Over the past 15 months, Pakistan has impressed the world with its military response to India and subsequent diplomatic gains, especially since February, raising its international profile and improve its global image. The recent defense pacts with Saudi Arabia, Turkey, and others are the direct results of Pakistan’s military proving its power through performance.
Domestically, however, the country has not been able to match this performance. While military leadership has delivered on its share of responsibility, political leaders have failed to take the initiative for meaningful economic, governance, or bureaucratic reforms. This has deepened public frustration and appears to have created unease within the hybrid arrangement. With the establishment, through the interior minister, proposing smaller provinces or administrative units, politicians now face a choice: resist change, accept another imposed system, or offer a better alternative.
Political parties should develop a consensus and present an alternative that preserves their role in federal and provincial governance while using this moment to pursue long-overdue governance, economic and bureaucratic reforms. A constitutionally protected local government system offers that opportunity. A properly designed Local government system is not only a tool for faster, better service delivery to citizens; it can also drive economic growth and reduce bureaucratic control through financial and administrative empowerment.
A core cause of Pakistan’s governance and economic malaise is a system that rewards power without performance. NFC transfers, elite perks, untargeted subsidies, industrial protection, and governments formed after manipulated elections all reflect this pattern. Since 2008, money is transferred from federal government to the provinces every year without having an accountability of how the money is spent or measuring any KPIs on how this funding improves people’s lives. As the main tax collector, the federal government has failed taxpayers by tolerating corruption and weak oversight at both federal and provincial levels.
Similarly, bureaucrats, ministers, members of parliament, and judges keep receiving exorbitant perks and privileges without showing any improvement in performance. This does not even include the illicit commissions they receive on government contracts and services which are parked in tax sheltered agricultural income, plots purchased on cash, or overseas transfers through informal channels.
Another example is the subsidies provided as an input instead of linking them to production and export output. Agriculture sector gets even double protection with no tax collection and subsidies on top. Industries are protected by imposing high duties on imports resulting in massive profits without improving quality, cost, and exports.
This has become even worse since 2018. The governments are formed by those who did not perform well in elections and were declared winners by manipulating results because of establishment preference. This has not only eroded public trust in the system but also encouraged parties to seek power through establishment support rather than focusing on serving the people. As winning wars requires troops to trust their commanders, military establishment should know well that Pakistan can only be strengthened if people have trust in the system. The task for both politicians and establishment is to create that trust instead of constantly undermining it.
Political parties should develop a consensus and present an alternative that preserves their role in federal and provincial governance while using this moment to pursue long-overdue governance, economic and bureaucratic reforms.
A performance-focused local government system could begin to create this trust. While its immediate benefit would be better service delivery, it could also advance economic and bureaucratic reform if designed well. To be meaningful, however, it must seek to remove governance and economic distortions and improve people’s livelihoods. Otherwise, it will become another lower-tier power grab, repeating the 18th Amendment’s concentration of authority and resources among ruling elites without real checks and balances.
For financial empowerment, a significant share of current NFC transfers to provinces should be redirected to local governments, either directly or through provincial pass-through arrangements. But funding alone is not enough to improve performance: NFC allocations for both provinces and local bodies should include performance-based criteria. KPIs for population control, education, health care, unemployment, law and order, and transparency in contracts and spending should carry significant weight in NFC distribution formula, making provinces and local governments more accountable for results and corruption control.
Administratively, local governments should return to Musharraf-era reforms by adopting a mayor-council system. Directly elected mayors should serve as chief executives responsible for administration, policing, and revenue, but merely shifting the reporting line to the mayor will not be enough. Instead, the mayor should have the authority to appoint qualified public- or private-sector candidates subject to district council approval. Compensation system should also be aligned with the common practices in the private sector by eliminating excessive perks and job guarantees and replacing it with stronger base salaries and performance bonuses for department heads and lower-level staff. Raises, promotions, and employment continuity should also be tied to performance.
In today’s world, local governments and cities are vital engines of economic growth. They can raise their own revenues and attract businesses through targeted incentives. With proper reforms, Pakistan has an opportunity to learn from successful policies in other countries and implement them through local governments. Property taxes on residential, commercial, and agricultural properties, based on market value, along with income-tax collection from currently untaxed small and medium retailers, could provide significant local revenue. These funds can then be used to encourage investment in new industrial units and expand existing production capacity. As growth creates jobs, raises property values, and improves business incomes, property owners and retailers will see a clearer benefit in their local communities from the system and become more willing to pay these taxes.
In addition, provinces should receive annual agricultural tax-collection targets, with any shortfalls deducted from their subsequent NFC awards. They should, however, have flexibility to use the additional revenue to incentivize investment in agricultural technology to improve crop yields and boost outputs. Market-value based property tax assessments, replacing DC and FBR rates, can also help close the cash-transaction loopholes in land and property purchases that are used to park black money and conceal cash-based business income. The federal government should instead encourage export-oriented investment through targeted tax credits, effectively reducing the tax and encouraging investments in productive assets.
These measures would promote responsive, accountable, and efficient governance while supporting economic growth through industrialization, higher agricultural output, and stronger exports. With time, the local governments will become more efficient in providing services and resolving people’s concerns without excessive red tape. Poor-performing local governments may lose part of their share, but they can learn from better performers and improve.
A focused one-time effort by politicians can deliver governance, fiscal, and administrative reforms in one constitutional package, while bringing untaxed sectors into the tax net. This would also create jobs for young people and help put Pakistan on a path toward poverty reduction and human capital development. Restoring public trust in the electoral process must be an essential part of these reforms. Once consensus is reached and a uniform local government law is constitutionally protected, free and fair elections should be held in every district. No party should be excluded, and results should not be manipulated in anyone’s favor. In provinces that already have elected local governments, fresh elections may be limited to district and city mayors.
Voters should decide who represent them locally and will most likely judge parties in general elections based on local government performance. If local leaders deliver better governance, they can help shift politics from popularity and personality-driven loyalty toward policies and performance. Pakistan’s battlefield success came from foresight, planning, execution, resolve, and the right tools and training. The same approach is now needed to reform governance, strengthen the economy, and equip citizens with education, technology, and skills. Consequently, political parties will gain more power through performance.