NFC funding for tribal areas: righting a wrong

Published: June 4, 2019

The writer is the Chief Minister of Khyber-Pakhtunkhwa

Great nations salvage their destinies in timely and appropriate actions. East Germany joined West Germany on 3rd October, 1990. It wasn’t an isolated historical event but the culmination of historical processes initiated by the Bismarck-ian politics of German unification of 1870s. The merger of the Federally Administered Tribal Areas (Fata) with the province of Khyber-Pakhtunkhwa in May 2018 is a similar event in Pakistani nationhood’s trajectory. It can be tracked forward from the struggle for independence, provinces and states opting to join the new country and creation of Pakistan, all beginning more than a century ago. And like the German historical trajectory, it can be considered a culmination of processes that started earlier, with undoing decisions regarding creation of buffers between competing empires.

In terms of walking the talk of national solidarity, what Germany did to salvage and re-establish its national unity was remarkable. From 1991 to 1999, it spent 6.5 per cent of its GDP, DM180 billion per annum, to integrate the poorer and underdeveloped East Germany into the West’s economy. East Germany was 1/4th of the West German population, and yet the ten states of West Germany in recognition that it was common, shared and higher objective, rose above and beyond parochial interests and partisan squabbles.

With the German example in mind, what are we going to do to genuinely integrate our fabled tribal areas with K-P and bring them on a par with the rest of the country? Will we, as a nation, rise to the occasion?

The tribal areas (now the merged areas of K-P) suffer from a developmental lag of historic proportions. This lag in development is not a geographic coincidence alone, and neither does it emanate from cultural factors. It is a direct manifestation of chronic public under-spending over the last seven decades. Provinces, with their meagre own-source revenue, derive most of their funds from the fiscal transfers under the National Finance Commission (NFC) awards. In the last decade, these transfers contributed to keep mean values of Rs13,261 per capita per annum public expenditures for Punjab, Rs16,489 in Sindh, Rs19,480 in Balochistan and Rs 14,165 in K-P. Fata never enjoyed such mandated transfers and consequently the level of public expenditure in Fata remained at a mean value of Rs8,411 per capita that is manifestly low. All this while, the two rich provinces got additional funds for being rich in tax base endowments.

The lucky federating units can raise some revenues on their own, these sources being the rich urban and industrial areas. The large urban centres of Pakistan — Karachi (Sindh) and Lahore (Punjab) — have had historically large public spending programmes, building up public infrastructure and services, in turn attracting private sector investments. Today’s tax capacity located in these cities is not completely uncorrelated to historic public spending in these urban centres. While Pakistan’s urban centres should keep developing, the areas long neglected in public funding should start receiving adequate levels of funding to attain regional parity and create further depth in the consumer markets and a larger national economy.

The last decade shows that mean spending in Punjab, Sindh, K-P and Balochistan under NFC transfers remained at levels well above Fata, in some cases twice the per capita spending in Fata. No wonder that schools and health facilities in Fata remained below par. At present 0.45 million children remain out of school, falling prey to all kinds of negative persuasions. Road connectivity despite the difficult geographic terrain remains 0.26 km per square kilometre, hampering access to markets and the meagre public services. Maternal mortality at 375 mothers losing lives during childbirth is one of the highest remaining in the world.

Each district of Pakistan has dozens of offices of departments providing services to people. In Fata these remained conspicuous by their absence, carrying on a low-cost and low-service model of governance. These citizens of Pakistan, resident in the tribal areas, would either travel long distances to access the services provided by the state at convenient locations in the rest of the country or remain unserved.

Using mean per capita expenditures in the four provinces and the same statistic for Fata, the underfunding of Fata comes to Rs377 billion in 2018 over the last one decade alone. Projected for the last seven decades since independence, the total size of underfinancing of Fata comes to Rs2,639 billion at least. All along, the residents of Fata have continued to bear a proportionate burden of the indirect taxes that in turn contribute 60 per cent of total national revenue at the federal level. Only in recent years, Fata received Rs50 billion of public expenditure per year but received only Rs50 billion or much less of financing for public services. Given the accumulated lag in spending, it has missed almost 50 fiscal outlays, 50 fiscal years of development.

It is not surprising that the shameful lag of epic proportions in development of Fata can be largely explained by the underfinancing, by equally large figures, of public services in the region. Fata merged in K-P when the constitutional amendment passed on May 31, 2018. During the current fiscal year (2018-19), K-P did not get its constitutional share in NFC transfers as the population, poverty-related needs and thinly-spread population of Fata have not been included in computing K-P’s share in transfers.

For our tribal brethren to seek and enjoy opportunities of life similar to other Pakistani citizens, the entire nation is to share this responsibility. And hence Germany’s example holds relevance. The challenge of creating development parity for the citizens in Fata is no less daunting than it was for West Germany. It has to be approached similarly with no mental barriers and with the right spirit. Would we recognise our national duty? Compared with the German example of spending 6.5 per cent for the greater cause of integration, if Pakistan decides to spend Rs100 billion per year to bring human development and public services in Fata closer to the rest of Pakistan, it will only amount to 0.002 per cent of the GDP.

The greatest question of national importance today is how to right the wrong, and how quickly; and how soon to regain the lost 50 years of development for the people of ex-Fata. This question cannot be postponed. It cannot only be debated. It cannot be left to number crunching. It is about an integration that has come about. Now it asks for complete citizenship, and what the nation owes to its citizens who lost half a century of development. It’s an occasion waiting to be converted into an opportunity, leading on to national destiny through a timely and appropriate decision.

Published in The Express Tribune, June 4th, 2019.

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