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May 29, 2020

What’s at stake?

Pakistan is again at a crossroads. The hard-won consensus achieved after decades-long political wrangling is under threat again.

From 1977 to 2010, for 43 years, the country’s politics was defined by deep-rooted mistrust and divisions among mainstream political parties. The 18th Amendment was a rare hope for political stability, unity and direction for the country. And, though the amendment left much to be desired, it was a step in the right direction and towards reconciliation.

Gen Musharraf’s dictatorial rule in the country created waves of unrest, a reign of killings in Karachi, political assassinations, fresh unrest in Balochistan after the killing of Nawab Akbar Bugti. Sindh was burning following Benazir Bhutto’s assassination, the ANP suffered huge losses as some one thousand of its workers were killed in terrorists attacked. But the 18th Amendment was seen as something of a gain for all these sacrifices.

Any amount of autonomy is meaningless without fiscal autonomy. Major tax collection still lies with the centre. Under the National Finance Commission award, the distribution of financial resources is carried out; the constitution guides on the percentage of resources for the centre and the provinces.

The federal government is not a federation; it is a competing component and party to federal resources which are regulated under law by constitutional institutions like the Council of Common Interest (CCI) via the National Finance Commission (NFC).

Pakistan is a federal polity, and resource distribution among the federal government and federating units is guided by the constitution. For years, the centre has ignored its constitutional responsibility of constituting the NFC which is required every year. Several budgets have gone without this constitutionally required new finance award.

Now President Arif Alvi has constituted a very controversial finance commission, which already has been rejected by Sindh over its Terms of References (ToRs) and composition. That is a very bad start; federating units have veto power in the NFC, and a new award cannot be worked out without consensus. The centre’s high-handedness could have been avoided by discussing the matter in the CCI.

There are two fundamental problems with the newly constituted NFC. One is its composition; the constitution clearly mentions who will be its members, thus the president of the country does not have powers to appoint members not listed in the constitution.

Second, the constitution is clear on the agenda of the NFC. The president cannot add new items, not listed in the constitution; that goes beyond the constitutional mandate of both the president and the NFC. The NFC’s sole work is to frame the distribution formula of the tax revenues of the government. In these ToRs, provinces are being asked to pay expenses of the federal government. Under the new ToRs, six new items have been added in the NFC agenda. This essentially alters the federal character of the constitution. If the provinces have to bear the federal expenses then the provinces could demand that they should collect revenue and pay for the federal expenses. That essentially turns the federation into a confederation.

Extracting more financial resources from provinces through unconstitutional means will weaken the federation; such policies will give rise to political unrest in smaller provinces. The case for provincial autonomy is weakened in Pakistan because the largest province does not demand it and also has an upper hand in all affairs of the country, representation in armed and civilian bureaucracy. Any gain of the centre comes at the cost of Sindh because the bulk of resource generation originates in the province.

The NFC has never before asked provincial governments to pay for federal ministries. Azad Kashmir and Gilgit-Baltistan are managed by the federal government; why should people in Balochistan or Sindh share their meager resources? On what ground can this be justified?

The rationale behind the center asking provinces to share the burden, we are told, comes from the impact of the coronavirus on the economy, less tax collection, and shrinking of the economy. What is being overlooked here is that provinces will be facing the same impact if overall tax collection is reduced.

On the contrary, the federal government has already got relief in its debt payment and new loan of $2.4 billion from the IMF and ADB. In the wake of deferred loan payments, the federal government won’t have to pay around $2 billion in current and next fiscal year. So the overall relief to the federal government stands at $4.2 billion; thus, the supposed federal resource deficit is unfounded.

It would be unconstitutional to reduce the share of provinces in the NFC, because under Article 160 of the constitution “the share of the provinces in each award of the NFC shall not be less than the share given to the provinces in the previous award”. In a blatant violation of the constitution, the current government in power is threatening the federal structure of the constitution.

The smaller provinces will just feel betrayed, which is why such moves are not only wrong but dangerous for the future of our federal democracy.

Email: [email protected]

Twitter @mushrajpar