FEDERALISM

IN PAKISTAN
ISSUES & PROSPECTS
By

Abdul Aziz Uqaili

January 31, 2010
UQAIPS For CSS / PCS
1

FEDERAL STATE

A state in which the powers

(legislative, executive, financial) are
distributed by the Constitution
between a Central Government and
Governments of the federating
units, making each government
supreme within its own sphere of
powers.

In view of Dicey a federal state is a

political contrivance intended to

FEDERATION: SALIENT FEATURES - I

I. SUPREMACY OF THE
CONSTITUTION (Not of the Parliament):
Written Constitution defines powers & functions of
two sets of governments;

Rigid Constitution provides a difficult procedure for

its amendment;

II. DISTRIBUTION OF POWERS:

Matters of national importance (defence, currency,
communication, external affairs, etc.) assigned to
Centre while
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FEDERATION: SALIENT FEATURES - II

III. SUPREMACY OF JUDICIARY:
Federal / superior judiciary is made supreme
to protect and preserve the constitution;

IV.BICAMERAL LEGISLATURE:
To maintain principle of parity / equality of
ederating units federal legislature consists
of 2 Houses:
One representing federating units (Senate)
and
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ISSUES OF FEDERALISM - I
Satisfactory Distribution of Powers
Difficulty in maintaining balance in
distribution so as to avoid it being Unitary
or Confederal state;
difficult to prevent encroachment of
powers;

Protection of Smaller Units: difficult to

protect smaller units against the centre
/ bigger units
Relationship between Centre and Units:
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ISSUES OF FEDERALISM - II
Satisfactory Method of Constitution
Amendment:
Constitution is supreme, amendment
procedure should be so framed that
neither Centre nor units could amend it
against the interests of the other

Secession:
The right of secession should be given so
as to restrain both Centre / Units but
This is very dicey situation very few

FEDERALISM IN
PAKISTAN:
THEORY AND PRACTICE

RELATIONSHIP ASPECTS
FINANCIAL RELATIONS
LEGISLATIVE POWERS DISTRIBUTION
ADMINISTRATIVE RELATIONS
JUDICIARY (UNITARY)
AUDITING & ACCOUNTING AFFAIRS
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FINANCIAL
RELATIONS

FISCAL TRANSFERS
FEDERATION OF
PAKISTAN

Federal Divisible Pool

(FDP)
VERTICAL
TRANSFERS

FO

RM

A
L
U

CG

NFC

/F

PG

FBR
A

E
A

S
X

T
HORIZONTAL DISTRIBUTION

PUNJAB

SINDH

NWFP

T
A
X
E
S

BALOCHISTAN
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FINANCIAL RELATIONS - I
(DISTRIBUTION OF REVENUES)
Art. 160 provides for National Finance
Commission (NFC) comprising of Finance
Ministers of the Federal and Provincial
Government and such other members as the
President may deem appropriate;
HOW

NFC FUNCTIONS?

NFC recommends & President orders distribution

of revenues
Distribution from Federal Divisible Pool (FDP)
FDP comprises: income tax, customs duties, sales
tax, etc.
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FINANCIAL RELATIONS - II
PROBLEM AREAS:
Vertical Distribution (Tilted in favour of
Centre)

Horizontal Distribution (Tilted in favour of

Punjab)

GST on Services (Centre keeps in violation

of Constitution)

Recovery Charges (Excessive deductions)

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FINANCIAL RELATIONS - III

Vertical Distribution

(Centre & PGs)

Centre : Provinces:: 62.5% : 37.5% (1996)

Grants to NWFP & Balochistan

2006 Order incrementally increased share of

provinces from 41.5% (2006-07) to 46.25% (2010-11)
Grants to all provinces

After 2008 Elections distribution frozen at 55%

(Centre) and 45% (Provinces)
Distribution of revenues heavily tilted towards Centre
while most of pro-poor service delivery rests with PGs
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FINANCIAL RELATIONS - IV
Horizontal Distribution (Among
Provinces):

The most contentious issue during

successive NFC deliberations
Until 2009 the sole criterion for distribution
remained population
It is regressive (creates perverse
incentives) benefits Punjab, while other
three provinces resent it.
Not a single example of a Federation which
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FINANCIAL RELATIONS - V
SINDH DEMANDS:
Adoption of a multiple criteria (population,
revenue generation, backwardness, area,
etc.) as per best practices of the developed
/ developing world;
Constitution of an independent and
apolitical NFC (like India);

BALOCHISTAN AND NWFP: support

Sindhs contention but give more emphasis

on backwardness

PUNJAB always prevailed on sole criterion

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FINANCIAL RELATIONS - VI
GST ON SERVICES:
Constitution provides collection of GST on
goods by the Federal Government
This implies that GST on services is a
residuary power resting with the
provinces
Sindh wants to retain all GST to remain
with it

RECOVERY CHARGES:
FBR deducted 5% as recovery charges

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FINANCIAL RELATIONS - VII

NFC AWARD 2009
Vertical Share Centre : Provinces :: 42.5%
: 57.5%

Horizontal Distribution Multiple Criteria

accepted

Population (82% weight)

Revenue (5% weight)
Inverse Population Density (2.7% weight)
Backwardness (10.3% weight)

GST on Services given to Provinces

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FINANCIAL RELATIONS - VIII

NFC AWARD 2009 (CHALLENGES)
Implementation of the Award in letter &
spirit
Recovery of GST on Services by
Provinces
OZT Share (of LGs) amalgamated in
fiscal transfers distribution issues

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FINANCIAL RELATIONS - IX
STRAIGHT TRANSFERS (Art. 161):
These are consolation to smaller provinces (natural
resources rich)
Royalty on natural gas & electricity produced from dams
Sindh & Balochistan benefit from royalty on oil &
gas
NWFP royalty on electricity generation (Tarbela Dam)
NWFP is denied its royalty. Its claim of over Rs. 100
billion against Centre / WAPDA is still pending
despite a favourable decision by the Arbitrator
Unease b/w Centre (WAPDA) and NWFP

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LEGISLATIVE
RELATIONS

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LEGISLATIVE POWERS DISTRIBUTION - I

The Constitution (Art. 70(4), 141-144 / 4th
Schedule) specifically provides for
distribution of legislative powers among the
Centre and the federating units.
Two lists specified - residuary powers with
provinces
Federal Legislative List 59 subjects (taxes,
duties, etc.)
Major subjects are: defence, external affairs,
currency / coinage, commerce, immigration /
citizenship, communications (including posts /
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telegraphs), etc.

LEGISLATIVE POWERS DISTRIBUTION II

Concurrent List 47 subjects of common of
nature
[criminal and civil laws,
evidence laws, family laws (marriage, divorce,
etc.), electricity, zakat, tourism, etc.]
This type of list usually not found in other
federations
In 1973, it was agreed to abolish this list within
ten years
Not done: creating mistrust among the centre
& provinces
In 1999, Gen. Musharraf promised to bring
constitutional reforms incl. doing away with

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LEGISLATIVE POWERS DISTRIBUTION - III

Residuary Powers:
Subjects not specified in any list are
called Residuary Powers.
These are left with the provinces.
These include:

Home Affairs,
health,
education,
agriculture,
livestock,
excise,
revenue, etc.

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LEGISLATIVE JURISDICTION
Parliament has exclusive power to make laws
w.r.t. Federal Legislative List;
Parliament & PAs have power to make laws
w.r.t. Concurrent List but in case of
inconsistency the federal law shall prevail
whether promulgated before or after PAs
law;
PAs have exclusive power to make laws w.r.t.
subjects not enumerated in any list
(Residuary Powers)
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In Constitutional Emergency Parliament can

ADMINISTRATIVE
RELATIONS

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ADMINISTRATIVE RELATIONS - I
Articles 145 to 149 provide Administrative
Relations:
FG may, with the consent of PG, assign any of its
functions to a PG / its officers;
Likewise, a PG may, with the consent of FG, assign
any of its functions (conditionally or
unconditionally) to the FG / officers

This is very critical as FG usually intervenes in

provincial matters under the garb of
provinces request, which in most cases
obtained from smaller province;
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ADMINISTRATIVE RELATIONS - II
In Baluchistan army operation started to
suppress the demand of the people for
political empowerment and fair distribution of
financial resources to the biggest (area wise)
but most impoverished province;
In Sindh, Rangers (a paramilitary federal
force to man boarders in peace time) have
developed permanent establishments under
the garb of maintenance of law and order.
None dares to send them back! A Governor in
early 2000 attempted, but he was sent home!
The Federal Government may issue
necessary directions to the federating units
regarding any of its subject matters / or of 27

JUDICIAL SYSTEM

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UNIFIED JUDICIARY

In case of superior judiciary, Pakistan is

more tilted towards a unitary form.

Unlike USA, there is no Supreme Court in

the Provinces The Supreme Court /
Federal Court is common court for all
provinces;

The Chief Justices and other judges of the

Supreme Court (at Centre) and High
Courts (of Provinces) appointed by the
President.

There is a provision for consultations but for

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AUDITING &
ACCOUNTING
SYSTEMS

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AUDITING & ACCOUNTING - I

AUDIT OF PUBLIC FUNDS:
Audit of public funds done by the public
auditors
Provinces have their own budgets, but
the audit establishment is unitary, with
Auditor General of Pakistan, as the
constitutional head of the department
No concept of Provincial Auditors
General
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AUDITING & ACCOUNTING - II

ACCOUNTING OF PUBLIC MONEY:
Accounts of public exchequer
maintained by Accountants General &
their establishments
Accountants General of provinces
appointed by the Centre & they report to
Auditor General of Pakistan
Thus, for all practical purposes Pakistan
is a unitary state in terms of accounting
of public resources
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RECOMMENDATIONS - I
Federalism in Pakistan facing serious
challenges
These difficulties are similar to and, in
some cases, even more serious than
those existed from 1947 till
dismemberment of East Pakistan.
For Pakistan to grow as a strong and
progressive federation the politicians
and other policy makers must settle

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RECOMMENDATIONS - II
FIANCIAL:
Newly agreed NFC Award 2009 should be
implemented in letter and spirit
NWFPs claim of Rs. 100 B against WAPDA
as announced by Arbitrator, must be
settled immediately

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RECOMMENDATIONS - III
EXECUTIVE:
Military operation in Swat / Waziristan, with consent
of PG & backing of public opinion a welcome step.
But
Forceful army operation being carried out in
Baluchistan should be immediately stopped.
Centre should also pull out its para-military forces
(Rangers) from Sindh to reduce its financial burden
Power to dissolve elected Govts., having confidence
of Houses, should be done away with to strengthen
democracy and federalism in Pakistan
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RECOMMENDATIONS - IV
LEGISLATIVE:
Concurrent List should be immediately
removed
FG should decrease its subjects to give
more autonomy to PGs as resolved in
1940

JUDICIAL & AUDIT / ACCOUNTS:

Superior Judiciary may be made more
autonomous at provincial level.
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CONCLUSIONS
Pakistan, comprising of culturally and
linguistically diverse regions /
provinces, must strengthen its
federation, in order to develop and
grow
More Provincial Autonomy, rather
than an attempt to centralize state
authority, is the only solution to
strengthen Pakistan

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PAST YEARS QUESTIONS

Pakistan is a federation in form and
unitary in spirit. Discuss it keeping in
view the strengths and weaknesses of
Federation of Pakistan. [2007(7)]
Federalism is facing serious problems
in Pakistan. Elaborate. [1999(7)]
Pakistans experience with federalism
is replete with grievances. Suggest
effective political and constitutional
measures to mollify (pacify) the
aggrieved. [1991(7)]
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