The price of incomplete devolution

The federal expenditure of defence plus ministries is Rs 3.3 billion plus Rs. 3 trillion (subsidies, PSDP & pensions) and Rs. 8 trillion debt servicing. PSDP could be done easy with as it is not federal subject. By severe audit and accounting, federal government can bring this to Rs. 14 trillion over the time—Senator Zamir Hussain Ghumro.

Pakistan’s federal budget tells two stories that official austerity keeps apart. The Budget in Brief for fiscal year 2026-27 shows gross tax and non-tax revenue of Rs 20.600 trillion and federal expenditure of Rs 18.771 trillion. After the constitutionally protected provincial share of Rs 8.848 trillion, Islamabad retains net revenue of Rs 11.751 trillion and plans to finance a gap of Rs 7.020 trillion. Debate usually moves straight to new taxes. A prior question is whether the Federation should be financing all the functions it continues to perform.

Minutes of the Senate Sub-Committee on Devolution, convened by Senator Zamir Hussain Ghumro on August 17, 2026, place that question before Parliament. They recall that Article 270AA of the Constitution required devolution following abolition of the 47-entry Concurrent Legislative List to be completed by June 30, 2011.

Notifications issued between December 2010 and June 2011 abolished or devolved 17 ministries. The minutes record that several ministries, organisations and functions were later retained or recreated under new descriptions.

This is the unfinished business behind our argument in “Devolution before division”. Pakistan is discussing 12, 15 or 33 provinces and 160 empowered districts while authority already redistributed by the Constitution remains stranded between tiers. Redrawing boundaries cannot cure refusal to obey the existing map of power.

The sub-committee identifies federal operations in health, education, national food security, climate change, housing, water resources, special initiatives, culture and heritage, and narcotics as intrusions into provincial space. It also lists railways, industries, statistics, petroleum, inter-provincial coordination, planning and development, and major ports as matters that must be handled through the Council of Common Interests (CCI), rather than ordinary cabinet control.

Four provisions govern the dispute. Article 142(c) of the Constitution gives a Provincial Assembly exclusive power over matters outside the Federal Legislative List. Article 97 limits federal executive authority to matters on which Parliament may legislate and restricts its extension into a province where the Provincial Assembly also has power.

Articles 153 and 154 assign policy, supervision and control over Part II of the Federal Legislative List to the CCI. The Constitution (Eighteenth Amendment) Act, 2010 also required a permanent CCI secretariat and a meeting at least once every 90 days.

“Coordination” cannot dissolve these boundaries. Nor can an international agreement restore domestic executive authority that the Constitution assigns elsewhere. Foreign Affairs may negotiate a treaty. Its implementation inside a province must still follow the distribution of legislative and executive competence.

The Federation may administer services for the Islamabad Capital Territory, cantonments and federal institutions. Those functions should be identified and costed separately. They cannot justify countrywide parallel bureaucracies.

Senator Ghumro’s broader case needs one legal refinement. The Constitution allocates subjects; it does not prescribe a numerical ceiling of nine federal ministries. Part I of the Federal Legislative List contains many competences.

A ministry’s title alone cannot decide its validity. Federal education functions concerning students abroad, federal institutions and research may have a constitutional basis. Standards in higher education belong to Part II and therefore require CCI control. The sound test is functional, not nominal. That test makes the indictment harder to evade.

Every division, attached department, regulator, grant and development project should identify the precise constitutional entry, CCI decision or federal-territory responsibility supporting it. An unsupported function should end. A valid federal function should be ring-fenced. A Part II function should operate within policy formulated and regulated by the CCI. Parliament should refuse money where this legal basis is absent.

The sub-committee calls for reducing federal outlay from about Rs 19 trillion to Rs 13 trillion. In a supplementary note shared with us, Senator Ghumro estimates that defence and the core Part I ministries require about Rs 3.3 trillion. These figures should initiate an expenditure audit, rather than be presented as immediately available savings.

The Rs 18.771 trillion outlay includes Rs 8.054 trillion for interest, Rs 3 trillion for defence services, Rs 1.169 trillion for pensions, Rs 2.680 trillion for grants and transfers, Rs 1.091 trillion for subsidies and Rs 1 trillion for the federal Public Sector Development Programme. Abolishing duplicate divisions cannot extinguish those obligations.

The figures still show why a line-by-line audit is overdue. Current and development demands allocate about Rs 71.2 billion to the Federal Education and Professional Training Division and Rs 53.3 billion to the National Health Services Division.

National Food Security and the Pakistan Agricultural Research Council receive about Rs 33.7 billion. Water Resources receives about Rs 107.3 billion and Railways about Rs 111.1 billion. Not every rupee is necessarily outside federal competence. Every rupee requires classification. A constitutional expenditure audit can distinguish legitimate federal work from duplication, tied grants and projects that bypass the governments responsible for delivery.

The CCI must become the working centre of cooperative federalism. Its permanent secretariat cannot remain a token demand of Rs 118 million while ministries and divisions control Part II subjects. The secretariat needs professional divisions, shared federal-provincial data and published decisions. The Prime Minister must convene it on schedule. Cabinet cannot settle CCI matters first and seek provincial endorsement afterwards.

In comments shared with us, Senator Ghumro identifies another weakness: local elections have themselves been centralised. Articles 140A(2) and 219(d) expressly place them with the Election Commission of Pakistan (ECP). Moving this responsibility to the provinces requires a constitutional amendment, not an administrative order.

The case deserves consideration. Central control has not secured timely elections. Islamabad’s municipal term ended in February 2021 and repeated legal and boundary changes frustrated fresh polls.

Provincial control alone is not a safeguard. Provincial governments have also delayed local elections and rewritten systems for partisan advantage. Any amendment should create independent Provincial Election Commissions, protected tenure and an automatic election timetable before a council’s term expires. India offers the closer comparison: its State Election Commissions conduct panchayat and municipal elections. The body conducting the poll must be insulated from both federal and provincial executives.

Senator Ghumro’s second proposal is that local governments must possess their own taxes. This is indispensable, though it should not be confused with fiscal isolation. Property tax, land-value charges, user charges, parking, licences and local fees create accountability because residents can compare payment with service.

Sindh’s transfer of urban immovable property-tax collection to local councils is a useful beginning. Councils also require authority to maintain valuations, enforce collection, set rates within statutory bands and retain predictable proceeds.

Article 160 distributes federal taxes between the Federation and provinces; it gives local governments no direct seat at the National Finance Commission (NFC). That does not prohibit provinces from making formula-based transfers from their own consolidated funds, including revenues received under an NFC Award. A Provincial Finance Commission (PFC) does not reopen the federal award. It allocates provincial resources according to population, poverty, revenue effort, service cost and need.

India demonstrates why own taxation and transfers are complements. Its constitutional scheme authorises local taxes, requires State Finance Commissions to recommend shared taxes and grants, and asks the Union Finance Commission to supplement local resources through state funds. Poor districts cannot finance comparable schools, water, sanitation and transport from a narrow local tax base. Predictable equalisation is as necessary as local revenue effort.

Pakistan needs a public devolution ledger. The Cabinet Division should map every federal function and rupee against Part I, Part II, a territorial responsibility or another express provision.

CCI should approve the treatment of Part II institutions. Parliament should sunset unsupported programmes and transfer staff, assets, liabilities and records without interrupting services. Provinces must then complete the chain by giving elected councils defined functions, own revenues, formula transfers, open budgets and independent audit.

Rs 7.020 trillion federal financing gap cannot be blamed on incomplete devolution alone. It does, however, make constitutional indiscipline unaffordable. Islamabad cannot demand more taxes while declining to show why each function belongs there.

A federation becomes credible when power, money and accountability meet at the constitutionally assigned level. Pakistan wrote that principle into the Eighteenth Amendment. Sixteen years later, it is time to put a balance sheet behind it.

Copyright Business Recorder, 2026