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October 3, 2004
REVIEW: Too big, too small
THE local government system in the subcontinent is as old as the arrival of the Aryans. They introduced it in the form of the panchayat or village council mainly for the collection of revenues and the maintenance of law and order. The system was reorganized during the British period “as an instrument of political and popular education”. The local government institutions were made responsible for the maintenance of schools, dispensaries, drainage, roads and other public welfare related activities. The post independence period saw massive erosion in the autonomy and efficacy of the local bodies.
The irony is that they remained dormant during the period of the elected governments. The authoritarian regimes resurrect the system using it as a fig-leaf for legitimacy. Ayub Khan gave a political role to the local councils by turning them into an electoral college for the provincial and national assemblies and for electing the president of the country.
In an insightful analysis based on the study conducted when the Local Government Ordinance 1979 (since repealed) was in force, Ayaz Muhammad gives an evolutionary history of the local bodies system in the Punjab. Highlighting their role in socioeconomic reforms, he touches on the size of the local bodies, poverty of their financial resources, lack of political, financial and administrative autonomy and their subordination to bureaucracy.
Written as a doctoral thesis, the book reveals that quite a many councils are either too big or too small with hardly any independent source of income. Some union councils with a dismal per capita income of two rupees only, far from being an instrument of socio-economic development, are a liability. The 34 district councils in the province have a total rural population of 34,241,000, each averaging a population of over one million and an area of 6,040 sq km. The Bahawalpur district council being the largest in the province is spread over an area of 24,830 sq km.
This is in sharp contrast to the corresponding units in the US and the UK. A county in the US measures not more than 3,077 sq km with a population of 75,544 and the one in the UK is spread over 3,477 sq km with a population of 663,853. The author suggests restructuring of the councils as has been done in many other countries, so as to make them administratively and financially viable units besides conforming to the changing demographic and social trends.
Property tax, octroi tax, zila tax, fees and user charges are identified as major sources of the local councils’ income. The octroi and zila taxes were abolished in 1998. Another important source of the local councils’ income is a government grant whose amount and beneficence varies from council to council depending on the political situation.
A major share of the expenditure is claimed by administration leaving little for the local bodies basic functions. Ever increasing population coupled with urbanization and spiralling inflation add to their financial worries. A tardy collection of taxes by the local government staff further constrict their resource availability. The study laments that the councilors avoid taking harsh measures against the tax evaders lest it might cause a dent in their popularity. As a result, the local bodies performance gets steadily worse.
The author refers to the bureaucracy’s ubiquitous interference in the repealed ordinance with the local councils’ affairs. The provincial government could quash any proceeding of a local council, suspend the execution of its resolution or prohibit the doing of anything proposed to be done if it was “in any way against public interest”. In the budget formation process the bureaucrats had a decisive role. They had the power not only to prepare and impose a budget if a local council failed to prepare it but to change or modify the budget prepared by a council, at any time, even after it was sanctioned. The government could, if the situation so warranted, take over the control of local bodies and appoint the government functionaries as their administrators.
Ayaz Muhammad pleads for the autonomy of the local councils to improve their efficiency and productivity. He gives prime importance to financial autonomy and wants the councils to be empowered “to initiate taxes, fix their own tax levels, collect their own taxes and more importantly spend their money in accordance with their own judgment”. He makes out a case for financial equalization in the local councils to achieve “a more balanced economic development between the different regions of the country”. He, in this regard, suggests rationalization in the distribution of government grants on the basis of population, area and income.
Under the Local Government Ordinance, 2001, which has replaced the 1979 Ordinance and which the author takes up in a cursory way, the present government launched the devolution plan with fanfare in August 2002 claiming it to be a silent revolution and a step toward good governance. Elected local governments have been installed in more than 100 districts.
The centerpiece of the devolution plan on paper is substantial autonomy to the local bodies in administrative and financial matters. The new system has been in vogue for more than two years but the local councils’ administrative and financial autonomy is still a far cry. The indications are, in fact, ominous. The abolition of octroi and zila taxes, the largest income earners for the local councils, will make them more dependent on government grants and, in the bargain, more pliable.
Bureaucrats remain a kingpin and a hurdle in the system’s smooth functioning. The elected district Nazims complain that the powers devolved to the local bodies are exercised by the bureaucracy arbitrarily. The taxation proposals sent to the provincial government for approval are ignored and the government functionaries issue directives contrary to such proposals. The government has retained the power to ignore, in public interest, a resolution passed unanimously by a council. On the political front, the devolution plan has sown the seeds of rivalry between the local and the provincial governments.
Local Government Finance, Some political aspects: A Case Study of Punjab
By Ayaz Muhammad
Oxford University Press, Plot # 38, Sector 15, Korangi Industrial Area, Karachi. Tel: 111-693-673
Email: ouppak@theoffice.net Website: www.oup.com.pk
ISBN 0-19-579917-8
240pp. Rs300
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