1. COMPARATIVE PUBLIC ADMINISTRATION MPA 503 LECTURE 28 BUDGETARY SYSTEM AND LOCAL GOVERNMENT 1

2. FEDERATION - PROVINCE RELATIONS THE CONSTITUTION DISTRIBUTES THE LEGISLATIVE POWERS AS FOLLOWS: PARLIAMENT MAY MAKE LAWS FOR THE WHOLE OR PART OF PAKISTAN THE PROVINCIAL ASSEMBLY MAY MAKE LAWS FOR THE WHOLE OR PART OF PROVINCE PARLIAMENT SHALL HAVE THE EXCLUSIVE RIGHT TO MAKE LAWS WITH RESPECT TO ANY MATTER BORNE ON THE FEDERAL LEGISLATIVE LIST. 2

3. RULES OF BUSINESS UNDER THE CONSTITUTION, THE EXECUTIVE AUTHORITY OF THE FEDERATION EXTENDS TO ALL MATTERS IN RESPECT OF WHICH PARLIAMENT HAS THE RIGHT TO MAKE LAWS; ON RECOMMENDATIONS OF THE FEDERAL GOVERNMENT. PARLIAMENT MAY BY LAW, CONFER ON OFFICERS AND AUTHORITIES SUBORDINATE TO THE FEDERAL GOVERNMENT. OTHER INSTRUMENTS MADE AND EXECUTED IN THE NAME OF THE PRESIDENT ARE TO BE MADE BY THE FEDERAL GOVERNMENT. THE FEDERAL GOVERNMENT MAY ALSO REGULATE THE ALLOCATION AND TRANSACTION OF ITS BUSINESS, AND MAY, FOR THE CONVENIENT TRANSACTION OF THAT BUSINESS, DELEGATE ANY OF ITS FUNCTIONS TO OFFICERS OR AUTHORITIES SUBORDINATE IT. 3

4. FEDERAL LEGISLATIVE LIST THE FEDERAL LEGISLATIVE LIST CONSISTS OF TWO PARTS: PART I AND PART II. THERE ARE IN ALL 59 SUBJECTS IN PART I AND EIGHT SUBJECTS IN PART II: IN ALL 67 SUBJECTS. SOME OF THE MORE SIGNIFICANT SUBJECTS IN PART-I OF THE FEDERAL LEGISLATIVE LIST INCLUDE DEFENSE AND DEFENSE ESTABLISHMENTS, CONDUCT EXTERNAL AFFAIRS, MATTERS PERTINENT TO NATIONALITY, MIGRATION FROM AND EMIGRATION INTO PAKISTAN, TELEPHONES, TELECOMMUNICATION, AND THE FEDERAL PUBLIC SERVICE COMMISSION. FEDERAL OMBUDSMAN, NUCLEAR ENERGY, NAVIGATION, CARRIAGE GOODS, STOCK EXCHANGE, FISHING ETC SOME OF THE MORE SIGNIFICANT SUBJECTs IN PART-II OF THE FEDERAL LEGISLATIVE LIST ARE PROVISION OF A FEDERATION-PROVINCE CONSULTATIVE MECHANISM VIZ THE COUNCIL OF COMMON INTERESTS, IN RAILWAYS, MINERAL OIL, NATURAL GAS,DEVELOPMENT OF SOME INDUSTRIES 4

5. CONCURRENT LEGISLATIVE LIST THE CONCURRENT LEGISLATIVE LIST CONSISTS OF 47 SUBJECTS, SIGNIFICANT AMONGST THEM ARE CRIMINAL LAWS, CRIMINAL PROCEDURES, CIVIL PROCEDURE, MARRIAGE, AND DIVORCE, BANKRUPTCY, ARBITRATION, CONTRACTS, TRUSTS, TRANSFER OF PROPERTY, ARMS, FIREARMS, AND AMMUNITION, EXPLOSIVES, SOCIAL WELFARE, LABOR WELFARE, ARCHAEOLOGY, EDUCATIONAL CURRICULA AND SYLLABI, STANDARDS, ISLAMIC EDUCATION, SANCTIONING OF FILMS AND EXHIBITIONS, LEGAL, MEDICAL AND OTHER PROFESSIONS IN CASE OF REPUGNANCY OR CONFLICT BETWEEN A FEDERAL LAW AND A PROVINCIAL LAW, THE FEDERAL LAW SHALL PREVAIL. THE PROVINCIAL ASSEMBLY HAS THE EXCLUSIVE POWER TO MAKE LAWS WITH RESPECT TO ANY MATTER NOT BORNE ON THE FEDERAL OR CONCURRENT LEGISLATIVE LISTS.(RESIDUAL SUBJECTS) 5

6. COUNCIL OF COMMON INTERESTS THE CONSTITUTION ALSO PROVIDES FOR A COUNCIL OF COMMON INTERESTS WITH HIGH LEVEL REPRESENTATION OF FEDERAL AND PROVINCIAL GOVERNMENTS ON IT, TO BE APPOINTED BY THE PRESIDENT. PART-II OF THE FEDERAL LEGISLATIVE LIST E.G. RAILWAYS, MINERAL OIL, NATURAL GAS, AND ITEM 34 ON THE CONCURRENT LEGISLATIVE LIST VIZ. ELECTRICITY, AND TO EXERCISE SUPERVISION AND CONTROL OVER RELATED INSTRUCTIONS. THE FEDERAL GOVERNMENT OR ANY PROVINCIAL GOVERNMENT MAY LODGE A COMPLAINT WITH THE COUNCIL OF COMMON INTERESTS. 6

7. NATIONAL ECONOMIC COUNCIL THE CONSTITUTION ALSO PROVIDES FOR A NATIONAL ECONOMIC COUNCIL WITH HIGH- LEVEL REPRESENTATION FROM THE FEDERATION AND THE PROVINCES CHARGED WITH THE DUTY TO REVIEW THE OVERALL ECONOMIC CONDITIONS OF THE COUNTRY. IT ALSO FORMULATE PLANS WITH RESPECT TO FINANCIAL, COMMERCIAL, SOCIAL, AND ECONOMIC POLICIES, WITH A VIEW TO TENDERING APPROPRIATE ADVICE TO THE FEDERATION AND THE PROVINCES. 7

8. NATIONAL FINANCE COMMISSION THE CONSTITUTION ALSO PROVIDES FOR THE CONSTITUTION OF A NATIONAL FINANCE COMMISSION COMPOSED OF THE FEDERAL FINANCE MINISTER, THE PROVINCIAL FINANCE MINISTERS, AND SUCH OTHER PERSONS AS MAY BE APPOINTED BY THE PRESIDENT AFTER CONSULTING THE GOVERNORS. THE NATIONAL FINANCE COMMISSION IS CHARGED WITH THE DUTY TO MAKE RECOMMENDATIONS TO THE PRESIDENT AS TO: (a)THE DISTRIBUTION BETWEEN THE FEDERATION AND THE PROVINCES OF THE NET PROCEEDS OF THE FOLLOWINGS: (i)TAXES ON INCOME (ii)TAXES ON SALES AND PURCHASES (iii)EXPORT DUTIES ON COTTON AND SUCH OTHER EXPORTS (iv)SUCH DUTIES OF EXCISE AS MAY BE SPECIFIED BY THE PRESIDENT SUCH OTHER TAXES AS MAY BE SPECIFIED BY THE PRESIDENT.ETC 8

9. FEDERAL BUDGET MAKING PROCESS BUDGET IS THE ANNUAL FINANCIAL STATEMENT OUTLINING THE EXPECTED REVENUES AND EXPENDITURES OF THE GOVERNMENT FOR THE COMING YEAR. IT ALSO REPORTS ON THE ACTUAL EXPENDITURE AND REVENUE DURING THE YEAR THE YEAR IS JUST ENDED. THE FINANCIAL YEAR IN PAKISTAN STARTS ON JULY 1 AND ENDS ON JUNE 30 THE PROCESS OF BUDGET FORMATION STARTS AS EARLY AS OCTOBER. 9

10. FEDERAL BUDGET MAKING PROCESS THE BUDGET CALL CIRCULAR (BCC): THE FIRST STEP IN THE FORMATION OF BUDGET IS THE ISSUANCE OF THE BUDGET CALL CIRCULAR( BCC ) BY THE MINISTRY OF FINANCE. IT IS ISSUED TO ALL MINISTRIES, DIVISIONS AND DEPARTMENTS OF THE GOVERNMENT. A DETAILED TIMELINE IS ALSO GIVEN IN THE BCC FOR COMPLETION OF VARIOUS STAGES OF THE BUDGET. AGENCIES ARE REQUIRED TO SUBMIT A STATEMENT OF : i. PERMANENT EXPENDITURE ON THE CURRENT BUDGET. ii.PROJECTED EXPENDITURE ON EXISTING DEVELOPMENT PROJECTS. iii.PROPOSALS FOR NEW EXPENDITURES iv.PROPOSALS FOR EXPENDITURE ON NEW DEVELOPMENT PROJECTS. 10

11. BUDGET DEVELOPMENT PREPARATION OF BUDGET ESTIMATES KEEPING IN VIEW THE PAST ACTUAL EXPENDITURES, CURRENT TRENDS AND FUTURE EXPECTATIONS, ALL THE DEPARTMENTS PREPARE ESTIMATES IN MINUTE DETAILS. THE BUDGET IS DIVIDED INTO TWO MAIN SECTIONS, NAMELY: 1.REVENUE BUDGET 2.CAPITAL BUDGET ANNUAL DEVELOPMENT PLAN THE DEVELOPMENT PROJECTS FOR THE YEAR ARE OUTLINED IN ANNUAL DEVELOPMENT PLAN (ADP). IT INDICATES THE FINANCIAL ALLOCATION FOR AND TARGETS OF VARIOUS DEVELOPMENT SCHEMES. IT IS PREPARED BY THE PLANNING COMMISSION IN CONSULTATION WITH THE MINISTRY OF FINANCE AND PROVINCIAL GOVERNMENTS. 11

12. BUDGET DEVELOPMENT RESOURCE ESTIMATION PRIOR TO DETERMINING THE SIZE OF THE PLAN, THE MINISTRY OF FINANCE DETERMINES THE RESOURCES AVAILABLE TO UNDERTAKE DEVELOPMENT PROJECTS. THIS EXERCISE IS COMPLETED IN COORDINATION WITH THE GOVERNMENTAL AGENCIES CONCERNED, PARTICULARLY CENTRAL BOARD OF REVENUE (CBR) AND PROVINCIAL FINANCE DEPARTMENT. FOLLOWING ARE THE PRINCIPAL COMPONENTS OF RESOURCES ESTIMATION: 1)PUBLIC SAVINGS 2)NET CAPITAL RECEIPTS 3)FOREIGN ECONOMIC ASSISTANCE 4)DEFICIT FINANCING. 12

13. BUDGET DEVELOPMENT THE REVISED ESTIMATES FOR THE CURRENT YEAR ARE ALSO PREPARED. THESE ESTIMATES INCLUDE PROVISIONS FOR AUTHORIZED EXPENDITURE WHICH IS EXPECTED TO BE INCURRED BEFORE THE CLOSE OF YEAR. THE PROPOSALS SUBMITTED BY DIFFERENT DEPARTMENTS AND MINISTRIES ARE REVIEWED. THE REVIEW OF THE BUDGET PROPOSALS VARIES GREATLY DEPENDING ON WHETHER THE EXPENDITURES ARE FIXED. MOST OF THE CURRENT BUDGET IS TREATED AS FIXED; IT IS NOT REVIEWED IN DETAIL UNLESS THERE IS AN EXTRAORDINARY CHANGE IN THE ESTIMATES FROM THE PREVIOUS YEAR. 13

14. SUBMISSION TO FEDERAL CABINET AND PRESENTATION IN N.A BUDGET PROPOSALS PREPARED BY THE MINISTRY OF FINANCE ARE THEN SUBMITTED TO THE FEDERAL CABINET. THE BUDGETARY PROPOSALS ARE CONSIDERED IN THE CABINET AND THEN APPROVED FOR PRESENTATION TO THE PARLIAMENT. AMONG THE FUNDAMENTAL PRINCIPLES OD DEMOCRACY IS THE ‘POWER OF THE PURSE’ VESTED IN AN ELECTED PARLIAMENT.CONCOMITANT TO THIS RIGHT IS THE RESPONSIBILITY ON THE LEGISLATURE TO ENSURE THAT THE BUDGETARY MEASURES IT AUTHORIZES ARE FISCALLY SOUND AND IN LINE WITH THE NEEDS OF CITIZENS. THIS REQUIRES INFORMED DEBATES AND SCRUTINY OF THE PROPOSED BUDGET SUBSEQUENTLY THE NATIONAL ASSEMBLY PASSES THE FINANCE BIL L 14

15. LOCAL GOVERNMENTS:ORGANIZATION AND FUNCTIONS THE MAIN PURPOSE OF INTRODUCING THE LOCAL GOVERNMENT SYSTEM WAS TO EMPOWER THE PEOPLE AT THE GRASSROOTS LEVEL AND TRANSFER POWER FROM THE ELITE TO THE MASSES.THIS SYSTEM OF GRASSROOTS DEMOCRACY ENVISAGED YIELDING NEW POLITICAL LEADERS. THE ESSENCE OF THIS SYSTEM WAS THAT THE LOCAL GOVERNMENTS WOULD BE ACCOUNTABLE TO THE CITIZEN FOR ALL THEIR DECISIONS. THE NEW LOCAL GOVERNMENT PLAN WAS AN EFFORT ON THE PART OF THE MILITARY GOVERNMENT TO LAY THE FOUNDATIONS OF AN AUTHENTIC AND ENDURING DEMOCRACY.THE PLAN EXPANDED THE FRANCHISE BY REDUCING THE VOTING AGE FROM 21 TO 18 YEARS, WHILE 50% OF THE SEATS IN UNION COUNCILS WERE RESERVED FOR THE WOMEN. THE NEW SYSTEM PROVIDED A THREE-TIER LOCAL GOVERNMENT STRUCTURE: 1)THE DISTRICT GOVERNMENT 2)THE TEHSIL GOVERNMENT 3)THE UNION ADMINISTRATION 15

16. THE DISTRICT GOVERNMENT THE PLAN ENVISAGED A DISTRICT ASSEMBLY COMPRISING CHAIRMAN OF ALL UNION COUNCILS IN A DISTRICT. THE ASSEMBLY WAS MADE RESPONSIBLE FOR APPROVING BYLAWS, TAXES, ANNUAL DEVELOPMENT PLANS AND BUDGET. THE DISTRICT GOVERNMENT CONSISTED OF THE ZILA NAZIM AND DISTRICT ADMINISTRATION. THE DISTRICT GOVERNMENT WAS RESPONSIBLE TO THE PEOPLE AND THE PROVINCIAL GOVERNMENT FOR IMPROVEMENT OF GOVERNANCE AND DELIVERY OF SERVICES. 16

17. THE DISTRICT GOVERNMENT DISTRICT ADMINISTRATION CONSISTED OF DISTRICT OFFICES INCLUDING SUB-OFFICES AT TEHSIL LEVEL, WHICH WERE TO BE RESPONSIBLE TO THE DISTRICT NAZIM WHO WAS ASSISTED BY THE DISTRICT COORDINATION OFFICER. THE DISTRICT COORDINATION OFFICER WAS APPOINTED BY THE PROVINCIAL GOVERNMENT AND WAS THE COORDINATING HEAD OF THE DISTRICT ADMINISTRATION. THE ZILA NAZIM WAS ACCOUNTABLE TO THE PEOPLE THROUGH THE ELECTED MEMBERS OF THE ZILA COUNCIL. THE ZILA COUNCIL HAD ITS SECRETARIAT UNDER THE NAIB ZILA NAZIM AND HAD A SEPARATE BUDGET ALLOCATION. 17

18. TEHSIL ADMINISTRATION THE MIDDLE TIER, THE TEHSIL, HAD TEHSIL MUNICIPAL ADMINISTRATION HEADED BY THE TEHSIL NAZIM. A TEHSIL COUNCIL, COMPRISING UNION COUNCILORS FROM THE TEHSIL, WOULD PERFORM FUNCTIONS AT ITS LEVEL. TEHSIL MUNICIPAL ADMINISTRATION CONSISTED OF A TEHSIL NAZIM, TEHSIL MUNICIPAL OFFICER, TEHSIL OFFICERS, CHIEF OFFICERS AND OTHER OFFICIALS OF THE LOCAL COUNCIL SERVICE. THE TEHSIL MUNICIPAL ADMINISTRATION WAS ENTRUSTED WITH THE FUNCTIONS OF ADMINISTRATION, FINANCES, AND MANAGEMENT OF THE OFFICES OF LOCAL GOVERNMENT AND RURAL GOVERNMENT, DIVISIONAL DISTRICT, TEHSIL AND LOWER LEVELS. 18

19. UNION COUNCIL ADMINISTRATION THE LOWER TIER, THE UNION COUNCIL, WOULD HAVE ITS OWN CHAIRMAN AND 26 COUNCILORS. MEMBERS OF THE UNION COUNCIL WERE TO BE ELECTED DIRECTLY BY ADULT FRANCHISE AND WOULD ALSO ACT AS THE ELECTORAL COLLEGE FOR RESERVED SEATS. THE MAIN FUNCTION OF THE UNION COUNCIL WAS TO UNDERTAKE LOCAL DEVELOPMENT PROJECTS AND MONITOR “CITIZEN RIGHTS, SECURITY AND SERVICES”. 19

20. UNION COUNCIL ADMINISTRATION THE UNION ADMINISTRATION WAS TO BE CORPORATE BODY COVERING THE RURAL AS WELL AS URBAN AREAS ACROSS THE WHOLE DISTRICT. IT CONSISTED OF UNION NAZIM, NAIB UNION NAZIM AND THREE UNION SECRETARIES AND OTHER AUXILIARY STAFF. THE UNION NAZIM WAS THE HEAD OF THE UNION ADMINISTRATION AND THE NAIB UNION NAZIM ACTED AS DEPUTY TO THE UNION NAZIM DURING HIS TEMPORARY ABSENCE. THE UNION SECRETARIES COORDINATED AND FACILITATED UNDER THE SUPERVISION OF THE UNION NAZIM 20