Grim walkout

The chief ministers of three out of four federating units of the country namely; Sindh, Khyber Pakhtunkhwa (KPK) and Balochistan - walked out of the National Economic Council (NEC) meeting in protest against the Centre's insistence on its proposed total Public Sector Development Programme (PSDP) inclusive of federal and provincial development budgets for fiscal year 2018-19. The walkout, the chief ministers contended during their joint press conference at the National Press Club, led to a loss of quorum with only four of the nine-members of the NEC remaining - Chief Minister Punjab had left earlier - which made approval of the PSDP for next fiscal year invalid.
Federal Minister for Interior and Planning, Development and Reforms Ahsan Iqbal stated that the smaller provinces wanted some development schemes added to the PSDP, whose funding, after the 18th Amendment, was the responsibility of the provinces though he added that the Centre would continue to support backward provincial areas. Miftah Ismail, Special Advisor to the Prime Minister on Finance, Revenue and Economic Affairs while talking to a section of the media pointed out that approval of the NEC is 'not mandatory for the federal PSDP or provincial Annual Development Plans.'
Article 156 of the Constitution stipulates that the NEC Chair will be the prime minister, and it would comprise the four chief ministers and one member from each province, as well as four members nominated by the Prime Minister; Article 156 (4) notes that "the quorum for a meeting of the Council shall be one-half of its total membership." Thus the three chief ministers were correct in pointing out that the quorum was lost when they walked out. However, Article 156 (2) stipulates that the NEC "shall review the overall economic condition of the country and shall, for advising the federal government and the provincial governments, formulate plans in respect of financial, commercial, social and economic policies; and in formulating such plans it shall, amongst other factors, ensure balanced development and regional equity and shall also be guided by the Principles of Policy set out in Chapter 2 of Part-II." Thus while the three chief ministers maybe right in maintaining that balanced development and regional equity was not ensured in the PSDP yet Ismail is right when he states that the NEC's role is advisory and it is answerable to parliament. Sadly, the incumbent government is relying on its parliamentary majority to ramrod next year's budget a mere 34 days before the end of its tenure.
One would, however, have hoped that given the myriad economic problems facing the country today coupled with the increasingly confrontational approach between the Centre and the non-PML (N) provincial governments as elections loom large on the political horizon, the Prime Minister had adopted a stance which strengthened federalism instead of weakening it. As it is the five-year economic legacy of the PML-N gives birth to serious concerns that would have to be faced by the next government ranging from moving towards an unsustainable trade and budget deficits to be plugged through increasing reliance on domestic and foreign borrowing (though the incumbent government continues to adopt an ostrich approach by not acknowledging the actual state of the economy).
The three chief ministers during their press conference added that their budgets for next fiscal year would be limited to four months - till the end of the caretakers' tenure (scheduled to end by early August if the incumbent government does not dissolve parliament earlier in which case 60 days would be allowed) and focus on: (i) supplementary grant budget that is announced by the end of the fiscal year to take account of actual expenditure/disbursements of the outgoing year; and (ii) current and development expenditure for four months with the latter limited to ongoing schemes near completion.
Analysts maintain that the provincial revenue generation may be for the entire year with some maintaining that it would, in all probability, be a continuation of the current year's revenue measures with no additional taxes/relief (to forestall any pre-poll rigging legal challenge). Others argue that the mainstay of provincial revenues is the assessment made by the Centre with respect to collections under the divisible pool and hence the provinces maybe compelled to look at the federal budget to determine their revenue for the next four months unless they restrict their expenditure to the revenue disbursed under the divisible pool for the current fiscal year.