After nearly two years in power, Prime Minister Imran Khan now plans to establish autonomous elected local governments that would enable people at the grassroots to resolve their problems independently. The prime minister told the federal cabinet meeting on July 28 that his government was in favour of the full implementation of Article 140-A of the constitution for empowering local bodies.

All previous governments had ignored this constitutional mandate which in broad terms finds expression in PTI’s unimplemented election manifesto that helped the party to come to power. An eminent economist attributes the surge in inequality and poverty to a political system that gives disproportionate voice to those on the top.

Mr Khan directed the Attorney General of Pakistan to immediately appeal to the Supreme Court of Pakistan for an early hearing and decision on a pending petition relating to Article 140-A. It may be recalled that chairing a cabinet meeting on July 1, the premier had directed all four provinces to make provincial finance commissions (PFC) functional and announce PFC awards.

Complying with the prime minster’s directive, Punjab has just constituted a 17-member Punjab Local Government Finance Commission (PLGFC) in terms of section 174(1)(2) of PLG Act 2019 as mandated, to determine the formula for distribution of funds as per the functions of the local bodies.

Critics say the long-neglected civic infrastructure in Karachi is decaying with the Sindh government largely micromanaging municipal functions

The Punjab local government system has been developed on the Khyber Pakhtunkhwa model. In PTI-ruled KP, the funds are provided to each district based on population, poverty and infrastructure. As in the case of KP, the provincial finance minister will be the chairperson and the minister for the local government.

The PLGFC members include secretaries of finance, local bodies and planning departments, members of the provincial assembly, two economists and heads of tehsil councils and town committees and a metropolitan corporation chief. The PLGFC is expected to hold meetings soon to finalise the formula for distribution of resources among various districts and announce its award.

In the other three provinces, the situation is as follows: Balochistan’s finance minister is reported to have held meetings on PFC with no decision made public so far. Khyber Pakhtunkhwa government established PFC in early February 2019. Sindh Assembly recently passed a unanimous resolution for setting up a new provincial finance commission, but nothing has happened so far.

In a recent meeting with the Sindh Governor Imran Ismail, the prime minister expressed concern why the Sindh government was not announcing the Provincial Finance Commission award. Unless the elected local government representatives become financially, politically and administratively independent, the prime minister said, Karachi’s long-standing problems cannot be solved.

Critics say the long-neglected civic infrastructure in the country’s financial capital is decaying with the Sindh government largely micromanaging municipal functions. They also say the one-off intervention of the federal institutions will not be a durable solution.

The cleaning of the city’s drains is a complex problem. District Municipal Corporation Chairman Rehan Hashmi informed Chief Minister Syed Murad Ali Shah during his visit to District Central that pillars of the Green Line Project had been constructed within the drain in the area and in close proximity to it. Karachi Mayor Wasim Akhtar argues that Frontier Works Organization would clean three big drains that the local government could have done, had it been empowered. The city has in all 38 drains

Though Sindh has a bigger population than KP, its annual development budget for local governments is smaller than KP. Sind has allocated a sum of Rs21.17 billion in the Annual Development Plan 2020-21 against Rs20bn budgeted in the previous year. On the PFC’s recommendation, the KP government has earmarked Rs44.6bn for development plans of ‘settled districts’ in the budget for 2020-21 against Rs46bn last year.

However, only Rs3bn of the total amount were disbursed last year as the KP’s provincial finance minister maintained that no elected local government system was then in place. An additional sum of Rs3.454bn has been budgeted this year for districts of former Federally Administered Tribal Areas territory, now merged with KP.

As stipulated in article 140-A, Mr Khan has also advised the provinces to hold local body elections as early as possible. Sindh is the only province to have elected local governments. The local bodies elections have been delayed for long and election schedules have yet to be announced by Punjab, KP and Balochistan.

Here it is pertinent to highlight two issues raised in a newspaper article by the outgoing World Bank country director for Pakistan Illango Patchamuthu. First, the issue of inertia in government decision-making which, he stressed, needed to be addressed promptly in ways he suggested. Second, “broader economic participation is critical for policymaking to become more responsive to citizen needs.” Though these issues are referred to in different contexts, the problems facing the local governments are the same.

The authority and mandate of the third tier of government need to be redefined as laid down in article 140-A: “each province shall, by law, establish a local government system and devolve political, administrative and financial authority to the elected representatives of local governments.”

An inkling of PTI’s thinking on how to raise resources for local governments can be gauged from a bill submitted by the party in the Sindh Assembly. The bill proposes that agricultural income tax (AIT) should be collected by the provincial government but revenue distribution should be entrusted to the local government department.

Some tax experts believe that if AIT revenues are spent on the villages from where they are collected, the farmers, seeing the palpable benefits, would be encouraged to pay AIT and its collection would go up. The bill also suggests that a formula be evolved to share motor tax and tax on services with local councils.

Under the KP stated-but-not fully-implemented policy, 30 per cent of the annual provincial development budget is to be earmarked for local governments.

The functions of the third tier of government should also be appropriately defined so that what can be managed at the local government should not be replicated at the provincial level.

Published in Dawn, The Business and Finance Weekly, August 10th, 2020