KARACHI, Dec 20: The Sindh Finance Commission is heading towards a sharp clash of conflicting rural-urban interests, as the Sindh government wants ranking of each of 16 districts by services, and has asked the Commission members to declare socio-economic development level in Karachi as the benchmark for the same.
“Ranking of the districts by services can be an aid in devising a matching grants scheme, to assist particular districts, deficient in particular service, to raise the level of that service,” an official communication asked the Commission members, when it met for the third session just before Eid.
The Commission was asked to give due weightage to the needs and demands based indicators drawn up by the UNICEF in matter of distribution of resources among the 16 districts of the province.
At the end of the day, it means pauperisation of the most developed city in Sindh, with virtually no development in less developed districts, where the rural elite—the big and the mighty feudals who rule with the help of police and bureaucracy— will squander the resources as they have neither the desire nor the vision of any socio-economic development. These feudals have successfully resisted all land reforms and tax on their income, including the package announced and legislated by late prime minister Zulfikar Bhutto in 1977. The late General Zia ul Haq won over feudals on his side by quietly repealing the agricultural income tax, incidentally the last piece of legislation done by 1970 elected National Assembly.
But before any decision could be made, a few members of the Commission urged the government to work out revenue generation weightages of each of the 16 districts, which should also be given due consideration in determining the criteria for resources distribution.
Sources close to Sindh government say that an exercise is already under way to draw up economic profile of each of the 16 districts of the province. The provincial Bureau of Statistics has been deployed in each of the 16 districts to work out the revenue generation capacity and indicate income generating potential.
And finally, the full picture of the total provincial resources will be available only after the sixth National Finance Commission gives its award of national resources distribution. The NFC is due to hold its third meeting in Karachi on December 28. It was originally scheduled to meet in Jacobabad by end of November but had to be put off because of the uncertainty that has gripped the national economy after September 11 incident in the US and launching of the US air raids in Afghanistan since October 7.
The awards of resources distribution between the provinces and in the districts of each of the four provinces including 16 of Sindh will be operative from July next when 106 district governments in all parts of the country become operational.
Fiscal decentralisation in Sindh is proving a tricky exercise because measured on an index of one to 100, Karachi is at least 40 points ahead of the next most developed district.
But the argument is that much of the socio-economic development in Karachi and for that matter in other urban centres like Hyderabad or Sukkur is because of the private sector initiative in education, health care, housing and in other fields. Bulk of the revenue that is being generated from Karachi and other urban areas is because of ‘tax culture’ which is hardly to be found in many parts of Sindh or for that matter in many parts of the country.
An abstract of resources distribution among the 16 districts based on 2001-2002 budget prepared by the Sindh government shows Karachi with over 10 million population, is the largest recipient with Rs8.4 billion share. It includes Rs3.31 billion of salaries for most of the 450,000 Sindh government employees posted in Karachi in main secretariat and other places. The non-salary bill of the Sindh secretariat staff, police, education and health is about Rs213 million. Karachi’s share in development funds is Rs709 million while it is getting about Rs420 million under second phase of Khushhal Pakistan and Rs95 million is the transition cost. Almost half of Karachi’s population (5 million) lives in slums.
However, the Commission members and the Sindh government overlooked a fact sheet file of the Central Board of Revenue issued on December 2. The CBR has given revenue collection from four cities which are Lahore, Karachi, Quetta and Peshawar. The punch line of this release is that contrary to general belief Lahore exceeded Karachi in tax collection. It is Rs21.27 billion in Lahore and only Rs13.05 billion in Karachi.
While the Sindh government has remained indifferent, the members of the PFC have no idea at all of this CBR release.