LOCAL GOVERNMENT AND POLITICAL

ECONOMY OF DECENTRALIZATION
INTRODUCTION

• Latest Development theories are not in the strong support

of centralized state

• Smaller, more representative administrative political units

are presumed to be better at delivering and
implementing development.

• Democracy is essential to make development work.

• A considerable response by international financial

institutions, development agencies and donor is
given.
INTRODUCTION

• Due to social and political change taken place over

time, people’s power emerged as a force to respond
state led initiatives like Philippine and South Africa.

• In this chapter we will explore decentralization

and devolution in Pakistan.

• The changing nature of Pakistani state its class

formation, politics emerged for participation, democracy
and civil society institutions will be examined in detail.
LOCAL GOVERNMENT IN
PAKISTAN

• There have ben 3 substantive interventions in the

decentralization structure in Pakistan since 1947, manifest
through different government.

• All of 3 attempts were made by military governments, taken

power
through force.

• The military government ruled directly for 33 years

since independence and supported the process of
devolution.
THE BASIC
DEMOCRACIES OF 1960S
THE BASIC DEMOCRACIES OF
1960S

• Ayub Khan’s civilian and military bureaucratic regime was a

developmentalist regime with substantial focus towards
increasing production and capital in both urban and rural
areas.

• Both industrial and agricultural output shows

phenomenal growth.

• Focus of land reforms was to break the hold of political

landowning class .
THE BASIC DEMOCRACIES OF
1960S

• The consequence of reforms were both, hold of large

landowners was dented and reforms and numerous
other interventions took place in agriculture sector
bought revolution in production and social relations

• Green revolution was a elite farmer strategy having high

cost associated with purchase of tractors , sinking tube
wells, subsidy to middle farmers to adopt technology.

• This was the essence of green revolution and capitalist

farmers emerged as dominant economic and political force
in agriculture and in the country.
LOCAL GOVERNMENT IN 1980S AND 1990S

• With the imposition of martial law political activities come

to stop.

• General Zia promised election within 90 days and

allow political compaigning to take place.

• Exactly after 20 years of Basic Democracies Order

1959 Local Government Ordinance of 1979 circulated
and elections were held to elect local councilors.
LOCAL GOVERNMENT IN 1980S AND 1990S

• Zia combined political centralization in the hands of army

at federal and provincial level with legitimization strategy.

• From 1959-79 become increasingly urban, not only

in statistical terms but also in influences and culture.

• So called feudal agrarian social and economic structures

gets way to more modern capitalist relations of production
and exchange.
LOCAL GOVERNMENT IN 1980S AND 1990S

• 1979 was the beginning of consolidation of middle class

as political and economic actors.

• They get further strengthen in 1980s due to

economic development and Gulf Boom.

• People understand the meaning of participation and

democracy.

• Now we need to understand Local government

Ordinance
1979.
LOCAL GOVERNMENT ORDINANCE 1979
FINANCING LOCAL GOVERNMENT

• As the politics of the power is the financing of local

government, one cannot have a fully functioning and
efficient local govt system unless financial issues are
around.

• Local govt had to deal with authoritarianism and other

issues at provincial and federal level, so they face
significant financial constraints.

• These constraints impact the performance and on failure

and success of local govt.
FINANCING UNDER 1979 LOCAL
GOVERNMENT SYSTEM

• Federation of Pakistan governed by constitution 1973

its amendments.

• Constitution specifies the functions of federal and

provincial government.

• Federal govt has exclusive responsibility to perform

functions under federal legislative list. (Constitution 1973).
FINANCING UNDER 1979 LOCAL
GOVERNMENT SYSTEM

• Many residual functions are not part of legislative list

were supposed to performed by provincial govt

• Those functions were delegated to local govt.

• Local govt had to perform compulsory and optional

functions may or may not be performed.
FINANCING UNDER 1979 LOCAL
GOVERNMENT SYSTEM

• Local govt spent only 4% of total expenditure

of all forms of govt.

• Local govt spent much large share on establishment

cost as 10% of all expenditures on general
administration.

• Provincial govt spends largest share of its revenue on

education and health.

• Federal govt focuses on development work.

 FINANCING UNDER 1979
LOCAL GOVERNMENT SYSTEM

• Since local govt came under the jurisdiction of provincial

govt so the right to levy tax is with provincial govt.

• Local govt assist provincial govt in collection of revenue so

provincial govt delegated the right of collection of tax to
local govt (LGO 1979).

• Local bodies were authorized by the provincial govt to levy

tax on following

• Import of goods and animals for consumption

FINANCING UNDER 2001 LOCAL
GOVERNMENT SYSTEM

• LGO was promoted by provincial govt with

amendments during 2001-2.

• They now assigned clear powers responsibilities and

service delivery functions to 3 levels of local govt.
(district, Tehsil, Union)

• Responsibilities for delivery social and human

development services rest at district level.
FINANCING UNDER 2001 LOCAL
GOVERNMENT SYSTEM

• Provincial departments were not suppose to determine

the distribution of funds.

• For this purpose Provincial Finance Commission

established by each province to develop fiscal transfer
mechanism.

• Each local govt expected to have single fund including

fund received from provincial govt, transfer made by
finance commission and own revenues generated by local
govt.
"What are the key challenges and opportunities in the local
government system of Pakistan, and how can it be
strengthened to better serve the needs of its citizens and
promote good governance?“

"How does the decentralization of economic decision-making

impact a country's economic growth and development?

what are the key factors that governments should consider

when pursuing decentralization policies?“

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THANKS