More than six million people exist but are not counted in Pakistan’s budget. The census has recorded them and they continue to bear the conflict and trauma they have endured for decades.
These people were merged into Khyber Pakhtunkhwa through the 25th Amendment eight years ago and yet they vanish from the scene when that constitutional obligation has to translate into financial reality. Why have eight budgets and three NFC cycles failed to give the Merged Districts their due share? Is this oversight, a lacuna in the law, or a decision to keep them deprived?
KP’s share of 14.62 per cent was fixed at the 7th NFC using the agreed formula and the statistical data then available. What deserves protection is the formula, not the figure – yet it is the figure that is treated as though it were written into the constitution, which it is not. It is nothing more than the result of applying the 7th NFC formula to 2009 population data.
The 25th Amendment merged 6,155,571 people into KP’s constitutional territory. Census 2023 recorded every one of them, lifting KP’s share of national population from 14.6 per cent to about 15.9 per cent and its territory from 9.4 per cent to 12.8 per cent of Pakistan’s total land area.
Run these figures through the same unchanged formula and the share rises to 16.79 per cent – and this is not an outside estimate: KP’s own Budget White Paper arrives at exactly the same figure. That increase of 2.17 percentage points, set against the Rs8,848 billion Budget 2026–27 transfers to the provinces, is worth on the order of Rs192 billion a year to KP. The federal government conducted the census itself, the formula is its own instrument, and the calculation could be completed within days. It has simply been left undone for eight years.
Most people assume the NFC is the forum where KP’s share will eventually be put right. It is not, and the reason has little to do with goodwill or procedure. Any increase in KP’s share has to be financed by someone, and under the existing formula, that someone can only be Punjab, Sindh and Balochistan. Will any of them voluntarily surrender a portion? I put the question seriously rather than rhetorically, because I sat in those negotiations as finance secretary of Khyber Pakhtunkhwa, and I was in the rooms where the 7th NFC Award was worked out. No province agreed to give up a single rupee of its existing share.
What made consensus possible was that the federation stepped back from its own vertical allocation – from 52.5 per cent to 42.5 per cent – so the divisible pool grew and every province ended up better off in absolute terms. No comparable sacrifice is expected from the federation now. Arriving at a consensus in which the gain of KP is the direct loss of three other provinces – all of whom are quite aware of this – is, at best, an uphill task. Insisting on the NFC as the only pathway is simply not tenable.
The Merged Districts’ deprivation is not limited to the NFC share. At the time of the 25th Amendment, parliament committed through formal resolutions to allocate 3.0 per cent of the divisible pool every year for ten years to bring the Merged Districts at par with the rest of the country. This was the key incentive for the merger. The ten years expire in 2028. Against the Rs700 billion that should have reached the Merged Districts in the first seven years, only Rs132 billion has arrived. The remaining Rs568 billion has evaporated.
Apparently, three assurances have been conveyed from the prime minister: resolution of the Merged Districts’ NFC share in 180 days; if the NFC fails, a summary to the president; and an increase in AIP allocation. One cannot question the sincerity, but the mechanism is uncertain. Article 160 requires the president to act on NFC recommendations; a prime ministerial summary re-determining provincial shares through the executive route would carry no binding force. As for the AIP assurance, increased by how much, from which baseline, and what becomes of the Rs568 billion already owed?
The deeper question is this: if the prime minister has the executive will to act now, why have eight years passed? The Finance Division requires no new Award and no presidential order – only a direction from the federal cabinet, which has been available since Census 2023 was notified. What has been missing is political will, and its absence has tracked, with some consistency, the state of relations between Islamabad and Peshawar. The people who pay for that are not the politicians on either side; they are the residents of Bajaur, Mohmand, Khyber, Kurram, Orakzai, North Waziristan and South Waziristan.
Cooperative federalism, but in which direction? Budget 2026–27 announced that all four provinces had agreed that their share of FBR collection above last year’s base would go to the federation for strategic requirements. The spirit is admirable. But is cooperative federalism designed to flow in one direction only? The same budget contains no provision for the roughly Rs192 billion a year owed to the Merged Districts, no reconciliation of the Rs568 billion AIP shortfall, and no ring-fencing of the 3.0 per cent commitment for its remaining years. KP, already unable to fund its obligations to six million deprived citizens, is asked to demonstrate national solidarity while the federation quietly defers its own.
In 2020, close to two-thirds of Merged District residents backed the merger and believed it would make their lives better. By 2024, fewer than half still believed it. In some districts, poverty now exceeds 70 per cent. These are communities that have already lost their sons, their livelihoods, their homes and the better part of two decades of ordinary life. When people who have sacrificed that much stop believing the state will keep its word, what tends to replace their hope is not patience.
What is being asked of the Finance Division is no different from what it has done after every previous census: apply the existing 7th NFC formula to the current population data and notify the provincial shares that result. No new formula, no constitutional amendment, no fresh consent from the provinces. And if the Finance Division still declines to perform so routine an administrative act, Article 175E of the constitution exists precisely for this kind of situation – not to impose a policy choice, but to compel a calculation the federal executive is already bound to make.
Parliament has voted, the constitution has been amended, the census has been taken and the formula sits on the books. The single thing that will not fall into place on its own is provincial consensus, and I have already explained why it cannot. The people of the Merged Districts are left waiting behind a veto that was never theirs to answer for. That clock is already running, and whether or not it is honoured, the facts set out here will be no different when it stops.
The article was originally published in The News on Aug 5, 2026
Sahibzada Saeed Ahmed
The writer is a former federal secretary and former finance secretary for KP. He is a member of ASPIRE-KP, a think tank based in Khyber Pakhtunkhwa.
