Beyond the NFC Award there is the forgotten PFCs

There is no dearth of patriotic discussions and sermons on the strengthening of the centrifugal forces and the need to build national cohesion in our country. But there’s very little discussion on how the centre deprives the provinces and how the provinces are reluctant to share the revenues with the local governments.

To establish a true democracy and build national cohesion in Pakistan, which is a multi-national state, the federating units must be given not only maximum political autonomy but also control over their natural resources.  The NFC award should be revisited giving more weightage to underdevelopment and contribution to the national exchequer.

One of the reasons why democracy has remained tenuous in Pakistan is that it hangs in the air without strengthening the local government foundation. The ruling political parties have not only tried to dilly-dally the local governments elections, but when they had to do it reluctantly under the pressure of the Supreme Court of Pakistan, they whittled down the latter’s administrative and revenue generation powers.

The provinces, with the exception of the KP government, had failed to update the Provincial Finance Commissions. National and provincial level politicians prefer the discretionary they get for the development of the respective constituencies. This not only creates a window for corruption but also gives them the power in their constituencies. The schemes undertaken by them from these discretionary funds are basically the functions of the local governments.

Take for instance the Sindh last PFC which was awarded in 2007 stipulated that 55% of the provincial revenues would be allocated to the local governments on the following formula: population 40%; infrastructure services 35%; development needs 10%; area 5% and performance 10%. The performance is gauged on the basis of 5% primary school enrolment and 5% subject to the revenue collection. The new NFC was due in 2013 but nobody talks about it now.

The crucial missing element is the taxes and royalties collected from the districts on their natural resources such as mining, oil and gas explorations and production, seaports, et cetera. The centre shares the royalty on the oil and gas production but the provinces do not share it with the districts from where these resources are being exploited. Bear in mind that incidentally most of such resources are found in the most underdeveloped areas of the country. Instead of sharing the profits from these mineral and oil and gas resources with their respective districts on an institutional basis — the local government, some protection money is paid to the influential people of the area.

These influential people hardly spend anything for the welfare of the people of their community, a good example of that is the Sui gas fields in the Bugti area. And much propaganda is spun around these pittances. That is one of the reasons that the local population is usually against exploitation of the resources whether it is by the government or by some private sector companies. There is a strong feeling in the communities living in and around these natural resources and the common refrain is that ‘what do we get when resources are exploited.’

The same is true when the people of Balochistan in general and Gwadar in particular resent the development schemes in the region. The provincial and national governments are supporting it .The local population, whenever they get the chance to talk freely, express their resentment. There are genuine reasons for resentment should be in addressed by building their stake in the project. For instance of 5% municipal tax should be imposed on all the goods and services created by the seaports of the provinces. The local governments should also be given at least 25% of the royalty and the profits of natural resources exploited from their respective areas.

Such measures result in a paradigm shift, inhospitable local communities will become hospitable and there will be competition between the districts to invite investments in their areas. It’s not reinventing the wheel but we have seen in many developed democracies that local governments try to attract investments in the areas so that they get better revenues, more employment and increase the goods and services produced by these areas.

We have heard many cynics telling us that it won’t make much difference to the people of these districts as the money would be siphoned out by the local governments’ office bearers. The first question I ask them is is that happening in the nationalist provincial level also, who have full control of these resources and the powers to impose taxes? As a matter of fact it is easier to check corrupt practices at the local government level as the elected members live within the community and not in the provincial and federal capitals only visiting their constituencies once in awhile.

Strong local governments will strengthen the foundation of democracy as the people at the grassroots level will have the stakes in the system. The military governments had not only survived on  the strength of their gun power, but they also established local governments to reach out to the people. All democrats believe in the maximum autonomy for the federating units. But they did not approve the military government bypassing the provincial structure and going down to the local governments directly.

Having said that, it is also important to remember that all government’s policies should be litmus tested to decide whether these policies are pro-common people or are to serve some vested interests only. Each policy has to be supported or opposed on an individual basis after evaluating them on the principle stated above and not on the basis of or overall like and dislikes of the decision-makers. They make some policies to serve their own interests but if consequently some good flows to the people we should demand further improvements instead of rejecting them out rightly.

The writer can be reached at

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