City suffers Rs3tr loss due to flawed fiscal policies: Dagha

Former federal secretary, caretaker provincial minister and current Chairman of the Policy Research and Advisory Council, Muhammad Younus Dagha, has said that Karachi has incurred an estimated financial loss of Rs3,360 billion, owing to the suspension of direct GST transfers, shortfalls in development funding and mismanagement of the Infrastructure Development Cess (IDC).

Speaking at the launch of his research paper, Dagha said that the Provincial Finance Commission (PFC) has remained dysfunctional since 2009 due to structural weaknesses. During this time, he said, the government had withdrawn several core functions from local bodies, including water supply, sanitation, solid waste management, master planning, building control, transport, mass transit, land control, education and healthcare. This centralisation, he argued, has led to a steady decline in social indicators, particularly in education and health.

Dagha explained that the IDC, introduced in 1994 to finance Karachi's infrastructure, has not been utilised for its intended purpose. Instead of creating a dedicated fund, he alleged, collections have been diverted unlawfully into provincial accounts. "Last year alone, Rs170billion was raised through IDC, while total collections are estimated at around Rs1trillion to date," he revealed.

According to him, Karachi today requires between $9 and $10billion — roughly Rs1,050billion — to bridge its service and infrastructure deficit. "Failure to transform Karachi into a livable city will continue to erode Pakistan's competitiveness and economic growth," he warned.