A thread on the 18th Amendment (18A). The 1973 Constitution left some subjects in the domains of both the provincial govts and the federal government (FG). This concurrent list was to last for 10 years only. However this list was never abolished until the 18A in 2010.
The 18A ended the concurrent list and transferred power to provinces for many things (agri, health, edu, environment etc) thus for 1st time giving Pak a federal structure as envisaged in 73 Constitution. But FG never reduced its ministries. Just renamed them. Some for good reason
Of course world over FGs have a legitimate role under federalism. Drug regulation, flood control, epidemic mitigation, environmental standards, counterterrorism coordination, etc are areas we have devolved on paper but where the federal presence is useful.
The 18A also re-balanced the powers between the prime minister and the president that had been altered by Gens Zia and Musharraf. It thus restored to Parliament and the PM the legislative and executive powers vis a vis the president as envisaged in the 1973 constitution.
Due to PTIs epic incompetence there’s now fiscal & governance crises in Pak. Given its leaders dictatorial instincts, some in PTI asking to end 18A. But solution to governance crisis is more democracy & federalism not less. Need to strengthen provincial powers not circumcise them
The 7th NFC (7NFC) award gave provinces a 57.5% share of federal taxes plus an extra one percent for KP for the war on terror and 0.67% of divisible pool to Sindh in lieu of Octroi. Plus FG has to give money to AJK, GB and Isd. All told FG gives out 62% of taxes to the provinces.
The criteria for division of resources: pop (82% weight), revenue generation (5%), poverty (10.3%) & inverse pop density (2.7%). As a result Balochistan gets (9.1%), KP (14.6%), Sindh (24.5%) and Punjab (51.7%). On a per capita basis Balochistan gets the most and Punjab the least
Our (national) deficit is calculated by adding FG’s & provincial deficit/surplus. Thus a reduction in NFC award wont reduce deficits per se. But it will force the provinces to either raise more resources or cut expenses. Thus if NFC award is reduced, deficit should go down.
7NFC award made federal finances weak but a change in NFC is no substitute for prudent fiscal policy. Even before the 7NFC, PPP inherited from Gen Musharraf a deficit of 7.8% of GDP in 07/8. PPP improved the situation in 1st year under Shaukat Tarin sb but then slowly lost it.
The last 2 years of PPP (Hafeez Sheikh sb & Mandviwala sb as FMs) had 8.8% & 8.2% deficits. Then Dar sb brought deficits under 5.8% for first 4 years of PMLN. Year 5 (I was FM partially) we ran a deficit of 6.6%. But since PMLN has left, things have gone awry, to say the least.
PTI’s first year deficit was 8.9% (where first time in FBR history tax collection was less than the previous year), and this year even before COVID-19 crisis was expected to be 9.5%. Now with COVID deficit might reach 11%. So 7NFC notwithstanding, fiscal policy must be controlled
Next NFC award need not necessarily reduce provincial share in taxes to improve FG’s finances. Some out of box thinking about the domain of provinces and FG regarding particular taxes may help FG finances. Also some FG expenses can be deducted directly from the divisible pool.
Again the solution to our problems & federal cohesion resides in more federalism not less. It’s time to delegate more power & responsibilities to provinces but also to ask provinces to delegate power to local govts. KP and Sindh have given very limited authority to local bodies.
And Punjab has disbanded them altogether. This is surely not right. Provinces cannot ask for delegated authority from the federation but then deny to the local govts. There are other issues too between the provinces and the federal govt that need to be solved.
KP (Tarbela) AJK (Mangla) and now Punjab (Ghazi Barotha) get “hydel profits” as determined by the “Kazi commission” during Gen Musharraf’s regime. Yet neither Gen Musharraf nor PPP ever paid the these profits and it was PMLN under MNS that started paying them out.
But these high hydel profits are beyond WAPDA’s capacity and don’t take into account that it is the FG that paid for building these dams. Similarly gas is a provincial subject but the FG is responsible for any gas losses. And the FG also controls and pays for electricity losses.
Mining is also a provincial subject yet the FG will be left with the international arbitration bill for Reko Dek. But then it was the Supreme Court that declared the agreement void. So lots of nuanced issues that need to be dealt with and resolved.
Before addressing the 18A or tinkering with the Constitution, the FG needs to first get the 8th NFC going and see where a consensus can be reached. And it has to lay down in detail what changes it is seeking in the Constitution and try to get a consensus.
If the attempt is to resolve outstanding issues, including those of finances, a resolution is both possible and desirable. But if the idea behind revising or revisiting the 18A is to curb federalism or democracy, then I think it will not find any support. Nor should it.
I should have noted above tweet 5 I think) that the 18A prohibits reducing the share of provinces in federal taxes from that allocated in the 7NFC. Hence if 8NFC wants to reduce the provincial awards, a change will have to be made in the Constitution.
