Distribution of resources between the federation, the provinces and local governments – Opinion


History is replete with evidence that economics is the underlying basis of most political action and reaction. In the case of states that are governed as a federation like Pakistan, United States of America, India, Australia, Canada, this subject is well defined in the Constitution. Under Article 32 of the Pakistani Constitution, there is a three-tier governance structure in Pakistan – the federal government, provincial governments and local governments. As will be explained below, prior to 2010 there was an obvious gap in the Constitution regarding the management of affairs by these three levels of government.

Over the past 50 years of Pakistan’s history after 1973, some fundamental questions regarding governance have remained unanswered. This led to serious political problems and resentment within some constituent units of the federation. In 2010, substantial changes in this regard were made by the 18th Amendment to the Constitution. Two extremely important changes were introduced in the Constitution. These are:

  1. Section 160(3A) provided that the provinces’ share of the National Finance Commission’s allocation would not be less than the previous allocation;

  2. Section 140A, which required the creation of local governments with financial and administrative powers.

These two amendments were made simultaneously and they had to be implemented with legitimate intent for the benefit of the people of Pakistan. It is regrettable, however, that Section 140A was never implemented with the spirit and intent behind its introduction.

This led to serious political and financial problems for the country. Concretely, after the 18th Amendment, the federal government, with all its responsibilities for debt service and defense, almost went bankrupt and the provincial governments, without any devolution to local bodies, found themselves short of money. .

As Acting Finance Minister of Sindh in 2013, I am aware of this reality. The story in other provinces was not different either and there are serious complaints from people in southern Punjab about it. It is extremely unfortunate that this matter has not been settled out of court especially in Sindh and that the ruling party in Sindh introduced the Local Government Act in 2013 and 2021 which according to most legal experts, violates the spirit of Section 140A of the Constitution. Initially, in the 2001 law on local authorities, 47 departments were to be deconcentrated. Subsequently, the number was reduced to 31 in 2013 and now, in the 2021 law, only 14 departments have been devolved to local authorities. These are unwarranted actions.

When the Local Bodies Act 2013 was introduced, it was challenged under Section 184(3) of the Constitution in the Supreme Court of Pakistan. The main issue was the interpretation of Section 140A of the Constitution. The Supreme Court of Pakistan, in its Order 4 of 2017 dated February 1, 2022, clearly explained Section 140A of the Constitution.

The Supreme Court of Pakistan ruled that all the actions of the government of Sindh in this regard were unconstitutional. For example, the laws relating to development authorities (KDA), sanitation (KWSB), mass transit (Mass Transit Authority) have been declared invalid. This order of the Supreme Court is binding under Section 199 of the Constitution by the High Court of Sindh for which an application should be made to the Honorable Court.

The Sindh government has indicated that it is not comfortable with the order and may file a petition for review over it. Review is not a call and can only deal with any errors floating on the surface of the command. Apparently there is none in this case.

Therefore, this case can now present a fait accompli. It would therefore be desirable for the government of Sindh to recognize that this is not a political subject. It is the question of financial and administrative deconcentration which has been mandatory since the insertion of article 140A in the Constitution. Residents of smaller cities and towns will also benefit and the distribution of resources will be wider. The Sindh government must also understand that by not resolving the issue with other political actors, it has created the ground for the Supreme Court of Pakistan to look into the matter. Now the ball is not in their court.

The chaos that existed is not without cause. The financial aspect of the matter paints a very uncomfortable picture. The resources available with Sindh province during 2020-2021 was Rs 1.452 billion. The excess cash can be identified by the fact that there was Rs 85 billion of excess cash carried over.

Expenditure which was directly controlled by the government of Sindh amounted to about 1 trillion rupees. For example, the share of Karachi Municipal Corporation which should have been at least Rs 500 billion if Section 140A had been applied has been reduced by more than 80% or even more. Two former mayors of Karachi have publicly stated that their duty is only to keep toilets clean in municipal areas if there are any.

The political government of Sindh is harming its own cause by depriving the metropolitan cities of Karachi, Hyderabad, Sukkur and Nawabshah of their legitimate authority and resources. It is the unwarranted distribution of functions and financial allocations that has led to a complete polarization of politics 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 issue is settled and the purpose of the federal structure can be achieved.

It is expected that the Sindh government will introduce a reasonable Local Bodies Act in Sindh as it is bound by the above judgment of the Supreme Court of Pakistan. It has been observed in the recent past that there has been an attempt to create further dissent by delegating powers directly to municipal cities such as Liaquatabad City, Malir City instead of Municipal Corporation of Karachi which is body governed by law.

This is also true for rural areas where there are union councils for districts and municipal committees for respective areas, such as Sehwan municipal committee under Dadu union council. In the opinion of the author, this can be verified by international best practices. The powers and functions of local bodies cannot be devolved in this way.

However, the government of Sindh must not lose sight of the fact that in this modern and transparent world, there can be no reason to deprive the people of their right under the Constitution. We must learn from our history of the breakup of our country where the cause was real or perceived economic deprivation and misuse of resources. We cannot afford to reproduce such errors.

It has taken us 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 elected officials. If politicians continue to act in this way, people will be forced to look for a possible but unsavory solution for governance that ensures financial fairness.

The clear message from the Supreme Court of Pakistan is that if there is an 18th Amendment, then there will be devolution to local bodies. Otherwise, a new wave may emerge to repeal the 18th Amendment, which could raise other issues. Therefore, it is imperative to realize that the province and the country can no longer afford such polarization.

Copyright Business Recorder, 2022


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