Devolving disparities

Devolution under the 18th Amendment is essentially a contested political move. With all its stated benefits of decentralisation, it tends to absolve the federal government of its key responsibilities. The federal government has been completely stripped of its responsibilities in planning, industry, agriculture and rural development, and social services and welfare (including social protection). According to the Economic Survey of Pakistan, the abolition of 17 ministries brought a combined development budget impact of Rs49 billion.

One can argue that the amendment represents a step forward but encompasses several missteps when it comes to creating a harmonious political and economic union. The 18th Amendment has reinforced an outmoded ‘pot-belly’ model (federalism of provinces) whereas the federalism of the local government is the key to effective socioeconomic transformation in countries like Pakistan.

In Western Europe, Canada, the US and in Asian countries such as Korea and China, local government spending accounts for 11 to 16 percent of the GDP and plays a key role in the delivery of services such as education, health and local infrastructure. The initial growth in China at the beginning of the economic reforms is largely attributed to the pivotal role of local governments.

In Pakistan, the devolution plan does not offer a palpable strategy and financial pledges for an effective local governance framework.

The federal government has so far failed to realign its organisational structure with the reduced mandate with no signs of serious efforts towards rationalising the huge federal government bureaucracy despite the devolution of significant powers to the provinces. On the contrary, federal budgeted current expenditure (excluding defense) rose from Rs1,819 billion in 2011-12 to Rs2,066 billion in 2012-13. It continued to increase till the budget of 2015-16, although 17 ministries with a total budgetary allocation of Rs49 billion in 2011 were abolished. In addition, outlays for public order and safety are rising although the centre continues to shrug off much responsibility for a poor and deteriorating law and order situation by maintaining that it is a provincial subject.

Radical/fundamental reforms are needed to right-size the federal and provincial governments, strengthen local governance, enforce fiscal discipline and citizen-based accountability for service delivery performance, dismantle provincial barriers to factor mobility and internal trade, and restrain the trends of unaccountable governance by ‘empowered provinces’ to mitigate the unintended adverse consequences of the 18th Amendment for nation-building and citizenship in Pakistan.

Development in Pakistan is marred by huge regional disparities in terms of holistic human development which has triggered a sense of deprivation and exclusion. For instance, the HDI for Lahore is 0.806 while for Awaran, Qila Abdullah and Jhal Magsi districts it is 0.467, 0.499 and 0.435 respectively, making them the worst places on earth to live. Ten districts of Balochistan are worse off than the impoverished regions of Sub-Saharan Africa in terms of their human development ranking.

The 18th Amendment, and the 7th NFC Award that supports it, have immense potential to address Pakistan’s crises of regional inequity, poor social outcomes and stagnant and low revenue generation blamed on an over-centralised federal structure. Whether or not the new, far-reaching arrangement of decentralised decision-making will be effective in meeting these challenges depends crucially on how it is implemented.

These objectives will be met only if provinces are truly representative of citizens and thus deliver better than the more centralised federal structure does. If, on the other hand, the substantially increased provincial resources are captured by sub-national elites at the expense of local social classes and/or through tribal custom, the new arrangement may well worsen regional inequity, service delivery and revenue generation.

The yet-to-be-materialised 7th NFC Award’s use of multiple indicator criteria for the distribution of resources is a step forward in the right direction; the distribution design still falls short on various counts. For example, the weight of 82 percent for population share is on the higher side whereas the demographic structure of the population, an important indicator of expenditure needs, does not figure in the distribution design.

Also, the basis of weights assigned to the revenue distribution criteria is unknown and no rigorous exercise seems to have been undertaken to determine these weights. Similarly, matching grants are key elements of the distribution design elsewhere but are altogether absent in Pakistan. Furthermore, provinces will still rely on large transfers from the centre which will erode the incentives of the provinces to generate their own revenues.

There is a need to rethink the mechanisms for resource-sharing as well as the institutional structure of the NFC itself. Despite being the poorest province, and with an increased sense of deprivation, Balochistan got only 9.1 percent of the share from the divisible pool of the 7th NFC Award.

Devolving powers to provinces without developing an effective institutional mechanism for inclusive, transparent and accountable service delivery, equitable distribution of resources and performance monitoring systems may lead to inter-provincial differences becoming formalised.

Statecraft (building the nation-state with universal ideological principles/value system) is still an unfinished business in Pakistan – in that the central government has to play the critical role of transforming nationality-based regional identities into the grand narrative of nationhood (one Pakistan for all). With an unfinished agenda of nation-building, transferring responsibilities to ethnically differentiated sub-national entities may crystalise the difference as political reality.

Communication, cohesion and enhanced coordination between the provinces and the federation is critical. For this the Council of Common Interests (CCI) has to play a proactive role to conform to the spirit of participatory federalism rather than a confederation of disengaged provinces.

Article 38 of the constitution of Pakistan categorically defines the role of the state to “secure the well-being of the people, irrespective of sex, caste, creed or race, by raising their standard of living, by preventing the concentration of wealth and means of production and distribution in the hands of a few to the detriment of general interest and by ensuring equitable adjustment of rights between employers and employees, and landlords and tenants”

In practice this seems to be unattainable when all financial, economic, legal and political instruments to secure these basic immunities are decentralised through the 18th Amendment.

The writer is a freelance columnist based in Islamabad. Email: ahnihal@yahoo.com