Implications of the 18th Constitutional Amendment for National Planning and Economic Coordination

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1 Implications of the 18th Constitutional Amendment for National Planning and Economic Coordination DR PERVEZ TAHIR FORMER CHIEF ECONOMIST, PLANNING COMMISSION OF PAKISTAN AND DR NADIA TAHIR ASSOCIATE PROFESSOR UCP BUSINESS SCHOOL, UNIVERSITY OF CENTRAL PUNJAB, LAHORE

2 The subject National planning and national economic coordination including planning and coordination of scientific and technological research. Pre Amendment: Serial No.32, Federal Legislative List, Part I, Fourth Schedule Post Amendment: Serial No.7, Part II

3 Council of Common Interests (CCI) Article 154 (1): The Council shall formulate and regulate policies in relation to matters in Part II of the Federal Legislative List and shall exercise supervision and control over related institutions.

4 Planning: Related institution in the Constitution 156 (2): The National Economic Council shall review the overall economic condition of the country and shall, for advising the Federal Government and the Provincial Governments, formulate plans in respect of financial, commercial, social and economic policies; and in formulating such plans it shall, amongst other factors, ensure balanced development and regional equity and shall also be guided by the Principles of Policy set out in Chapter 2 of Part-II.

5 National Economic Council (NEC): An advisory institution NEC charged with the responsibility of making plans for advising the Federal Government and the Provinces This advice needs an approval forum before operationalization

6 CCI and planning Planning on Federal List, Part II Part II the domain of CCI CCI cannot perform this function unless it exercise[s] supervision and control over related institutions, in this case NEC Transition from centralized planning to federalized planning Chaired by the Prime Minister, equal Federal- Provincial representation Decisions by the majority rule

7 Provincial empowerment after Amendment Balanced development and regional equity Full control of social and production sectors Larger role in electricity, water sector, ports, natural resources Larger public sector development programme than the Federal Government Post- 7 th NFC, larger revenue to spend than the Federal Government NFC award irreversible and subject to regular Parliamentary oversight Article 160 (3A, B) Provinces allowed to contract domestic and external debt

8 Constitutional deviation CCI not involved in planning NEC reconstituted, but functioning as before Governed by the Federal Government Rules of Business 1973 Not a body of the Federation but a committee of the Federal cabinet Cabinet Division the Secretariat

9 Non-constitutional bodies - I Executive Committee of the NEC ECNEC - approves projects/programmes as it used to Set up under Federal Rules of Business Functions as a Federal Cabinet Committee, chaired by Finance Minister and Cabinet Division is the Secretariat Planning Commission provides technical input

10 Non-constitutional bodies - II Before approaching ECNEC, all Federal schemes costing over Rs one billion and Provincial schemes costing over Rs 10 billion appraised and cleared by the Central Development Working Party (CDWP) chaired by Deputy Chairman, Planning Commission Approval forum for schemes costing upto one billion rupees

11 Non-constitutional bodies - III In case of Federal funding or external financing, even Provincial schemes must go through the CDWP/ECNEC process Concept Clearance Committee (CCC) under Deputy Chairman, Planning Commission, grants permission to negotiate with the donors Article 160 (4) allowing provinces to contract debt violated

12 A hint of federalized planning and economic coordination Article 167 (4): A Province may raise domestic or international loan, or give guarantees on the security of the Provincial Consolidated Fund within such limits and subject to such conditions as may be specified by the National Economic Council.

13 A hint of federalized planning and economic coordination In a case submitted by Ministry of Finance, the CCI directed Finance Division and the Provincial Governments to work out a proposal on the borrowing limits of the Provinces and, as required by the 18 th Amendment, seek the approval of the NEC before it is considered by the Council of Common Interests.

14 Federalized planning and economic coordination Decisions of the NEC thus require the approval of the CCI, as planning and economic coordination is a matter related to Part II of the Federal List. The main economic coordination body is the Economic Coordination Committee, a Cabinet Committee provided secretariat facilities by the Cabinet Division and functioning under the Rules of Business of the Federal Government. Economic coordination business placed in Part II of the Federal List fragmented

15 Way forward Instead of the Rules of Business of the Federal Government, the rules of CCI apply to the NEC ECNEC composition should correspond to NEC composition, chaired by rotation. CDWP to be abolished Planning Commission is the institution related to the subject of planning and economic coordination. It has to be under the supervision and control of the CCI through the NEC.

16 Way forward The letter and the spirit of the Constitution can be satisfied by (1) making Planning Commission, in place of the Cabinet Division and Inter Provincial Coordination Division, the think-tank and Secretariat of the NEC as well as CCI (2) reducing the number of its members to five, one each from the Provinces and the Federal Government. Prime Minister chairs the NEC/CCI and there is no need for him/her to chair the Planning Commission The Chairman should be appointed by the CCI to represent the Federation, and by rotation

17 Way forward Pakistan Institute of Development Economics is under the administrative control of the Planning and Development Division. With Planning Commission moving to the CCI/NEC, the Planning and Development Division continues to deal with the development subjects in the Federal Legislative List, Part I. PIDE, under its administrative control, can be its think-tank

18 Thank You

19 NEC composition 156 (1) The President shall constitute a National Economic Council which shall consist of: (a) the Prime Minister, who shall be the Chairman of the Council; (b) the Chief Ministers and one member from each Province to be nominated by the Chief Minister; and (c) four other members as the Prime Minister may nominate from time to time.

20 NEC meetings (3) The meetings of the Council shall be summoned by the Chairman or on a requisition made by one-half of the members of the Council. (4) The Council shall meet at least twice in a year and the quorum for a meeting of the Council shall be one-half of its total membership. (5) The Council shall be responsible to the Majlis-e- Shoora (Parliament) and shall submit an Annual Report to each House of Majlis-e-Shoora (Parliament).

21 Electricity Electricity.- (1) The Federal Government may in any Province construct or cause to be constructed hydro-electric or thermal power installations or grid stations for the generation of electricity and lay or cause to be laid interprovincial transmission lines: Provided that the Federal Government, prior to taking a decision to construct or cause to be constructed, hydro-electric power stations in any Province, shall consult the Provincial Government concerned.; and

22 Composition of CCI Article 153. Council of Common Interests (1) There shall be a Council of Common Interests, in this Chapter referred to as the Council, to be appointed by the President. (2) The Council shall consist of (a) the Prime Minister who shall be the Chairman of the Council; (b) the Chief Ministers of the Provinces; and (c) three members from the Federal Government to be nominated by the Prime Minister from time to time.

23 (4) The Council shall be responsible to Majlis-e- Shoora (Parliament) and shall submit an Annual Report to both House of Majlis-e-Shoora (Parliament) Functions and rules of procedure.- (1) The Council shall formulate and regulate policies in relation to matters in Part II of the Federal Legislative List and shall exercise supervision and control over related institutions. (2) The Council shall be constituted within thirty days of the Prime Minister taking oath of office. (3) The Council shall have a permanent Secretariat and shall meet at least once in ninety days: Provided that the Prime Minister may convene a meeting on the request of a Province on an urgent matter.

24 (4) The decisions of the Council shall be expressed in terms of the opinion of the majority. (5) Until Majlis-e-Shoora (Parliament) makes provision by law in this behalf, the Council may make its rules of procedure.(6) Majlis-e-Shoora (Parliament)] in joint sit ting may from time to time by resolution issue directions through the Federal Government to the Counci generally or in a particular matter to take action as Majlis-e-Shoora (Parliament) may deem just and proper and such directions shall be binding on the Council. (7) If the Federal Government or a Provincial Government is dissatisfied with a decision of the council, it may refer the matter to Majlis-e-Shoora (Parliament) in a joint sitting whose decision in this behalf shall be final.

25 (2) The Government of a Province may- (a) to the extent electricity is supplied to that Province from the national grid, require supply to be made in bulk for transmission and distribution within the Province: (b) levy tax on consumption of electricity within the Province; (c) construct power houses and grid stations and lay transmission lines for use within the Province; and (d) determine the tariff for distribution of electricity within the Province. (3) In case of any dispute between the Federal Government and a Provincial Government in respect of any matter under this Article, any of the aid Governments may move the Council of Common Interests for resolution of the dispute.

26 Natural resources In the case of mineral oil and gas, Provinces now have 50 per cent ownership. The Provinces also have the full ownership of the fish stock in territorial waters. Article 172 has been suitably amended. According to the amended Clause (2), All lands, minerals and other things of value within the continental shelf or underlying the ocean beyond the territorial waters of Pakistan shall vest in the Federal Government. The new Clause (3) reads thus: Subject to the existing commitments and obligations, mineral oil and natural gas within the Province or the territorial waters adjacent there to shall vest jointly and equally in that Province and the Federal Government. Article 158 already gives priority to the requirements of natural gas in the Province of location.

27 Development and Federal and Provincial Revenues (Rs billion) Public Sector Development Programme Pre-NFC (Actual) (Actual ) (Actual) Post-NFC (Provisiona l) (Budget ) Federal Provincial Total Revenue Federal Provincial (NFC Share) (633.6) (999.3) (1089.9) (1215.0) (1502.3)