The think tank is the Policy Research Institute of Market Economy, known as Prime. In a market analysis release on Thursday, it set out estimates of what new provinces would cost the public purse each year on a recurring basis.
For two more provinces, the study put the additional annual recurring cost at Rs47 billion to Rs57 billion. The reference in the study is to South Punjab, Bahawalpur and remaining Punjab — the configuration that would result from dividing the current Punjab into additional provincial units. A range of Rs47 billion to Rs57 billion a year is a substantial sum, and it represents the extra cost of running the additional provincial governments, over and above the current arrangements.
The cost rises sharply if the idea is taken further. If 30 divisional units were upgraded to provincial status, the additional annual recurring cost would be up to Rs730 billion, within a range of Rs610 billion to Rs730 billion. That figure is an order of magnitude larger than the cost of two additional provinces, and it illustrates how quickly the fiscal burden multiplies as more units are created. The study’s range — Rs610 billion at the lower end, Rs730 billion at the upper end — reflects different assumptions about how expensive each new government would be to run.
The study also broke down the cost of a single new provincial government. The estimated annual recurring cost of one new provincial government is Rs22.4 billion under the low-cost scenario and Rs25.9 billion under the high-cost scenario. Those per-province figures help explain the totals: two provinces at roughly Rs22 billion to Rs26 billion each produce a total in the Rs47 billion to Rs57 billion range, while 30 provinces at similar per-unit costs produce a total in the hundreds of billions. The consistency between the per-province figures and the totals shows the study’s arithmetic is built up from the cost of individual provincial governments.
Beyond costs, the study examined how National Finance Commission, NFC, allocations would be distributed under different configurations. Under six provinces, South Punjab receives an illustrative NFC allocation of Rs1 trillion and Bahawalpur receives Rs537 billion. NFC allocations are the shares of federal revenue distributed to provinces under the NFC Award, and they are the main source of provincial income.
Among 30 proposed units, the study found allocations ranging down to Rs46 billion for Loralai and Rs50 billion for Zhob. Those are the smallest allocations in the 30-unit scenario, and they contrast sharply with the trillion-rupee figure for South Punjab under six provinces. The study also found that 11 of the 30 proposed units would receive less than Rs150 billion a year. The distribution therefore matters as much as the total cost: some new provinces would be well-resourced, others much less so.
The think tank’s recommendation follows from its findings. It advised stronger local governments instead, if public service delivery was actually intended. That advice reframes the debate: if the goal of creating new provinces is to bring government closer to people and improve services, the study suggests that strengthening local government — the tier closest to communities — could achieve that goal without the heavy fiscal cost of new provinces. Local governments, in this argument, offer a more cost-effective route to better service delivery.
The study’s final recommendation is procedural as well as substantive. It said any proposal for new provinces should include a formal fiscal costing exercise before constitutional or legislative changes are made. A formal costing exercise would require proponents to set out, in advance, what new provinces would cost and how they would be funded, before parliament considers changing the Constitution or passing legislation. That is a call for evidence-based decision-making: fiscal consequences should be quantified and debated before irreversible constitutional steps are taken. For a debate that has often been driven by political sentiment, the study offers a set of numbers — Rs47 billion to Rs57 billion, Rs610 billion to Rs730 billion, Rs22.4 billion to Rs25.9 billion per province — that will now form part of the discussion.
Sources: Dawn, 30 Oct
