Nearly a trillion rupees are missing from the books of the Punjab government. The money, which has been misappropriated over the course of eight years and six chief ministers, was constitutionally supposed to be handed over by the provincial government to the 229 local governments that exist in Punjab.
These local governments, such as Municipal Committees and Municipal Corporations, provide vital services to the people in their jurisdiction and are supposed to be the third tier of democracy in Pakistan. However, the absence of these funds have brought many of these local governments to the point of bankruptcy. An investigation conducted by Profit revealed a number of local governments do not have the money to pay their utility bills, and the electricity connection for streetlights in their jurisdiction have been cut. In other areas, sanitation workers have gone on strike while employees of these local governments are not receiving their salaries.
So where did this money come from, why was it owed to local governments, and how has the government managed to get away with not paying them their due?
The money, which amounts to at least Rs 828 billion, is part of the Interim Provincial Finance Commission. This was established in Punjab in 2017 as a temporary body pending legislation regarding local governments in Punjab. The PFC acts much as the National Finance Commission (NFC) does. The NFC is supposed to pool taxes collected by Islamabad into a fund and divide it every year between the provinces. The provinces are then supposed to set up PFCs which collect the NFC award, add provincial revenues to this pool, and then allocate a certain portion of these funds to local governments.
Since 2017, the Punjab Government has paid Rs 281.37 billion to local governments in lieu of this money. However, the amount due according to the formula for the division of money created by the Punjab Government itself comes out to almost Rs 1.1 trillion. The finance division claims that from within the amount owed, some money is cut for common provincial expenditures including debt servicing and pensions. However, the amounts disbursed to local governments every year have not increased and have remained at the same level as 2017 despite a significantly increased NFC award.
The money owed to these LGs has gone largely unnoticed because of the conspicuous lack of elected local governments all over the country. Since the 18th amendment, it has been the responsibility of provincial governments to establish empowered and elected local governments, which all four provinces have failed to do. In Punjab, the disregard for this constitutional requirement has come to a point where the amount due to the 229 local governments spread across the province has just not been released.
The only reason the misappropriation of funds has come to light now is because of the deplorable state many of these local governments find themselves in, and their inability to keep up with expenses.
Behind this misappropriation of funds is the callous attitude of the Punjab Finance Department and the career bureaucrats that run the economy of Pakistan’s largest province. The finance department’s handling of the PFC award shows an utter disregard for constitutional requirements. At best, it comes from being criminally unaware of the role local governments play in Pakistan’s already ailing democracy. At worst, it is a case of wilful ignorance. This callous attitude was on display only recently, on the 27th of February during a meeting of the Punjab Assembly’s Public Accounts Committee. This also happened to be the meeting from which Profit gained access to some of the raw data that has led us to the misappropriated Rs 828 billion. The content in this publication is expensive to produce. But unlike other journalistic outfits, business publications have to cover the very organizations that directly give them advertisements. Hence, this large source of revenue, which is the lifeblood of other media houses, is severely compromised on account of Profit’s no-compromise policy when it comes to our reporting. No wonder, Profit has lost multiple ad deals, worth tens of millions of rupees, due to stories that held big businesses to account. Hence, for our work to continue unfettered, it must be supported by discerning readers who know the value of quality business journalism, not just for the economy but for the society as a whole.To read the full article, subscribe and support independent business journalism in Pakistan
