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

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

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.”

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.

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

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

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- 7th 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

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

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

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

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

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.”

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 18th Amendment, seek the approval of the

NEC “before it is considered by the Council of

Common Interests.”

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

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.

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

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

Thank You

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.

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).

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 inter-

provincial 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

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.

(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).

154. 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.

(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.

(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.

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.

Development and Federal

and Provincial Revenues (Rsbillion)

Pre-NFC7 Post-NFC7

2009-10

(Actual)

2010-11

(Actual

)

2011-12

(Actual)

2012-13

(Provisiona

l)

2013-14

(Budget

)

Public Sector

Development

Programme517.9 461.5 664.8 695.1 1155.0

Federal 259.5 215.0 289.3 323.5 540.0

Provincial 258.4 246.5 375.5 371.6 615.0

Total Revenue 2078.2 2252.9 2566.5 2982.4 3640.0

Federal 1202.2 1041.6 1232.5 1438.0 1917.7

Provincial

(NFC Share)

876.0

(633.6)

1211.3

(999.3)

1334.0

(1089.9)

1544.4

(1215.0)

1722.3

(1502.3)