Karachi, the largest metropolis in Pakistan, has incurred an incredible loss of around Rs3,360 billion due to stagnated direct GST transfers, shortfalls on the development fund and an abused Infrastructure Development Cess (IDC). These findings were disclosed by Muhammad Younus Dagha, former federal secretary and present Chairman of the Policy Research and Advisory Council, when he released his latest research paper.
Dagha emphasized that the Provincial Finance Commission (PFC) has been quite useless since 2009 because of the flaws in its system. Centralization of several major municipal functions, including water supply, sanitation, waste management, urban planning, transport, mass transit, land oversight, education, and healthcare has taken place over the years. This centralization, he cautioned, has helped to achieve poor social outcomes, particularly in the field of health and education.
The IDC that was put in place to finance the infrastructure of the city way back in 1994 has been allegedly embezzled into provincial coffers instead of being used to finance local development. Last year alone, Rs170 billion was raised by way of IDC, and collections by way of IDC amount to nearly Rs1 trillion.
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Dagha emphasised that the economic centre of Pakistan is now requiring between $9-10 billion (Rs1,050 billion) to overcome its service and infrastructure shortages. His warning that failure to turn Karachi into a livable, competitive city will directly affect the development of Pakistan, is accurate. To investors and developers, this gap in infrastructure is not only a matter of urgent concern but also a matter of commercial importance.
