direct taxes as long as they have no representation in parliament; however, one must remember that they do pay for all indirect taxes like general sales tax that is included in the price tags of all consumer products moving up the Karakoram Highway. Presently, GB contributes to the federal resource pool through tourism and mineral-related revenues, custom duties of cross-border trade from China through the Karakoram Highway etc.

There is also scope for additional trade-related revenues once the Tajikistan-Ghizer, Srinagar-Astor and Kargil-Skardu roads are opened. Besides, the region could claim upstream water rights and royalty on upcoming hydropower resources once the Diamer dam, Bunji and other mega hydro-projects are completed.

Similarly, AJK feeds the federal coffers through cross-border trade with Indian-administered Kashmir, minerals, forests, hydro-power and more importantly remittances from the large number of Kashmiris living in Europe, America and the Middle East.

On the other hand Fata — now globally associated with terrorism — is a crucial development challenge. Ignoring the financial needs of the region could imperil peace and development in the entire country and beyond. Unlike AJK and GB, Fata has representation in parliament but no direct taxation, as laws promulgated by parliament do not cover the region. Distorted by years of conflict, Fata — both its people and institutions — are now hardly taxable. But again, it's a border region with a thriving cross-border trade, in addition to drugs, weapons and terrorists. It would be plainly wrong to leave Fata at the mercy of external donors.

One way to help Fata overcome its isolation is to develop the region's stakes in the federation and bring into the mainstream its stakes in federal processes. Hence, even a passing reference to Fata in the NFC agenda would have had a therapeutic effect on its tormented people.

It is about time that the exclusive NFC club comprising the centre and four provinces started looking at the three non-federating units as stakeholders, even if at the second tier of the overall federal architecture. Not only do these three entities draw resources from the common resource pool, which the four provinces and centre have divided among themselves, over the years the country has spent a major share of its military expenditure in defending and managing conflicts in these areas.

Thus in some way inclusion of the non-federating units in the NFC is a direct investment in better civil-military relations. As to how participation of these units in the NFC process could be made possible, that is a task cut out for the constitutional reform committee of parliament. One way to go about it is to create an 'NFC 2' for the second-tier units.

But there is a silver lining for AJK, Fata and Gilgit-Baltistan in the new edition of the NFC award. The acceptance of backwardness, revenue generation and inverse population density as criteria for horizontal resource distribution to the provinces is something they should cheer, even from the sidelines. In addition to special grants they should seek a proportionate raise in line with the new criteria. The three must not lose hope and keep at it, as it is only a matter of time before these now voiceless entities will break into the NFC club.

ismail.mik@gmail.com