Dealing with the disconnect

The JUI-F dharna is making things move. Those who were convicted by courts or scrutinized by law enforcement agencies, including NAB, are getting out mainly on medical grounds. The government is on an ordinance passing spree. The IMF first review has been successful, and WB ease of doing score has improved - the donors are pumping money in. The stock market is booming, and the talks of investors' interest are reviving. This is not the change - this is getting back to old Pakistan style with some synthetic flavor of change. It was the need of the hour as the elite of the country does not have the stomach for change, as such.

What next? What is required to be done to bring about a meaningful change through instilling the structural reforms? How can you ensure that this IMF programme would be the last? How can you bridge in the trust deficit between taxpayers and government, and between investor and government?

The government has to improve its service delivery, and the second element is to extract the potential from agriculture, removing inefficiencies within the energy chain, unlocking real estate potential, and putting the fiscal house in order. Majority of these issues are provincial, and the decision making is central - media, multilaterals, and others scrutiny is mainly at the federal level. There is a disconnect between what is required and who is responsible to do what.

After the 18th Amendment and 7th NFC, the major resources have moved to the provinces while the fiscal imbalances are created at federal level - as direct and indirect debt (energy circular debt) are federal headache, while improvement in the delivery is provincial responsibility. Agriculture is said to be the hidden jewel of Pakistan, and is a provincial subject. The real estate development and cities are said to be the engine of growth, and provinces have the right to work on these, while the so-called will and push is at the federal level.

The traders or many other sectors or high net worth individuals are not paying taxes because the common thinking is why pay tax when the services are peanuts. In true sense of economics, tax is a cost in a society where no or little services are delivered in return - education, health, better environment, safety, justice and the list goes on.

Where we have moved in the past few decades - public service delivery has nosedived. Only parameter where we are better than the region is roads and bridges - for elite to drive cars. There are ten times more two wheelers than four wheelers in the country - but there is no dedicated bike lane anywhere in the country. Some decent work on public transport system is only done in Lahore or Pindi-Islamabad. What about the rest of the country?

We need to ask right questions to get the right responses from the government. We closely monitor the fiscal situation at federal level - tax collection and spending both. But where does federal government spend - debt servicing, defence and pensions of government employees -more than the fiscal share of federal government is gone in a blink.

The share of spending is with provinces. The service delivery is there. The trust deficit has to be bridged there. And even that has to go at third tier for meaningful engagement of community with authorities - to feel the connection. The PTI government has to work on provincial levels. What is being provided there? Who is the CM of Punjab and what has he done in the past 15 months? What about KP? Who will mend things in Sindh? What about Baluchistan? Is there anyone in media or any economist knowing the ground realities or is there someone trying to bring change there?

The energy sector needs to be decentralized. Why some additional or joint secretary-level federal employees are managing a number of Discos? Why can't these be passed on to provinces or even at lower level? Why provinces aren't made liable for debt they are creating at federal level? The discos are to be held responsible for their bottom-line - the energy selling and recovery has to be deregulated.

The talks are of building housing, and opening of real estate. The WB says that land value tax is the key potential - who is to collect and make policies? This has to happen at city and district level. The tax has to be collected at that level and has to be spent there. The districts or cities with better governance will thrive and others will learn from them.

But that is a pipedream. Now even the price control of essential food prices is being managed at federal level. The PM Khan and others with power have to realize that the control has to be passed on to lower levels - make them independent and responsible. Otherwise, the disconnect will only grow, which is bad for the state.