When a federal state tries to manage its economy using a centrist financial system the result would certainly be no better than what Pakistan had experienced during its first 63 years leading to 2010 when the 7th National Finance Commission (NFC) Award was announced (March, 18) preceding the passage of 18th amendment (April 8). But then the results have been no better since, because since 2010-2011 budget the country has been using the federal system of finances to manage the economy of a state which stubbornly refuses to give up its centrist characteristics.
In fact, the powerful centrist forces have been trying since 2010 to bring back the bad old practice of using the centrist financial system to manage the economy of a federal state with inherent centrist characteristics!
Some influential elements in the country who seem to be still suffering from the colonial mindset believe that giving political and financial autonomy to provinces which they believe are not yet capable of shouldering increased responsibilities, would lead to financial chaos, economic instability and wastage of limited resources. Some dunderheads among them even believe that "granting" full autonomy to the provinces would eventually lead to the country's disintegration.
These status quo forces perhaps fear that the smaller provinces would use the 18th Amendment to drift away from the federation, not realizing that it was because they were being ruled all these years as colonies from Islamabad, negating the spirit of federalism, that the three smaller provinces today seem to be suffering from a massive dose of disillusionment with the federation itself. And that is also why East Pakistan is Bangladesh today.
And here is why the state of Pakistan can survive only as a federal being with federal financial system managing its economy; it has no future as a centrist or a federal state underpinned by an economy based on centrist financial system:
Pakistan comprises four distinct federal units plus two additional ones which are still out of the ambit of our Constitution. Each of these units has its own distinct features. Each is ethnically different from the rest and has its own distinct mother tongue. Our national language, Urdu, is not the mother tongue of any of the units. And our official language, English, is the lingua franca of our rulers while for the ruled it is Greek! Culturally too, these units differ from each other in many distinct ways.
One of the units is larger population-wise than the rest of the three put together. Economically, this unit is relatively richer and more advanced too. Another unit, size-wise, is larger than all others combined, but is the poorest of the four and relatively less advanced.
Of course, the majority of the population inhabiting these units is made up of Muslims. But then in this context as well, Pakistan is five countries in one. Part of it is Saudi Arabia, part Iran, part Turkey, part Afghanistan and part India. Adding to the peculiarities is the perpetual tug of war among various schools of Islamic thought.
It is because of the failure of our ruling elite to recognize these diversities and accept them as such that those who have been ruling this country since Independence have continued to keep looking at Pakistan as a unitary state made up of one unified Muslim Ummah instead of recognizing the kernel of unity in its diversity.
Of course, numerous countries in the world suffer from more challenging diversities than does Pakistan. In Asia, we have India, Sri Lanka and China in the same class. India is perhaps one country with the most diversities and peculiarities; it is more complex than the other three. China being a one-party socialist country has managed to dissolve its diversities into a political crucible to a large extent. India, on the other hand, has managed these diversities and peculiarities by recognizing and accepting them very early on; and used liberal democracy to allow all its states to develop on their own, each using its own comparative socio-economic and cultural advantages.
The major crux of the 18th Amendment with regard to political autonomy was the devolution of 17 ministries, including those of education, food, agriculture and health, from the center to the provinces, allowing the provinces to formulate policies and projects in these spheres in their domain.
Roughly speaking, if the 18th Amendment is implemented in its true letter and in spirit, the federation will have no more than four portfolios to look after - finance, foreign affairs, defence and communication. Additionally, it would need to spare resources for expanding and building physical infrastructure.
It was in this federal framework that the 7th NFC Award was formulated and announced. Under this Award fittingly, the shrunken federal government receives 42.5 percent of the divisible pool, while the remaining 57.5 percent is distributed amongst the provinces on the formula of shares being determined as follows: 82 percent on the basis of population, 10.3 percent on the basis of poverty and backwardness, five percent on revenue collection and 2.7 percent on inverse population density. It was also presumed at the time of announcement of 7th NFC Award that the federal government would focus on expanding the national tax base.
However, successive federal governments since, including the present incumbents, have failed on both counts. The tax-to-GDP ratio remains stubbornly at the decade-old figure of 9.3 percent because of the failure of the Federal Board of Revenue (FBR) to enhance tax collection, while the defunct federal ministries remain in existence and contribute to a large federal cabinet (now as many as 50 federal portfolios) with its attendant high cost.
Prime Minister Imran Khan had wholeheartedly welcomed the 18th amendment and the 7th NFC Award when following the 2013 general elections, his party, the PTI was in opposition while at the same time having political control over just one province, the Khyber Pakhtunkhwa. But today when the PTI is in the saddle at the federal level as well as in three of the four provinces, the PM, perhaps on the urgings of the forces given to colonial mind-set, is being seen applying political pressure on the provinces to give up part of their divisible pool shares. The federal government has also floated the idea of revisiting the 18th Amendment.
The reluctance and apprehensions of centrist forces and other influential political elements have made it almost impossible to draft and pass in time, relevant subordinate legislations both in parliament and the respective provincial assemblies, making it almost impossible to move ahead on the game-changing 18th constitutional amendment.
It has been almost ten years since the 18th constitutional amendment was passed by parliament. But so far the provinces are said to have succeeded in achieving no more than five per cent of what the amendment guaranteed. The biggest hurdle in the way seems to be the federal bureaucracy, which appears to have not yet reconciled to the idea of losing its colonial powers over the provinces. The federalist elements among the public at large and within the mainstream political parties seem greatly disappointed with the progress of implementation of the amendment largely because the Council of Common Interests (CCI), in their opinion, has been consigned to the limbo.
The federal bureaucracy has continued to remain the main obstacle in the way of the CCI coming into its constitutional being. It has rendered the CCI into a spineless entity not able to regulate, supervise and control vital functions accorded by the Constitution. This has jeopardized the basic concept and essence of the 18th amendment that aimed at striking a balance of power between the federation and the federating units. Article 154 of the Constitution is unambiguous: "The Council shall formulate and regulate policies in relation to matters in part II of the Federal Legislative List and shall exercise supervision and control over related institutions." The subjects in question include water and power, petroleum and natural resources, railways, ports, industries and production and inter-provincial coordination.
Another big hurdle in the way is the extension given to Article 143, which empowers the federal legislature to overturn with a simple majority any law passed by any provincial assembly. In fact, instead the government has created a dozen new federal portfolios without the approval of the CCI.
To be sure, the increase in the responsibilities of the provinces, especially their responsibilities concerning social and physical infrastructure demand enormous amounts of resources to meet the huge bill adequately. And unless the provinces tap the real potential of the agricultural income tax and the urban immoveable property tax, it would be well-nigh impossible for them to deliver on this front with any degree of success.
And, meanwhile, the provinces need to set up provincial finance commissions (PFCs) so that adequate funds are made available to the respective local bodies to sufficiently finance their respective responsibilities. Here, one would expect Sindh to take the lead as the provincial ruling party, the PPP always makes a big song and dance about its commitment to the concept of devolution of political and financial powers to grassroots.
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