Distribution of resources among federation, provinces and local governments

History is replete with evidence that economics is the underlying basis of most political actions and reactions. In the case of states that are governed as a federation such as Pakistan, the United States of America, India, Australia, Canada this subject is well laid down in the Constitution. Under Article 32 of Pakistan’s Constitution, there is a three-tier structure of governance in Pakistan — the federal government, provincial governments and local governments. As will be explained below, prior to 2010, there was a clear deficiency in the Constitution with regard to management of affairs by these three tiers of government.

In the past 50 years of post-1973 history of Pakistan, certain fundamental questions with regard to governance remained unresolved. This led to serious political issues and resentment within some constituent units of the federation. In 2010, substantial changes on this subject were made through the 18th Amendment to the Constitution. Two extremely important changes were introduced in the Constitution. These are:

1. Article 160(3A) envisaged that the share of the provinces in the National Finance Commission Award shall not be less than the earlier award;

2. Article 140A, which required establishment of financially and administratively empowered local governments.

Both of these amendments were simultaneously made and they were required to be implemented with rightful intent in the interest of people of Pakistan. It is, however, unfortunate that Article 140A was never implemented with the spirit and intent that existed behind its introduction.

This has led to serious political and financial issues for the country. In practical terms after the 18th Amendment, the federal government with all its responsibilities for debt servicing and defence became almost bankrupt and the provincial governments without any devolution to local bodies became flush with money.

As a caretaker finance minister for Sindh in 2013, I am privy to this reality. The story in other provinces was no different either and there are serious complaints by the people of southern Punjab on this matter. It is extremely unfortunate that this matter was not amicably settled especially in Sindh and the party in power in Sindh introduced the local government law in 2013 and 2021 which, according to most legal experts, violates the spirit of Article 140A of the Constitution. Initially, in the 2001, the local bodies law, 47 departments were to be devolved. Thereafter the number was reduced to 31 in 2013 and now in the 2021 law only 14 departments have been devolved to local bodies. These were unjustified actions.

When the local bodies law of 2013 was introduced it was challenged under Article 184(3) of the Constitution in the Supreme Court of Pakistan. The primary issue was the interpretation of Article 140A of the Constitution. The Supreme Court of Pakistan in their Order 4 of 2017 dated February 1, 2022 has clearly explained Article 140A of the Constitution.

The Supreme Court of Pakistan has held all the actions of the government of Sindh on this matter as not in accordance with the Constitution. For example, the laws relating to developmental authorities (KDA), sewerage (KWSB), mass transit (Mass Transit Authority) have been declared invalid. This order of the Supreme Court is compulsorily enforceable under Article 199 of the Constitution by the High Court of Sindh for which application is expected to be made to the honourable court.

The government of Sindh has indicated that it is not comfortable with the order and may file a review petition on the matter. Review is not an appeal and can only deal with any error floating on the surface of the order. Apparently, there is none in this case.

Therefore, this matter may now present a fait accompli. It would, therefore, be advisable for the Government of Sindh to recognise that this is not a political subject. It is the question of financial and administrative devolution of power which is compulsory after the insertion of Article 140A to the Constitution. People of smaller towns and councils will be equally benefited and there will be a wider distribution of resources. The government of Sindh is also required to understand that by not resolving the issue with other political players, it created the ground for the Supreme Court of Pakistan to delve in the matter. Now the ball is not in their court.

The chaos which existed is not without cause. The financial aspect of the issue poses a very uncomfortable picture. The resources available with the Province of Sindh during 2020-2021 were of Rs 1,452 billion. The excess of money can be identified from the fact that there was Rs 85 billion excess cash carried forward.

The expenditure which was directly controlled by the Sindh government was around Rs 1,000 billion. For example, the share of Karachi Municipal Corporation which should have been at least Rs 500 billion if Article 140A would have been applied was reduced by over 80% or even more. Two former Mayors of Karachi are on record as having stated that their duty was only to keep the toilets clean in the municipal areas if there are some.

The political government in Sindh is hurting its own cause by depriving the metropolitan cities of Karachi, Hyderabad, Sukkur and Nawabshah of their rightful authority and resources. It was the unjustified distribution of functions and financial allocations that led to complete polarisation of politics that is detrimental to the security of the province and the federation. Nevertheless, after a proper definition of Article 140A of the Constitution by the Supreme Court of Pakistan this matter is settled and the objective of the federal structure can be achieved.

It is expected that the Sindh Government will introduce a reasonable local bodies law in Sindh as it is bound by the aforesaid judgment of the Supreme Court of Pakistan. It has been observed in the recent past that there was an attempt to create further dissent by devolving powers directly to the Municipal Towns such as Liaquatabad Town, Malir Town instead of Karachi Municipal Corporation which is the body under the law.

This is also true for rural areas where there are Union Councils for Districts and Municipal Committees for the respective areas like Sehwan Municipal Committee under Dadu Union Council. In the author’s view that can be verified by international best practices. Powers and functions to local bodies cannot be devolved in this manner.

However, the Sindh government must not lose sight of the fact that in this modern and transparent world there cannot be any ground to deprive the people of their right under the Constitution. We have to learn from our history of break-up of our country where the cause was real or perceived economic deprivation and wrongful utilization of resources. We cannot afford to replicate such mistakes.

We have taken fifty years to grasp the true meaning and nature of local bodies and local governments and that too has been done for us by the court and not by the elected people. If the politicians continue to act in this manner then people will be constrained to look for a possible but unsavoury solution for governance that ensures equity in the financial matters.

The clear message of the Supreme Court of Pakistan is that if there is 18th Amendment then there will be devolution to local bodies. Otherwise, a new wave can emerge to repeal the 18th Amendment which may raise other issues. Therefore, it is imperative to realise that the province and the country cannot afford such polarization any further.

Copyright Business Recorder, 2022