THE government’s decision to “devise a mechanism to hold provinces accountable” for how they spend money they receive as their share from the federal tax pool under the NFC award is at best illogical and at worst lacks a constitutional basis.
It will also be seen as an attempt by the centre to deflect public attention from its own failings in implementing reforms to boost tax revenues, cutting back on its own growing current expenditure and reducing its size despite the devolution of several major functions to the federating units after the passage of the landmark 18th Amendment.
The move is going to be interpreted by critics as a likely assault on hard-won provincial autonomy with a view to extending greater federal authority over the provinces, especially those ruled by the opposition parties. More importantly, the way in which the government has put across its intentions to control provincial spending choices gives the impression as if it is giving them money as charity. Islamabad must understand clearly that federal taxes are collected from the territorial jurisdictions of the provinces with their consent and part of these funds is transferred to them under a constitutional scheme.
Additionally, the provinces get the powers to spend their money the way they want to from their assemblies. Therefore, any plan “seeking to improve the mechanism for funds distribution” will require radical constitutional changes.
However, there are no two opinions on the urgent need for implementing extensive financial governance reforms to slash non-essential expenditure, plug financial leakages and create greater fiscal space for undertaking social and economic development and making provinces truly accountable to their citizens rather than to Islamabad.
That will involve significant changes in the budget processes and investment in technology at every tier of the provincial government. Also, the process of administrative and financial devolution launched with the 18th Amendment will have to be taken further down to the district and even lower tiers. The elected representatives, rather than bureaucrats, at every level — from the federal to the local tier of government — should have the final say on how public money is spent.
The provinces should stop looking towards the centre for cash outside the NFC mechanism every time they need resources to fix their own mess. The centre would do everyone a service by helping the provinces reform their budgets and devolve powers to the local government instead of trying to take from them to pay its own bills.
Published in Dawn, December 18th, 2020