IT is widely acknowledged that the most potent framework for bringing government close to the citizenry is the devolution of the authority manifested in local governments, now recognised in Article 140-A of the Constitution.

However, with continuous resistance from provincial legislators and governments, the formation of empowered local governments remains an unfulfilled objective. Moreover, much of the discussion tends to be sweeping and general in nature, with specifics starkly missing on a host of linked elements.

The generally perceived objective is to devolve power such that those residing in, say, Sahiwal, Punjab, do not have to travel to Lahore (the provincial capital) to get their grievances redressed. This model assumes that Lahore residents can access the government to get such matters attended to.

Opting for this flawed approach will create the same centralised, hierarchical structures and governance systems that prevail at the provincial level, resulting in the establishment of mini-provincial governments at the local level.

Click to see more

This article attempts to raise questions requiring clarity on what would underpin a viable and sustainable structure and the allied systems of governance and possible constraints to the realisation of hopes associated with devolution.

• What should be the process of representative formation, the rules for the formulation of local governments, and opportunities for citizen groups to participate in decision-making? And, as in the case of the federal and provincial governments, should safeguards on tenure and ensuring timely elections be built into Article 140-A?

What functions, fiscal and administrative powers, and processes should be devolved?

• What functions, fiscal, and administrative powers and processes should be devolved? What should be the extent of delegation, decentralisation, and localisation of functions? For example, what should localisation mean? Of course, they should have autonomy on allocations with priorities anchored in local exigencies. But then, if the local need for, say, drinking water is more persistent and resource flows are barely adequate to provide for, and manage it, should it be at the expense of national priorities like schooling and primary healthcare, or should the latter objective be incentivised through a matching grant criterion or built into the resource-flow criteria from the provincial pool?

• Should devolution, say, as a starting point (owing to capability considerations), be restricted to basic social and economic services like school-level education, primary healthcare, water supply, sanitation, and solid waste disposal? Or should it also cover some responsibilities discharged by the police and the agency maintaining local land records? But then, what should be the functions and authorities of lower formations/tiers (for instance, union councils)?

• Can one-size-fits-all be a desirable, rational approach? To illustrate, should they be formed along administratively determined district boundaries? But then, shouldn’t large cities be treated differently (for example, Karachi with seven districts and six cantonments)? Would it be that politically straightforward to propose that Karachi (with the majority of its non-Sindhi population) be made a vibrant, independent, and autonomous city government, fully empowered, well-resourced, and with the relevant skill mix to be more actively involved in the provision of services beyond their basic category to include, say, some curative health facilities and, more importantly, management of agencies like the development and water and sanitation authorities? A similar issue would arise in the case of Quetta with its majority Pakhtun population.

• Moreover, should cantonments continue to be administered by the army? Or, should they be absorbed into the structure of local government? The logical and common-sense answer is obvious. Hence, clarity would be required on what would constitute the boundaries of the city in the static and dynamic sense.

• Also, which tier of government should have ‘ownership rights’ over ‘government-owned’ land (including that used for government offices and employee residences), gas wells in the geographical area, etc.?

• What should be the employee recruitment process, skill set determination, and parameters for evaluating performance? Mimicking the skill mix, the compensation structure, and retirement benefits of the provincial government, without rationalising the administrative structure from the aspects of efficiency and cost-effectiveness, will ensure the speedy bankruptcy of these institutions. Or, should these governments embrace the culture at the federal and provincial level of elected representatives holding executive positions?

• Although Pakistan is ostensibly a federation, it has a highly centralised structure, characterised by the constitutional assignment of powers and the political, administration, and fiscal systems of governance. The Constitution gives the federal government the power to levy the most productive taxes — on non-agricultural incomes, on imports, excise duties, and sales taxes on goods. The provinces are empowered to levy agriculture income tax, sales tax on services, levies on property transfers, and property tax (the collections from the last-mentioned revenue base are shared with the respective local government). The collections from these taxes are then shared between the provinces and local governments (under the PFC Award), based on predetermined shares for the predictability of transfers.

• Under the existing legal framework, the bulk of the funds intended for local governments would come from the provincial pool, raising the query of how they can be protected from the negative outcome of any fiscal imprudence of a provincial government. Or can they be empowered to levy some taxes directly (for example, agricultural income tax and property tax and levies on property transfers), supplemented by conditional grants for local action on provincial priorities.?

• Next, should they be allowed to borrow domestically on the strength of their cash flows? And should these liabilities be covered by provincial or sovereign guarantees? Or, in their formative years, should they be allowed to offer assets as collateral?

• Finally, with the transfer of some of the functions to local governments, the provincial government would also have to be shrunk to check duplication as is the situation today at the federal level after the 18th Amendment.

However, in view of the centripetal features of our structures and systems of governance, it is not obvious how a predatory state with its bloated size and culture of entitlement, particularly in the constrained environment of a sluggishly growing economy, would willingly share these extractive powers with other power centres.

The writer is a former governor of the State Bank.

Published in Dawn, August 25th, 2023