Strengthening local governments
Urban/urbane
Friday, June 12, 2009
Ahmad Rafay Alam
It's budget time. Not just for the federation and the provinces, but for local governments as well. In Lahore, a news report reveals that the city district government has failed to meets its revenue target of Rs763 million by about 293 million. That's nearly 40 per cent less than what was expected.
Much of the revenue shortfall was expected. The chief minister placed a moratorium on the commercialization of roads. This, in turn, seriously affected the business of the Lahore Development Authority and the CDGL. Apparently by about Rs80 million. Also, there was the Rs100 million due to the CDGL from the Water and Supply Agency of the LDA that wasn't received this year. It wasn't received last year either, so I don't know what people were expecting. Just these two heads account for over half of revenue shortfall this year. But it's strange to think that these two accounts, along with receipts from the tax on the transfer of property, form the majority share of the city's revenue. In a city of eight million people, one would wonder whether there weren't any other ways for the local government to make money.
Our cities and the local governments that administer them seem to have always been on the verge of bankruptcy (if a private corporation posted 40 per cent losses in a year, you would expect heads to roll). In an article written in 1996 ("Urban local government in Pakistan: expecting too much from too little?" published in the Economic and Political Weekly), S Akbar Zaidi pointed out that revenue from local governments accounted for little over five percent of the total tax collection of the country. On the other hand, the federal government earned close to 89 per cent of the taxes collected that year, the remainder generated by provincial governments. I realize Mr Zaidi's article is over a decade old, but I suspect the revenue collection percentages haven't changed much (and this is an area ripe for some research). The fact is, our cities and local governments have never amounted (pardon the pun) to much. There must be good reason for this.
Usually, debate on the role, function and future of urban and local governments falls into the same old clichs. The first is that, since our constitution envisages a two tier system of administration federal and provincial there is no space for a third, local, level of administration. The second is that local governments are creatures of military dictators seeking to legitimize their regimes by creating a new, grass-roots level, constituency. Ayub Khan has his basic democracies, Zia had his local governments under a 1979 law and Musharraf gave us the local government ordinances of 2001. I would like to consider a third, historical, analysis that places itself outside the narrow confines of these existing debates.
Historically, the sub-continent can be characterized as rural, and the dominant form of local administration has been the village panchayat. These cosy little gathering of village elders have been, traditionally, a body of several men who undertook the responsibility of maintaining village life in the sub-continent. Although reference to a village panchayat nowadays evokes Pavolvian reactions towards thoughts of honour killings or trials by fire, it is interesting that the origin of the name is shrouded in some confusion (and I would appreciate any guidance from those in the know): The term panchayat either has to do with the fact that, usually, five elders sat to adjudicate village matters or, alternatively, has to do with the act that the village gathering was shouldered with the responsibility of five things, including revenue collection, adjudication of disputes and maintenance of law and order. In any event, it was the panchayat that held things together. Fairly well, one would imagine, as the system is as old as the hills and wasn't changed until recently.
Lord Ripon (George Frederick Samuel Robinson, 1st Marquess of Ripon KG, GCSI, CIE, PC aka Viscount Goderich, just in case) was the father of the colonialists' earliest experiments with "local self government". Lord Ripon's government's proposals of the early 1880s rested on the idea of creating a system of governance at the grassroots level that would permit the participation of the "native". Under these proposals, municipal boards began cropping up that allowed for the participation and election of Indians in the governance of their own affairs. These boards were even given the primary responsibility, much like the original functions of a panchayat, of collecting revenue and providing for cleanliness and sanitation. Additional functions, depending on the size of the municipality, included public health, education, communications and, of course, works. These boards were also given the power to levy and collect tax from their constituents to fund development projects. This power of direct taxation was as revolutionary as it was alien. Most colonialist reports from the time indicate that local populations were reluctant to part with their hard earned without solid proof it would be put to good use. How little has changed in over a century.
But the spanner in the words, so to speak, was a little known or talked about caveat in the entire "local self government system". And it was that, although the new system allowed for "natives" to participate in the conduct of their affairs, including elections and taxation, the Colonialist retained the power, exercised by the collector or deputy collector of the district, to spend the money collected by taxation. One case illustrates the point perfectly: In Rajahmundry, an important religious and commercial settlement on the banks of the Godavari River in South India, the local municipality voted for a tax to collect revenue for improving sanitation, but the local deputy collector, acting as overseer of the municipality ordered the money to be spent on the pension of a retiring English schoolmaster. It seems that things have changed little since: For instance, of all the local government representatives and officers I have had the chance to meet and talk to, to a man each one of them talk of the importance of having effective sewerage, sanitation and waste disposal. On the other hand, most of the provincial government receipts that they are handed down are for the construction of roads or other "hard" infrastructure.
Since its inception, the local government system that we've inherited, boasts about its multifarious responsibilities. But, at the end of the day, the power to spend is not in the hands of the people who are given the responsibility to govern.
Today's newspapers are full of news that the federal government is rethinking the local government ordinances: that Musharraf's "silent revolution" may be brought to a halt. This position needs to be reconsidered, or at least brought outside and into the debate about the historical development of local governments.
Local governments, especially the urban local governments of Karachi, Lahore, Faisalabad, Multan and Sialkot are disproportionate in size to the rest of the country, but their contribution to the national economy is disproportionately large. At some point, the immense amounts of wealth that is created in these urban centres must be allowed to be regulated by local governments. It is the only way that they will be able to become financially independent and capable of providing the services they are meant to.
Time is running out: At 35 per cent, we are already the most urbanized country in South Asia and we expect at least 50 per cent urbanization in the next decade. If the local governments in the urban areas aren't strengthened, or given financial independence, then the future is bleak.
The writer is an advocate of the high court and a member of the adjunct faculty at LUMS. He has an interest in urban planning.