A rare political consensus is emerging around one of Pakistan’s most sensitive fiscal questions: whether the National Finance Commission’s (NFC’s) horizontal distribution formula has for decades rewarded unchecked population growth at the expense of sustainable development.
Although the NFC Award allocates resources among provinces using four indicators – population, revenue generation, inverse population density, and poverty and backwardness – population alone commands an overwhelming 82 percent weightage.
This glaring imbalance has distorted national incentives, embedding demographic expansion into the logic of fiscal allocation even as the country grapples with an alarming population surge, while simultaneously struggling to contend with mounting economic strain.
Against this backdrop, a growing cross-party push for reform is gaining momentum, reflected in a pre-budget session of the Parliamentary Forum on Population held on March 20 that brought together legislators from national and provincial assemblies in an effort to convert long-standing concerns over population management into tangible budgetary proposals, including revisiting the NFC formula.
In recent decades, Pakistan’s demographic trajectory has evolved into becoming its gravest economic challenge. By 2050, its population is projected to swell to nearly 390 million, with roughly 256 million people expected to fall within the working-age bracket, a significant swathe of whom will be under the age of 30.
In many economies, such a youthful population has served as a powerful demographic dividend, fuelling productivity, industrial expansion and long-term growth. But as Senator Sherry Rehman noted at the forum, in Pakistan the potential risks are mutating into a corrosive demographic liability.
The country is failing to generate the economic capacity, employment base and human development infrastructure required to absorb this rapidly expanding young population.
Without sustained investments in education, healthcare, skills development and employment generation, Pakistan’s youth bulge risks intensifying unemployment, economic fragility and social strain. But these investments cannot be mobilised at the scale or pace required as long as the nation’s resources remain perpetually outpaced by the demands of a population expanding at breakneck speed, trapping Pakistan in an unending cycle of underdevelopment and fiscal strain.
It is, then, a spectacular failure of governance that successive governments have sustained systems, which by design continue to reward population growth. And this is not confined to the NFC Award formula alone.
From the allocation of parliamentary seats and the distribution of public sector job quotas at federal and provincial levels to access to admissions in government-run professional colleges, all are heavily calibrated on population shares.
Rather than prioritising indicators such as poverty incidence, revenue contribution and climate vulnerability, the system remains anchored to population-centric frameworks, pushing development needs, the principles of equity and evidence-based governance to the margins.
It is important to note that empirical evidence has consistently shown an inverse relationship between population growth rates and literacy levels: lower literacy is associated with higher fertility, while expanding education helps ease demographic pressure. This underscores the urgent need to broaden access to education, not only to improve human capital outcomes but also to build public awareness around the socioeconomic benefits of lower fertility and responsible population management.
Equally important is the fact that evidence across diverse contexts demonstrates that women’s education and economic participation are among the strongest determinants of smaller family sizes, with empowered women more likely to delay childbirth and make informed reproductive choices.
So, alongside urgently prioritising the revision of the NFC Award’s population-heavy formula, Pakistan must also pursue far-reaching, well-resourced family planning initiatives nationwide, firmly anchored in education and women’s empowerment.
Strengthening primary healthcare systems, expanding reproductive health services and integrating population awareness into school curricula will be critical to sustaining such efforts.
The cost of delay will only exacerbate demographic pressures and further narrow an already shrinking window for much-needed change.
