FEDERAL infrastructure development schemes are located in the provinces. Most such projects — for instance, motorways and highways — cut across provincial boundaries. Likewise, more than one federating unit shares the socioeconomic benefits accruing from establishing projects, such as those for hydropower generation. Thus, it appears logical for the provinces to also start funding these schemes, along with the centre. That is how it is being done in India. In Pakistan, however, until recently, the centre was bearing the expenditure of federal schemes as well as partly sponsoring provincial development from its own resources or with borrowed money. But the continuing financial crunch has led Islamabad to stop funding provincial development from this fiscal year. It has now drawn up a National Development Framework to establish ‘strategic’ infrastructure development projects, with financial support or contribution from the provinces. Besides helping to reduce the financial burden of infrastructure development borne by the cash-strapped centre, the idea is to encourage the provinces to share their experience and expertise with one another so that they can establish similar projects, while ensuring optimal use of resources and increased efficiency of their investments.

The government is expected to discuss the draft framework at the next Ecnec meeting, as well as with the provinces whose consent is necessary if it wishes to work out a mechanism for sharing the costs and other related matters. The plan can indeed cut the financial burden on the centre, and perhaps dilute the misplaced criticism of the seventh NFC award, which allocates a bigger share to the federating units from the federal divisible tax pool — an arrangement that should not be disturbed. It may also give the provinces some impetus to boost their own revenues. Nevertheless, such a transition will not be seamless. The provinces will justifiably demand greater administrative control over the projects that they will be asked to finance, as well as a share of the profits and royalties, in keeping with their contributions. A bigger issue, though, will pertain to the ability of Balochistan and KP to chip in. The underdeveloped economies of these two provinces are already in a state of disarray due to terrorism, and they lack the required cash to meet even their most urgent needs. A lot of work will have to be done before the new proposal is ready to be implemented.

Published in Dawn, March 29th, 2024