'Finance Commission' to be set up to distribute funds among Sindh, local governments

YASIR BABBAR KARACHI: Under the PLGO 2012, a Provincial Finance Commission (PFC) would be authorised to distribute resources between the Sindh government and local councils out of the proceeds of the Provincial Consolidated Fund into a Provincial Retained Amount and a Provincial Allocable Amount. Sindh Governor Dr Ishratul Ebad Khan would constitute this Provincial Finance Commission for the province "hereinafter referred to as the Finance Commission". According to Chapter XII-A of PLGO 2012: "On coming into force of this chapter, the Governor forthwith shall constitute a Provincial Finance Commission for Sindh hereinafter referred to as the Finance Commission. "The Finance Commission shall be headed by the Minister for Finance and shall comprise of such other members as may be prescribed. "The functions, duties and powers of the Finance Commission shall be to make recommendations to the Chief Minister for a formula for distribution of resources including distribution between the Government and the Local Councils out of the proceeds of the Provincial Consolidated Fund into a Provincial Retained Amount and a Provincial Allocable Amount respectively. "Provided that in no case shall the Provincial Allocable Amount be so determined that it is less than the funds transferred to local councils in the financial year 2012-2002 and the establishment charges budgeted for the functions of the Local Council in the same year, excluding transfers in lieu of Octroi and District Taxes. "Provided further that all the monies received by the Government in lieu of Octroi and District Taxes shall be added to the Provincial Allocable Amount separately. "Distribution of the Provincial Allocable Amount amongst the District Council, Taluka and Town Municipal Administration and the Union Administration as shares: "The making of grants in aid by Government to the Local Councils from the Provincial retained Amount and any other matter relating to finance for and of the Local Council referred to the Finance Commission by the Chief Minister or Government or by a Local Council. "The recommendations shall be based on the principles of fiscal need, fiscal capacity, fiscal effort and performance. Before finalisation of the recommendations under Sub-Section (1) the Finance Commission shall hold consultations with the relevant departments of government, Local Councils and, in the discretion of the Finance Commission, with any other body or persons and this process may carry on during the currency of an Order made by the Chief Minister under Sub-Section (5) of this section. "PFC shall forward the provisional recommendations prepared under Sub-Section (1) to the cabinet, which shall provide its views within two weeks failing which the finance Commission shall make its recommendations to the Chief Minister. "PFC may review the recommendations on receiving the views of the Cabinet if any, and on finalisation of its recommendations shall forward them to the Chief Minister. "As soon as may be after receiving the recommendations of the PFC, the Chief Minister shall by Order specify in accordance with the recommendations of the commission under clause (a) of Sub-Section (1), the Provincial Retained Amount and the Provincial allocable Amount, and in turn the shares inter se of the Local Councils and that share shall be paid directly to the Local Council concerned promptly in accordance with the laid down procedure. "Chief Minister may, by Order, also make grants in aid of the revenues of the Local Council in need of assistance and such grants shall be an additional charged expenditure upon the Provincial Consolidated Fund after deduction of Provincial Allocable Amount. "Certain Institutional process of the Finance Commission: (1) In every financial year, at least three months before the finalisation of the Provincial Budget the Finance Commission shall require the Finance Department to submit a statement of estimated revenues and expenditures of Government for the following financial year and shall also require a statement of the Provincial Allocable Amount and its distribution prepared in the light of the Order under Section 120-D(6). "Finance Department shall provide the PFC with a statement of Provincial Allocable Amount and its distribution, prepared in accordance with Order under Section 120-D(6), on approval of the Provincial Budget. "PFC may cause any information required for making assessments and decisions on fiscal transfers to be placed before it from any organisation or office of the Government, or Local Council. It would take all decisions by a majority of members present and voting." September 12, 2012 (Daily Business Recorder)