The government's reputation has been recently battered by a plethora of administrative issues relating to sugar, power and trade policy, amidst others, but the likelihood that a provincial consensus may be achieved on NFC award for the first time in 13 years deserves them a pat on the back. It also shows that democracy in Pakistan, though limply, may indeed be finding its feet.
Talks are currently under way to achieve a national consensus on distribution of revenues amongst provinces and given the historically contentious nature of the issue, chances are we are in for the long haul. But with Punjab finally conceding to consider other population-plus distribution criteria, and leading political parties eyeing votes from provinces other than their main base, the air abounds with hope that this time around, talks will not end in stalemate.
Leaving political bickering aside, here are a few recommendations the government should consider for current and subsequent NFC awards, while capitalising on this rarely found aspiration to reach a compromise. - In order to bring a harmony between the centre and the provinces, there has to be a systematic approach to decentralise, capacitate and to encourage the provinces to generate their own revenues to reduce administrative and financial dependence on the centre in the long term.
While increasing tax powers of provinces is necessary to foster provincial legislation for opening new areas of economy and administrative functions, it should at the same time be in harmony and must avoid duplication and loopholes. - Agreed, that the federal government doesn't have the fiscal space to exclude unconstitutional elements from the divisible pool, such as GST, at present; it should nonetheless make a gradual timeline to do and stick to it, in tandem with suggested decentralisation.
- This year's NFC might see the inclusion of other criteria such as revenue collection, area, backwardness (or development gap) and war against terror in addition to population.
While this is a good development, both the centre and provinces also need to appreciate the importance of other variables as well, for a country as geographically, demographically and infrastructurally diverse as Pakistan.
These, in accordance with the practices in developed and developing economies, should include:
-- inverse income distribution
-- inverse population density
-- natural resource endowment
-- poverty
-- environmental consideration,
-- fiscal discipline, and
-- degree of sub-province distribution
-- Knowing that the key to successful public service delivery is fairness and transparency, an independent technical body of experts should be set up in order to remove perceptions of biasness. This becomes even the more necessary in this case, as the centre is not seen as an honest broker in inter-provincial revenue distribution due to domination of Punjab.
Such a body should not just look into revenue distribution but also other related thorny issues such as water distribution and natural and hydel power royalties.
These should be periodically reviewed, in order to keep pace with changing dynamics of the economy, which should be upfront, announced, and publicly discussed before implementation. - On a related note, efforts should be made to develop human capital, as there are just a few handful public policy and social choice experts in the country. There is a need to strengthen academic establishment in this regard and encourage students to take interest in the field.
-- Lastly, work towards reducing fiscal federalism by decentralisation and local body system. This will not just help improve democratic tendencies, but also help bring more people in tax net.
In addition, it can help document the economy - perhaps the root of administrative failures in the country - which in turn will not allow leaving economic decisions to whims and surmises, but on real verifiable data.