Role of Provincial Finance Commission in Pakistan’s Municipal Finance: is it too early to talk about it?

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All politics is local. So goes an adage from US politics referring to the profession’s demand of public office hopefuls to immerse themselves in the community they represent; know the places, the people and their unique problems, and win them over by either solving those problems or by presenting a solution before asking for their votes.

Almost every country in the world has some form of sub-national government structure. The nature of these sub-national government structures ranges between various variations of elected state, provincial, municipal or local governments with high degrees of autonomy on one hand, and minimal discretion for local agents of central state on the other. Pakistan, however, seems to be an exception, where decentralisation has remained restricted.

Until 2010, 63 years after Pakistan’s independence from British India, all local government reforms in the country were brought about by military dictatorship regimes. Brought about by non-representative regimes, those reforms lacked support from the wider political system since, for good reasons or bad, the military efforts towards local government were seen as a means to bypass the political leadership at the provincial level. Ergo, the history of local government in Pakistan, one that is brought about by elected representatives of the people is recent: less than a decade.  

The history of provincial finance commissions (PFC) – the institution that decides the distribution of provincial governments’ revenues among cities, districts and regions within the provinces – is also very recent in Pakistan. It was only after the Devolution Plan, 2001 that the PFCs were “constituted for the first time in all provinces of Pakistan.” However, that devolution plan was shelved after 2008, as were the PFCs. Since then, the PFCs in Pakistan have had a chequered history.

Unlike the Indian or Nepalese constitutions that spell out detailed provisions on local government bodies and their finances, these three Articles [32, 37(i) and 140A’ define the limits of Pakistan’s constitutional demands on political, administration and fiscal decentralisation to the third tier of government in general, and local government and PFCs in particular. As a result, the provincial governments in Pakistan have the complete power and discretion to design local government framework as they deem fit, leading to a lack of uniformity in the structure of local governments in provinces, and also the nature and scope of respective PFCs. To read more, download the following paper.

Role of Provincial Finance Commission in Pakistan’s Municipal Finance: is it too early to talk about it?

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Policy Research Institute of Market Economy

آزاد معیشت – خوشحال پاکستان