The financial independence to district governments from the provinces was an integral part of the devolution of power plan introduced on August 14, 2001. The bottom line was that the success of the entities at grassroots level would be hard to ensure without giving them sufficient financial autonomy.
For this to happen, the mentors of the devolution plan elaborated fiscal powers, functions and responsibilities for the district governments. New entities were delegated powers for planning and executing district-specific development schemes to ensure the need-based development activities at the grassroots level.
Similarly, the plan also spelt out a comprehensive scheme to give financial freedom to the second and third tier of local governments - tehsil/town municipal administration and the union councils - for helping them enjoy a certain degree of financial independence in discharging their role and responsibilities.
So far, districts don't have the freedom to spend development funds on the need basis. They are still governed by strict guidelines set by the provincial government to monitor their development activities. Under the guidelines, the district governments are bound to spend development funds in line with a formula set by the provincial government.
Seventy per cent of the total funds provided to district governments, as the share of the Provincial Finance Commission (PFC) award, has to be spent on the social sector development schemes, including the development works of education, health, roads and water supply.
The remaining 30 per cent the total annual development plan funds could be spent on schemes belonging to other sectors. This leaves very little funds for sectors other than the social sector.
Squeezing their options further, the district governments are required to utilize the allocation for social sector in a manner to ensure that 40 per cent should go to education sector, 35 per cent to health and the remaining 25 per cent to other sub-sectors that are road and water supply.
These stiff rules have been set out by none other than their mentors, the last military-backed civil government of the NWFP. The guidelines were laid down because of the then provincial government's endeavours to keep a close check on the district governments' spendings.
It was partly meant to ensure that the local entities do not detract from the development priorities determined at the provincial and national levels. These curbs were also a condition of the World Bank's loan agreement which required the province to focus on the social sector.
The military backed civil government was replaced as a result of the October 10, 2002 general elections by the Muttahida Majlis-i-Amal. Though a change of government occurred, the province's commitments with the international donor agencies stayed. Haunted by its much stigmatized image of a radical government and with an inherited empty provincial kitty, the MMA took the reigns of power with little space to exercise freedom towards its own 'Islamic' agenda.
It had two simple options to govern the province. Either to go without international donor agencies by adhering to its stated position against them prior to the October 2002 elections or follow its predecessors' pursuit to carry out the development activities with the donors' injected money. The provincial government strictly adhered to its predecessors' commitment with the international lending agencies.
Allocation of 70 per cent for social sectors out of the total amount of the development funds provided to district governments was one such commitment. In the first year of the MMA rule, this commitment helped it to qualify for the second tranche of $90 million under the World Bank's structural adjustment credit (SAC).
However, the ultimate victims of the policy appeared to be the newly established district governments. They have to build additional health and education facilities, no matter if they don't require more. They can't utilize the funds - out of the funds earmarked for the social sectors - on any other sector even though they have need to spend in other sectors.
The issue was raised on several forums with the provincial government, but to no avail as the province has its own commitments to fulfil in an effort to improve its rating in the eyes of foreign donors. This situation has resulted in serious complications for the district governments. It also meant strained relationship between the provincial and district governments.
Besides that, the involvement of assembly members, particularly those of the coalition, in the development activities at district level has multiplied the woes of district governments.
The much cherished devolution, drawing a clear line between the roles of the counsellors and members of the provincial and national assemblies, remained far from getting fulfilled ever since the October 2002 elections.
The public policy of last military government that lawmakers would have no business with the development activities failed to see the light of the day. The MNAs, the MPAs and senators are involved in the 'development' business.
The federal and provincial governments are sticking to the old practice of giving special funds to members of the parliament and provincial assemblies to win their support.
In several instances, the MPAs and the MNAs of the ruling coalition have rendered the district governments ineffective by taking over development process at the district government level. The ruling alliance has support only in a couple of districts, while the majority, out of a total of 24, is being governed by the supporters of political elements opposing the MMA in the provincial assembly.
In some instances, rivals of the MMA's leaders and lawmakers are at the helm of affairs at the district level which is a source of strain in working relationship. In May last year, nazims of all the districts had tendered resignations to President Pervez Musharraf in protest against, what they termed as, 'high handed ness' on the part of the provincial government.
District governments have not yet been given the responsibility to maintain the salary accounts of their employees, numbering close to 200,000. The salary component of their budgets are still being maintained by the provincial government on the pretext that district governments lack capacity to properly maintain accounts and take care of the employees' issues.
This leaves a large amount of funds - Rs13 billion - at the disposal of the provincial government. It denies the much needed fiscal space to district governments. Besides, it also helps the province to utilize the funds accrued as 'savings'.
Uptil now the district governments' expenditure accounts are also supervised by strict guidelines and procedures laid down by the last provincial government causing numerous problems for the district governments to freely reappropriate funds from one account to another.
Furthermore, the provincial government's policy of forcefully recovering Wapda dues from the district governments has further reduced their resources. An amount of more than Rs300 million was recovered from the district governments concerned during the current fiscal on account of Wapda arrears.
Though, the provincial government has recently engaged Wapda to reconcile its accounts with the districts to resolve the long pending disputes, the money already deducted at source would make them feel the heat for quite some time.