ISLAMABAD: After drying up the provincial project financing from the national kitty in January, the federal government is pushing financing of national ‘strategic nature projects’ jointly by the federal and provincial governments besides the creation of synergies among the provinces through an integration of provincial projects.

“Federal and provincial projects in sectors such as health, education, infrastructure, urban services, agriculture, industries, etc., are generally implemented in isolation. There is no cross-learning between provinces and federal government and between provinces themselves that, reduces the efficiency of such investments when viewed with a lens focused on national economic growth goal,” says a working paper for the upcoming meeting of the National Economic Council (NEC) ahead of next year budget.

It notes that projects of similar nature and types are sometimes implemented using varied methodologies, with different funding sources and amounts. “Integration of such projects can help the provinces achieve economies of scale and optimise public investment spending,” it argued. This could do away with the need for revisiting the National Finance Commission (NFC) award floated by certain quarters now and then.

The draft National Development Framework (NDF) to be taken up by the NEC in about two months on another front makes a pitch for the financing of national strategic projects as a common responsibility of the centre and the provinces. This is a step forward from the January decision of the NEC that decided to stop federal financing of provincial projects.

NEC to take up a draft framework to integrate development spending

“This is high time to take only national level projects of strategic nature for national economic growth. Such projects should be identified by the technical experts having good knowledge of development practices from the federal, provincial and area governments,” it said, adding that once identified strategic projects should be equally contributed by all governments and efforts be made for their implementation.

The NDF also advocates better understanding and implementation of the devolution introduced through the 18th Constitution Amendment and 7th NFC Award almost one and half a decade back in true spirit and essence enshrined in articles 29 to 38 of the constitution, generally encompassing equal opportunities to all segments of society, and Article 156 — the NEC — were the appropriate instrument and institution to ensure that through NDF in respect of financial, commercial, social, and economic policies.

“At the federal level, a national development outlay may be prepared comprising the federal PSDP (Public Sector Development Programme) and provincial ADPs (Annual Development Plans) highlighting the main sectoral strategies and priorities as well as flagship projects. It advised that the provinces should present success stories of mega projects worth over Rs10bn, approved by the Executive Committee of the National Economic Council (Ecnec) but financed through provincial resources.”

Good practices may be shared with all stakeholders for the creation of synergies, it said, adding that the synchronisation between provincial development priorities and National Strategic Priorities can become attainable only if National Strategic Priorities are defined in very specific and measurable terms.

This would be done at the Planning Commission by defining “strategic priorities by declaring certain sectors to be growth-enablers such as infrastructure and focus only on investment in these sectors while at the same time rendering provinces autonomy to define their provincial development priorities”.

Provinces can then find financial support from international donors and through provincial resources to support their development priorities. In this manner, there would be no conflict between the provincial development priorities and National Strategic Priorities. This would be done through the revival of development forums at the level of planning and development ministers and heads of planning boards immediately “to create harmony and synergies in development initiatives and greatly help avoid duplication and making investment more effective”.

At the same time, the paper calls for the first and foremost priority going forward for Pakistan to “establish the harmony among the various institutions and provinces through democratic process of politics” as regional disparity had been the biggest flaw since 1947, also evident from the recently identified 20 less developed districts of Pakistan.

Therefore, the differences in comprehension of the underlying spirit of the 18th constitution amendment and its interpretation among the constituent units of the federation need to be addressed as they had a strong bearing upon overall national economic performance. These differences can also potentially invoke the constitutional jurisdiction of the Supreme Court of Pakistan to help resolve rifts and differences.

This could be done through the “concept of balanced development and regional equity” that did not warrant only the federal government to be responsible for ensuring balanced development but equally of the provinces to ensure balanced development through respective development programmes.

As such, the spirit of the 18th amendment and 7th NFC Award is to strengthen the federating units with more financial autonomy and simultaneously hold them responsible for equitable development by investing more resources in the devolved core social sectors to ensure realisation of sustainable development goals achievement by 2030, ultimately under Article 32 — promotion of local governments.

Published in Dawn, March 28th, 2024