Wednesday August 10, 2022

A matter of trust

January 09, 2021

The federal government has called for acceptance of the 2017 Census results “in the national interest” and promised a fresh census at an early date. There are three problems with the federal government’s offer.

The first problem is with the definition of ‘national interest’. Definitions differ according to perceptions and perceptions are a function of one’s interests. For example, in the view of one province, it is in the national interest to build the Kalabagh dam; for the other three provinces and for social rights and environmentalist lobbies, it is in the national interest not to build it.

Moreover, the history of the application of the doctrine of “supreme national interest” is rather unsavoury. General Musharraf, upon seizing power in October 1999, appointed himself as the chief executive – and in June 2001 appointed himself president in the “supreme national interest!

The second problem is with the content of the new census. The issues with the 2017 Census are not to do with technical anomalies. The inconsistencies, identified by several independent researchers as well, are too glaring to be attributed to technicalities. In fact, there are suspicions of deliberate manipulations. And there are no guarantees that the next census will be free of any such manipulations.

The third problem is the timing of the next census. The centre has dangled the carrot of holding the next census before – much before – the next due date in 2026. History again does not offer comfortable examples. General Ziaul Haq publicly committed to holding elections in 90 days, which stretched to 11 years. Currently, the centre committed to carrying out a five percent sample Census to verify the results of the 2017 Census. It has defaulted on the commitment. Thus, there can be legitimate doubt that the offered carrot may be left hanging to rot for an indefinite number of years.

The issue is essentially one of trust. And the unfortunate fact is that the centre, except for a brief period between 2008 and 2013, has been a dishonest broker in matters affecting the provinces. And there are a series of hard instances as evidence. Two such cases, both with respect to the NFC, are particularly blatant.

One, all pre-1997 NFC formulas stipulated the federal-provincial vertical distribution ratio at 20:80. In 1997, the ratio was changed to 63:37. The provinces were persuaded to accept the drastic reduction of their share from 80 percent to 37 percent on the grounds that the size of the divisible pool was being expanded to include customs duty – and 37 percent of the expanded divisible pool would be greater than the 80 percent of the prior divisible pool.

What the provinces were not told was that an understanding had been reached with the IMF to slash import duty rates. The result was that the size of the divisible pool did not enlarge to the extent promised and the provinces never saw the committed millions. Consequently, annual average growth in provincial receipts from the divisible pool crashed from 26 percent over 1992-97 to 7 percent over 1998-2001.

And two, the experience with the 7th NFC was jarring. Sindh had at the outset pointed out that the constitution stipulated General Sales Tax (GST) on Services as a provincial tax, which the centre was collecting and distributing to the provinces. Sindh claimed the constitutional right to collect the tax itself. There was intense discussion involving technical, legal and constitutional arguments.

The centre opposed the transfer; however, at its last meeting in Lahore, the NFC unanimously decided to devolve GST Services to the provinces. All NFC members, representing the Centre and all the provinces, put their signatures to the agreement, which carried the clause devolving GST Services. The signing of the formal accord took place in Gwadar on December 30, 2009 in the presence of the federal finance minister and all the chief ministers.

The accord was sent by the Federal Ministry of Finance to the president for his signature and the NFC Order was issued in March 2010. However, the clause with respect to devolution of GST Services was insidiously missing! The matter was taken up and the prime minister of the time called a meeting, attended by the third ranking officer of the Finance Ministry. His explanation for the omission was telling: “Sir, it was removed because it is not practicable”. He was told pointedly that the NFC is a constitutional body and no civil servant has the right to change the decisions of that entity.

Later, a revised NFC Order, with the missing clause restored, was issued in May 2010. Understandably, therefore, trust remains the principal factor in provinces accepting the centre’s assurances and commitments at face value.

The writer was a member of the 7th NFC and is now a member of the 10th NFC.

Twitter: @kaiserbengali