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EDITORIAL: According to a Business Recorder exclusive, the caretaker federal government has directed all relevant ministries to finalise the proposal to share expenditures of all devolved functions with provinces (doing the rounds in the power corridors since the 18th Constitutional Amendment was approved unanimously by parliament in 2010), including but not limited to Benazir Income Support Programme, Higher Education Commission and power subsidies.

There is the need to also send back the staff to the provinces of their domicile that are currently serving in these devolved ministries in the centre and the ministries dissolved with their work consigned to the Inter-Provincial Coordination Ministry for liaising between the federal and the provincial governments on all matters that require collaboration.

Four administrations later, including the 16-month Shehbaz Sharif-led administration, the devolved subjects remain with the federal government requiring annual budgetary allocations - for staff salaries as well as for development projects - while the provinces awarded higher resources from the federal divisible pool as per the tenth National Finance Commission (NFC) award in 2010, have yet to develop their capacity to manage the devolved subjects.

Clearly, both the constitutional amendment and the NFC award reflect a consensus within all political parties and though the Pakistan Tehreek-e-Insaf (PTI) was not in parliament, federal and provincial, in 2010 and therefore not a party to the consensus, yet it is noteworthy that Shaukat Tarin, who served as the finance minister during the last year of PTI’s tenure in government, was the architect of the tenth NFC award and, hence, one may assume that the party was indirectly on board.

It is noteworthy that all previous elected governments periodically urged provinces to share the cost of provincial projects and subsidies, especially pertaining to fertilizers, given that agriculture was one of the devolved subjects, but were not able to enforce their suggestions. Provinces refused on the grounds that their balance sheets were in the red and therefore they were simply not able to meet their share of these federally determined costs.

It is relevant to note that a PML-N (Pakistan Muslim League-Nawaz) government, which has traditionally relied on the announcement of mega projects as well as subsidies to garner political support in provinces, especially where it was not in government, may be tempted to continue to inject federal funds into those provinces where it does not form a government.

Be that as it may, this is an economically viable proposal and one can only hope that these measures, as and when implemented, are continued in letter and spirit after the general elections next year – measures that would not only provide the federal government with the fiscal space to meet a higher percentage of its annual budgeted expenditures but also reduce the pressure on raising taxes and thereby burdening the general public to contain the budget deficit that has been unsustainable for the past four to five years.

Critics, however, lament the fact that these directives were issued by the apex committee of the Special Investment Facilitation Council (SIFC) with representation from senior civilian (federal and provincial) and military personnel, a body not representative of the public.

However, what has to be borne in mind is that apex committee SIFC (i) is chaired by the prime minister or a member of the executive, (ii) it was established and empowered by the Shehbaz Sharif-led government, an empowerment that was to continue during the caretakers’ tenure, and is therefore a legitimate high-level forum to take policy decisions, especially those that were already approved by previous administrations and parliaments, and (iii) the country remains in the grip of terror attacks and hence military support is critical to jump-start the economy.

It is reasonable to hope that if these decisions are taken and more crucially, also implemented during the caretaker’s tenure, then the onus of taking politically challenging decisions by the next elected government would exist and hopefully the country would be set on a firm path towards development as the next government would only be required to stay the course.

Copyright Business Recorder, 2023


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Tariq Qurashi Oct 24, 2023 12:09pm
The NFC award is largely based on population; which is too simplistic a formula. Criteria should include poverty levels, the size of the province (and subsequent road network required); literacy levels (especially for women), healthcare coverage, life expectancy, nutritional status; agricultural productivity, per capita income etc. There should be algorithms and a mathematical model developed to factor in all these criteria so that richer parts of the country can transfer funds to poorer areas to assist with their development.
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zaya zaya Oct 25, 2023 03:46am
PTI already wanted under Imran Khan to review 18th Amendment and NFC inequities as 60% of the Federal Revenue was allocated to Provinces and then Federal govt was also asked to assist in Education and Health of the provinces, while carrying the expenditure burden of the Foreign Affairs, Defence and the Bureaucracy with Safety, Security and Justice.
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