Extraction and delivery

AS the debate on changing provincial boundaries and decentralisation rages on, it is worth taking a step back to see what is at stake here. What are the main problems that require attention and which have made several people, including entrenched insiders, declare that the current system is ‘broken’? The biggest issue being sidestepped by everyone involved (except opposition parties) remains constitutional rule and legitimacy of the state. The current discourse chooses to ignore this, considering it either taboo or a foregone conclusion. Bringing it up seems particularly futile in this discussion given how little it bears on those making decisions and increasingly with those tasked with interrogating these decisions. The second issue is macroeconomic growth, or the absence thereof. What changes are needed to the form of the state that can help kickstart broad-based and sustained capital accumulation? What needs to be done to make the state fiscally more viable? The third issue is social development, and the slowdown in improvement of basic education, health, and other human capability-related indicators. What strategy or approach will help break through the current plateau, marked by a slowdown in literacy rate improvement, a persistently large number of out-of-school children, poor learning outcomes, and no considerable progress on health indicators? When the interior minister talks about a system collapse, the primary subject of this collapse is the state. The Pakistani state, like every other modern state, is engaged in a variety of tasks, none of which it seems to be doing too well. Broadly these tasks can be clubbed under two domains — extraction (getting something from its population) and delivery (doing something for or to the population). There is a third domain — regulation (setting boundaries or implementing rules for various things that private actors may be doing) — as well but we’ll keep that to one side for now. There is no one-size-fits-all approach for the many developmental challenges confronting Pakistan today. The historical record on extraction and delivery is generally poor. Extracting taxes from anyone other than a captive population has proven to be a challenge. Regulating private behaviour, from polluting emissions to urban sprawl to inter-gender interactions, has been difficult as well. And delivering basic services — law and order, education, health — remains highly uneven across rural-urban and provincial lines. If one thinks about the state as the core of a governing system, the track record so far provides ample grounds for a complete overhaul. But a key question to ask is: do all of these functions require an overhaul of the same type? It is possible to look at the exceedingly few examples of success on part of the state in each domain as a blueprint of sorts for what works, especially when thinking about administrative changes. What type of extraction has the state done well and where has it failed? In recent years, the state has done a ‘good’ job of getting people to pay for expensive electricity at cost, rather than delay tariff revisions or provide blanket subsidies. This is an example of a reform that is not really productivity enhancing, but it is certainly something that the state was not doing a decade and a half ago. Similarly, the state has been successful at extracting more taxes from the formal sector and the salaried segment of the population in recent years. This is both by raising the tax rate and by making it ever difficult for the formal sector to avoid its share through an entrenched withholding tax regime. This has happened even while the state has failed to bring many sections of the population into the tax net. When we review the evidence on what enables some types of extraction over others, the absence of discretion and fragmentation of functions comes out as a possible factor. In the case of electricity bills and withholding taxes, the state has centralised collection and removed discretion from its own functions. Local state functionaries have some leeway, sure, but by and large people have no option but to comply and pay directly to the state. In contrast, where economic activity has to be documented by state functionaries themselves (ie, a situation of increased discretion) local politics and influence come into play. On the other hand, the evidence on delivery points in the opposite direction. The biggest gains in social development took place during times of greater decentralisation. When schools were being managed at the school council/local level, improvements in literacy rates and enrolment happened at a faster rate. Similarly, greater autonomy for basic health units and hospitals (with requisite oversight) allowed them to respond to actual patient-level challenges more effectively. Even in delivering basic municipal infrastructure — sanitation and sewage, roadworks — decentralised decision-making and expenditure (between 2002-2008) proved to be more effective. Since province-level centralisation took hold in 2011, gains in key delivery areas of health and education have slowed down. In some parts of the country, outcomes have stagnated altogether. The challenge of delivering to hard-to-access populations has become far more acute. Given this admittedly speculative review of patterns in both extraction and delivery, it is clear there is no one-size-fits-all approach for the many developmental challenges confronting Pakistan today. In domains of extraction, there is an urgent need to reduce discretion and fragmentation of state authority, perhaps even with the use of automated structures in whatever form. In delivery related domains, we likely need even more discretion and fragmentation of the state, via substantive decentralisation that devolves decision-making and accountability down to the level where delivery is supposed to take place. The writer teaches politics and sociology at Lums. X: @umairjav Published in Dawn, September 14th, 2026

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