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 (Rs
billion)
Pre-NFC7 Post-NFC7
2010-11 2012-13 2013-14
2009-10 2011-12
(Actual (Provisiona (Budget
(Actual) (Actual)
) l) )
Public Sector
Development
517.9 461.5 664.8 695.1 1155.0
Programme

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 876.0 1211.3 1334.0 1544.4 1722.3

(NFC Share) (633.6) (999.3) (1089.9) (1215.0) (1502.3)