Islamabad Local Government Bill 2015. This report cover i) critical Analysis ii) Administration and political power iii) Election process and iv) Local government finance and revenue power

1. P I D E S c h o o l o f P u b l i c P o l i c y
MuhammadWaseem Sajjad
M.Phil. Public Policy
mwsmusa@gmail.com
Islamabad Capital Territory Local
Government Act,2015
DEVOLUTION AND LOCAL GOVERNMENT

2. 1
Table of Content
1. Introduction…………………………………………………………………………………………...2
2. Brief History of Local Government in Sub-continent……………………………...3
2.1 Local Government Orders 1969-1979………………………………………….5
2.2 Local Government Ordinance 2001……………………………….…………….6
3. The LG Act, 2015 (Chapter I – VII)…………………………………………….…............9
3.1 Local Government Elections……………………………………………….……..11
4. Issues with CDA and Management of CDA………………………………………..….12
5. Metropolitan Corporation……………………………………………….………..14
5.1 Local Government Finance………………………………………………..……….14
6. Approaches to Fiscal Decentralization………………………………………..….….….18
6.1 1st
Generation ………………………………………………………………………………..18
6.2 2nd
Generation …………………………………………………………..…………………..18
7. Relations of Islamabad Local Government with Federal Government……18
7.1 Legal Relations…………………………………………………….……………………..19
7.2 Power of Court………………………………………………………….………………..19
7.3 Power to punish……………………………………………………………….………..19
7.4 Collection of Fine……………………………………………………………………....19
8. Critical Analysis……………………………………………………………………………………..20
9. References…………………………………………………………………………………………….21

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1. INTRODUCTION:-
Pakistan is a federation in which the affairs of government are guided by the
Constitution of Pakistan of 1973, with all amendments. In the constitution the allocations of the
functions of the federal and provincial governments are clearly specified. There are some
functions which are the exclusive responsibility of the federal government, while others
according to the constitution can either be performed by the federal or by provincial
governments. The existence of local governments is not formally embodied in the constitution.
Local governments in Pakistan exist under the supervision of the various provincial
governments, where provincial governments have merely delegated some of their functions
and responsibilities to local governments by the promulgations of ordinances. The Local
Government Ordinance of 1979, with its amendments, is in operation in Punjab, Sindh and the
NWFP, while Baluchistan's local governments are under the 1980 ordinance. These ordinances
specify the allocation of residuary functions of local governments [AERC 1990b]. Before we
briefly examine the history of local governments in Pakistan, and then turn to the existing
statute of municipal local governments, it is important to emphasize the point that elected local
governments exist only in the sparsely populated province of Baluchistan. Other local
governments stand dissolved. In the NWFP, all local bodies were dissolved in 1991, in Sindh in
1992, and in the Punjab in August 1993.Different reasons exist as to why the provincial
governments dissolved the local governments in their own provinces. In the case of NWFP,
mismanagement and corruption were cited as reasons, while the Punjab provincial government
dissolved its local governments in order to ensure that national elections held in October 1993
were not influenced by incumbent local government officials. Thus, in the absence of
democratically elected local government officials in the rural and urban areas, town
committees, municipal committees, and municipal corporations are all being run by
administrators who are members of either the federal or provincial public (civil) service cadre.
Administrators are appointed by the provincial government and are transferred between
different posts for unspecified duration of tenure.

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2. BRIEF HISTORY OF LOCAL GOVERNMENTS IN SUB CONTINENT:-
Local governments have existed in the Indian subcontinent for many centuries, with the
first municipal corporation set up in Madras in 1688 by the East India Company. In 1842, the
Conservancy Act which led to the formation of sanitary committees for garbage disposal
became the first formal measure of municipal organization which applied to the Bengal
presidency. In Karachi, the board of conservancy was established in 1846, while in Lahore and
Rawalpindi, the Municipal Act was passed in 1867. Subsequently, Lord Ripon's resolution on
local self-government in 1882 allowed for the provision of some elected members in municipal
committees and proposed the establishment of rural local governments. The 1907
Decentralization Commission recommended the appointment of non-official chairman of
municipal committees, a recommendation which was endorsed and extended further by the
1925 Simon Commission set up to assess the performance of local self-government. The 1935
Government of India Act allowed provincial autonomy and permitted provinces to frame
legislation on local government systems.
Historical Overview
The Constitution of Pakistan establishes the state as a federal parliamentary republic,
comprising four provinces: Punjab (95 million), Sindh (41.3 million), Balochistan (8.8 million)
and Khyber Pakhtunkhwa (23.3 million). Administratively, the country is divided into Districts,
Tehsils (sub-districts) and Union Councils, with each Union Council comprising a number of
villages.
Islamabad is situated at the great belt of Potohar Mountains and Margalla hill at the end of this
belt. A city known for its ‘greenery’ with pollution free and healthy atmosphere and owns
plenty of water resources. The city is considered as most organized and well planned among all
cities across Pakistan.
It is not a part of any province. The land for the proposed capital was originally acquired by the
then Government of Punjab and KP in 1960, which for some time, remained under
administrative control of Rawalpindi District/Punjab Government which was later separated
from Rawalpindi district. The newly formed ICT was divided into five zones.

5. 4
The city is divided into each sector, with four sub-units of a sector facilitated with a Markus
(Commercial center), a community center, park, school, college and several public goods and
services.
The Islamabad is administrated under the Islamabad Capital Territory Administration (ICTA)
which is powered as a distinctive administrative unit of the country functioning under Article
1(2)b of the Constitution. It is delimitated with two constituencies in the NA, named as NA-48
and NA-49.
Historically, the capital was divided into Urban and Rural Islamabad. The rural Islamabad
administrated fewer than 12 UC’s (elections held haphazardly) which further compromised 133
villages while the Urban Area functioning under Municipal Corporation (CDA).
However, a universally acceptable form of the federation that guarantees a balanced
distribution of power among the federating units, including the local governments, remains an
elusive goal. Two factors have contributed to this. First, it was not until 1958 (11 years after
Pakistan's independence) that political leaders and parties agreed on a constitution, which was
subsequently amended twice. Second, the military took the country's reins at several critical
junctures and experimented with various forms of local government, primarily surrogates for a
parliamentary form of democracy.
The revival of local governments continues to be debated, despite the fact that the 18th
Amendment to the Constitution of Pakistan has made it mandatory. Article 140(A) of the
Constitution explicitly states, "Each Province shall, by law, establish a local government system
and devolve political, administrative, and financial responsibility and authority to the elected
representatives of the local governments." Moreover, sub-clause 2 of the same article
stipulates that "Election to the local governments shall be held by the Election Commission of
Pakistan."
Since the country's political transition in 2008 and, particularly, after the passage of the 18th
Constitutional Amendment, the following trends are visible. First, the provincial leaderships
have reluctantly passed the LG laws and taken steps to hold local elections. Second, the
provinces have shown a preference for, and a considerable degree of unanimity in, restoring
the Commissioner system, whereby the provincial governments manage local government

6. 5
functions directly through the provincial bureaucracy, rather than continuing with the
devolution reforms elected by the previous LG Act of 2001. Third, demographic changes, and an
unprecedented rate of urbanization, have made local governments a necessity and not simply a
choice. Fourth, there is growing awareness among civil society, media and policy analysts that
local governments are a must for efficient and accountable governance. Finally, a series of
landmark decisions and persistent interventions by the higher judiciary have made it impossible
for the provincial governments to hold up the local government elections.
These trends raise several questions. Why have the provincial governments been reluctant to
revive the local governments? What has caused the return to the Commissioner ate system?
Why do three provinces still lack a political consensus on the main characteristics of the LG
laws? What can be done to ensure that the revival of the LG Acts improves governance, service
delivery and citizens' participation at the local level? In the following pages, I will address some
of these questions.
2.1 Local Government Orders 1969 and 1979:-
Subsequent military regimes (1969-71 and 1977-88), adopted the same model of
promoting local government while maintaining centralized control at the federal level. Thus,
rather than a federal principle, the local government came to be identified with the military
regimes as an instrument of delegitimizing the party system and provincial autonomy, while
trivializing political processes and power sharing at multiple levels (federal, provincial and
local).
The Local Government Order 1979 expanded the local governments and empowered
the Deputy Commissioners. This ordinance created four levels of municipal government in the
urban areas: Town Committees, Municipal Committees, Municipal Corporations and
Metropolitan Corporations. Members of each council elect the senior officers of these councils
and the controlling authority is the elected house. In the rural areas the system provided for a

7. 6
three-tier
Figure-I
system of local government, where Union Councils, Tehsil or Taluka Councils and District
Councils came into existence. The chairmen of these councils were elected by the members. In
1979, the citizen of Islamabad cast vote in local election but in limited areas means only in rural
areas. As the figure-I show that some area came under the Capital development authority and
remaining came under ICT LGO 1979. In 1979, there are 12 union council where local election
held on non-party based.
2.2 Local Government Ordinance 2001:-
The Local Government Ordinance (LGO) 2001 removed the urban-rural divide and established
local government at three levels: Union Council, Tehsil/Taluka Council and District Council

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levels. The Union was the basic unit and the Union Nazims (mayor) and Naib (deputy) Nazims,
directly elected by the voters, became members of the District and Tehsil Councils, respectively.
The LGO did not establish any hierarchical relationship between the local and provincial
governments, but networked the former with the National Reconstruction Bureau and the
President's office.
It devolved administrative, financial and development powers to the elected officials in
the local councils and all the government departments became accountable to the District
Council. The Deputy Commissioners were re-designated as District Coordination Officers and
subordinated to the District Nazim for executive approvals, performance evaluations and
transfers/postings. The role of police oversight by the Deputy Commissioners was abolished
and the district police chiefs became directly accountable to the District Nazims.
The LGO changed the political and social landscape by bringing more than 150,000
people into the political arena and creating more than 6,000 councils. According to one report,
38 percent of the newly elected councillors reported that they had never contested an election,
nor had anyone from their family. Another important feature of the LGO 2001 was its allocation
of reserved seats for women (33 percent), minorities, professionals and peasants, although
women's participation was constrained in some parts of the country by the local jirgas, tribal
leaders, and biradaries.
Finally, the LGO provided for several forums, such as District Monitoring Committees, to
oversee the work of government departments, Citizens Community Boards to allow direct
citizen participation in designing and overseeing development schemes, Musalehat-e-Anjumans
(consultative bodies) for alternate dispute resolution, and Citizen Police Liaison Committees for
promoting rule of law and protection of rights.
In Musharraf era’s in year 2002, there were two new ordinances promulgated, which were
proposed by National Reconstruction Bureau (NRB), a non-ministerial regulatory body which
exclusively worked out to carry out a new devolution plan for Pakistan. However, the two
ordinances were not implemented even being promulgated, hence no elections were held:
(i) Islamabad Capital Territory Local Government Ordinance, 2002.
(ii) Islamabad Capital Territory Local Government Elections Ordinance, 2002.

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The then dictator Government kept confuse in discussing the pros and cons of the two bills, and
no elections were held finally. Now, after about 13 years (in 2015), the two ordinances were
merged into once Bill, called “Islamabad Capital Territory Local Government Act, 2015”.
The military regimes in Pakistan have generally favoured reliance on local government for at
least three reasons: first, political exclusion of the incumbents by changing the rules of the
game; second, alliance with the bureaucracy to manage the centralised and hierarchical
structures; and, third, creating a political elite by introducing new politicians through the local
government laws.
The impact of the three local government laws and elections has been different and
nuanced. The BD 1959 revived and consolidated the prestigious Civil Service of Pakistan (CSP),
whereby the District and the Deputy Commissioners became the lynchpins of the regime and
pursued politics of patronage and the development goals of the regime.
Under the military regime of Field Marshal Ayub Khan (1958-69), the military governed
and the CSP ruled. That also led to the creation of a new set of political elites, who became
members of the 80,000-strong BD system (later raised to an electoral college of 120,000).
However, with the downfall of the military regime, the CSP also came under criticism. The 1969
mass movement and protests also tarnished the glory and image of the bureaucracy in general,
but particularly the CSP.
The Civil Services Reforms of 1973 under Prime Minister Zulfikar Ali Bhutto (1971-77)
further eroded the power and prestige of the CSP, who were now labelled as the District
Management Group (DMG).
General Zia-ul-Haq, who assumed power by dismissing the government of Zulfikar Ali
Bhutto in July 1977, sought legitimacy again through the Local Government Ordinance 1979.
The regime revitalised the districts, while delegitimising politics at the national and provincial
levels, and resuscitated local government (elections were held in 1979, 1983 and 1987). During
this period, the CSP and the DMG were able to rehabilitate their positions both in the policy
arena and in the districts.
When General Musharraf seized power in October 1999, the military regime sought the
international community's support by promising a return to democracy, improved governance,

10. 9
and reforms in the social and economic sectors. The local government plan emphasised the
1973 Constitution by invoking the separation of the executive and judiciary. It sought to reduce
the role of the CSP, particularly the DMG, by restructuring the civil service at the district level
and subordinating it to the elected representatives.
The offices of Division Commissioner and District Commissioner (DC) were abolished
and their roles and functions were distributed to the District Government headed by the
elected mayor (Nazim) and including a District Coordination Officer (DCO) who reported to the
Nazim. The magisterial powers of the DC were withdrawn and given to the judiciary and police.
The role of police oversight formerly held by the DC was abolished and the responsibility of law
and order was entrusted to the Nazims.
3. The LG Act, 2015 (Chapter I – VII of the LG Bill, 2015): (Sajjad Yousaf)
The Local Government to be established has to observe the laws applicable to
Islamabad Capital Territory. The jurisdictions of these laws spans to the Constitutional
commitments that the State carries into the Capital. The assets of the states are located in the
city. So, it is obvious that Local Government is certainly bound to very extent not to interfere in
Capital’s classified issues.
The development, planning and overall maintenance of the Master Plan of the area
specified has to be kept with CDA. The CDA being a capable and well versed with the projects in
hand and key organization to evolve Islamabad could be the best facilitator to manage
infrastructural issues of the city. The LG, contracting roads or development of sectors could find
it difficult whereas there’s a readily available institution to do so.
The Local Areas of the Islamabad under the new act are so divided such that the old-
aged, controversial rural-urban divide finally came to an end. The delimitation of constituencies
shall be carried out by the Government (Federal Government) by consent of two UC’s winning a
two-third majority of their total membership shall be able to delimitate their constituency.
However, the revenue powers shall not be divided and so does the size of the population will
be kept equal to as much of possibility of occurrence. The limitation process shall not be

11. 10
scheduled if an election if announced for that area. Similarly, the Government may even divide
the Local Government into two or more Local Governments, also dividing the existing members
such that they are incorporated into the newly formed Local Government.
The Constitution of Local Governments shall be:
(i) Metropolitian Corporation for ICT.
(ii) Union Councils for ICT.
The composition of A Union Council shall exist:
(i) Chairman and Vice Chairman (as joint candidates);
(ii) Six general members;
(iii) Two women;
(iv) One peasent or worker;
(v) One youth member and
(vi) One non-muslim member.
Whereas the composition of a Metropolitian corporation shall be:
(i) Mayor and Deputy Mayor, as joint candidates;
(ii) Chairmen of all Union Councils;
(iii) Women;
(iv) Peasent/workers;
(v) Technocrats;
(vi) Youth members and;
(vii) Non-muslims
The number of women shall not be less 33%, peasent/workers, non-muslims and youth
shall not be less than 5% while technocrats should not be less than 2%. However, these
numbers will be computed by the Government through timely notifications.
The Mayor and Deputy Mayors shall be jointly elected in the first session of
Metropolitian Corporation from among the members of the UC. (The Mayor and Deputy Mayor

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shall be indirectly elected while all the members of the UC are to be elected directly through
Elections).
3.1 LG Elections:
The election of members of all local governments (UC and Metropolitan Corporation) is
to be carried through secret ballot on the basis of adult franchise. The Election Commission of
Pakistan (ECP) shall conduct the Local Government Elections. The eligibility to caste vote stands
due for:
(i) Citizens of Pakistan;
(ii) Not below the age of 18; and
(iii) Fulfilling other conditions (if specified by ECP)
The electoral rolls shall be made by the ECP, free of errors and omissions.
After doing so, the ECP shall appoint Returning/Assistant returning officers for each
constituency and perform his/her duties as imposed by the ECP. The Returning officer shall
establish a polling station in light of the directions by the ECP, especially maintaining the fact
that the polling station shall not fall under constituency of a candidate.
A returning officer will than appoint a presiding officer for each polling station atleast
fifteen days before polling, not changing any duty plan but except after the consent of the ECP.
The Presiding officer shall be bound to carry out polling following the directions provided
therein the act.
A candidate stands eligible to take part in the LG Elections if he/she fulfills:
(i) Citizenship of Pakistan;
(ii) Youth member, not less than 25 years of age; or
(iii) Enrolled voter in electoral rolls of the UC.
The Union Council is the corporate body having a perpetual succession and a common
seal, power to acquire and hold property and enter into any contract with its Chairman being

13. 12
the executive head. The functions of a UC shall be carried out under CDA Ordinance, 1960 and
as specified in the second schedule of the bill.
The office of Local Government shall stand for five years after holding its first meeting.
The Mayor, Deputy Mayor, Chairman, Vice Chairman or member, shall take an oath; also
declaring their assets in prescribed manner.
If the seat of Mayor, Deputy Mayor, Chairman or Vice Chairman or a member falls
vacant due to any reason, the new candidate shall be elected within thirty days. In case there is
vote of no-confidence, the Mayor or Deputy Mayor shall cease to hold office if it is won by two-
third majority. The motion of vote of no-confidence shall not be moved before one year of
assumption of office of both. If the motion of vote of no-confidence fails to attain majority,
there shall be no further motion for upto one year the date the previous motion was moved.
Finally, the Executive authority of a local government shall be exercised by its Mayor or
Chairman. For Metropolitan Corporation, the Government shall appoint a Chief Officer; as
many of such as she may. Such officer will be known as Principal Accounting Officer and in case
of a Union Council, the Chairman shall be the PAO.
The Chief Officer shall coordinate between the metropolitan Corporation and the UC’s in ICT.
He shall be responsible to oversight the Metropolitan Corporation. The Government may also
divide function of Government into one or more of its functions to Local Government for
improved and efficient service delivery. Similarly, the Metropolitan Corporation may also
devolve one or more of its functions to the UC’s.
4 Issues with CDA and Management of CDA: (Sajjad)
The first version of the said bill was passed by the National Assembly. The bill was made
controversial when CDA employees protested complaint and perused the Standing Committee
of Senate to look after their grievance. The controversial clauses lead to their job-insecurity and
dilute CDA by the passage of time. (The bill was first passed by the NA, which later removed
these clauses):

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The Bill which was first passed by the NA (later amended by Senate) clearly envisages
transfer/allocation/reallocation of CDA employees.
124(4); 123 (4): “However, the protection upon such transfer / allocation or reallocation
is diluted, if not vague. The protection is limited to “salaries, emoluments and pensions”.
125(4): “Additionally the guarantee of the Government towards payment of salaries is
till such time as the government may deem appropriate.”
130(2): “The Governmeny may be notification, assign any of the functions of the Union
Council or the Metropolitan Corporation specified in the second and third schedule respectively
to any statutory body or public or private company.”
One assignment takes place to the private company, all transfers from CDA performing
those functions would be easily thrown out by the Municipal Corporation and / or the Union
Council.
72(2): “The Metropolitan Corporation may entrust any of its functions to a person,
authority, agency or company, through a contractual agreement, on such terms and conditions
as may be prescribed”. (which means that the Metropolitan Authority was not bound to
contract out CDA, tenders may have horse trading and role of CDA will completely be
relinquished).
Clause 36(1), 36(2) and 36(5) related to transfer of CDA employees to Metropolitan
corporation or UC was aggressively opposed by the Senate’s sub-committee of the Standing
Committees as well as the CDA Mazdoor Union.

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5. Metropolitan Corporation
In ICT local government bill, Islamabad declared a metropolitan corporation which is a body
consists of 66 members (50 direct elected, 9 women member, 2 minorities member, 1
technocrat and 2 youth), 3 deputy mayors and 1 mayor a detail in figure-II. The Metropolitan
Corporation base on three main actors i) Mayor and deputy mayor, ii) Chief Officer and iii)
Municipal office. Metropolitan have the power to acquire and hold property and enter into any
contract and may be sue and be sued in its name. Metropolitan Corporation performed
function mention in the fourth schedule of
I. Capital Development Authority Ordinance 1960
II. ICT Zoning Regulation 1992
And metropolitan corporation may perform these function through a person, an authority,
agency or company through contractual functional.
In Metropolitan Corporation a mayor is the executive head of the system and supported by the
deputy mayor, there can be more than one deputy mayor; currently there are three deputy
mayors in ICT- Metropolitan Corporation. The most senior deputy mayor will precede the daily
work of Metropolitan Corporation in the absence of mayor. The mayor shall provide the vision,
direction, priorities the issues and then designed the strategies for achieving the priorities of
governments. And also mayor prepare the tax proposal and budget and devise the mechanism
for the accountability and oversight of Metropolitan Corporation.
The mayor review the performance of the Metropolitan Corporation in order to improve
I. Economy, efficiency and effectiveness
II. Efficiency of revenue collection service
III. Implementation of the bye-laws
The chief officer main responsibilities are coordination, internal audit, human resources
management, public relation, legal affairs and emergency service. The other main task of the
chief officer is to check ensure the implementation of rules and laws.
5.1 Local Government Finance:-
Public finances in Pakistan have been characterized by high fiscal deficits, poor revenue
mobilization, a persistent trend of centralization, massive vertical imbalances between federal
and provincial governments (i.e. very large gaps between provincial governments’ expenditures
and own revenues, which have to be made up by means of fiscal transfers from the federal
government), weak financial management and lack of accountability of the public sector.

16. 15

17. 16
A stable and meaningful decentralization requires an unambiguous and well-defined
institutional framework in the assignment of expenditure responsibilities among the different
levels of government. This is by no means the only condition, but it is the most important. For
example it is also necessary to have sufficient budgetary autonomy to carry out the assigned
responsibilities at each level of government. According to the ICT-Local Government act 2105,
the administrative and financial authority for the management of the offices of the
Government specified in Eighth and Ninth Schedule of the Act. Following Table described
responsibility of Metropolitan Corporation.
No.
Responsibility
No.
Responsibility
1 Animal 9 Development Planning
2 Boundaries and trees 10 Public Health and Sanitation
3 Burial Places/Graveyard and
Cremation
11 Public Safety
4 Culture 12 Registration of Births, Deaths, Marriage and
Divorce
5 Dangerous and Offensive Articles and
Trade
13 Social Welfare and Community Development
6 Drainage and Sewerage 14 Streets and streets lighting
7 Food and Market 15 Trades and occupations
8 Licensing 16 Public Vehicles and Parking
17 Water Supply
Figure-II
The local government within limitation can prescribed the honoraria for the mayor, deputy
mayors and members of local assembly. The local government shall not incur any debt without
the previous approval of the central government but invest it surplus in different project with
approved by the government. The annual budget of the local government consistent on the
following elements
i. grants from the Government
ii. Amounts available in the Local Fund

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iii. Receipts for the next year
iv. Expenditure to be incurred for the next year
The Local Government Plan acknowledges the importance of resources for the local
governments in the following words: “The principle of the formula for provincial to district
transfers is that district and local government should generate their own resources to the
extent possible. Incentives should always encourage financial self-sufficiency to the extent
possible at each level. However, the current quantum of funds being used by the provinces will
ensure the working of the district administration and the political system. Untangling provincial
finances and simplifying funding processes and the financial plumbing will result in increased
efficiency”. Accordingly, it lists out taxes, which may be levied by various levels of the local
government in the fourth schedule of the ICT Local Government Act 2015. Following are the
taxes that levies by the local government
Taxes and Levies
N0. Metropolitan corporation Union Council
1 Water Rate Taxes
2 Drainage rate Entertainment tax
3 conservancy rate Birth and Marriage registration fee
4 fee of construction fee on UC service
5 land changing fee Fee of Public utility i.e. drainage, water etc.
6 licenses fee community tax
7 slaughter house fee fee for licensing of professions and vocation
8 tax on profession, trade any other tax/levy authorized by the
government
9 market fee
10 tax on sale of animal
11 toll tax
12 fair and industrial show fee
13 parking fee

19. 18
Figure-III
First and second generation approaches to fiscal decentralization and ICT Local Government
Act. 2015
6. There are two approaches to fiscal decentralization
I. First Generation Approaches
II. Second Generation Approaches
In the 1st
generation approach main contributor are Musgrave, Tiebout, Olson and Oates.
People select a representative for better services provision, individual net benefits from the
public service delivery may extend to political boundary. Sometimes political boundary may
extend to economics boundary but these both are inefficient situation. When an economic
boundary of public goods match with political boundary, is best explained by the 1st
generation
theory. Main focus in 1st
generation theory is on a) service delivery responsibility b) revenue
raising power c) intergovernmental fiscal transfer and d) subnational borrowing.
The 1st
generation theory said that pure public goods best provide by the central government
and fiscal equivalence and decentralization theorem should match with economic and political
boundary of third tier of government. In case of ICT pure goods are provided by the federal but
it didn’t meet the fiscal equivalence and decentralization theorem. First generation said that
there should be clear assignment of responsibility but in ICT and CDA many responsibilities
didn’t clear that leads to higher transaction cost and fiscal illusion.
According to ICT Local Government Act. 2015, local government perform huge number of
responsibilities but the revenue raising power of local government very limited which meet by
fiscal transfer from federal government. When local government fails to meet its expenditure
then in many developed and developing countries can borrow. But in case of ICT borrowing
constraints are higher are also.
The second generation theory main consideration is i) Political process and behavior of political
agent and ii) Asymmetric information and political agent. Seabright (1996) introduced the
notion of “incomplete contract”. In case of incomplete contract federal govt. can efficiently
provide the services same case in ICT local government, there is incomplete contract. Weingast
(1995) introduced the notion of market preserving federalism to investigate the competing
jurisdiction but there is no competition in between jurisdiction. Weingast said SNGs have
regulatory responsibilities but in case of ICT there is regulatory responsibilities and also
common market.
7 The Relations of Islamabad local government with Federal government
The local government if capital terrorist of Islamabad has a unique nature due to absence of
provincial government it has working relations with Federal Government of Pakistan. The

20. 19
Federal government shall constitute a commission it has a chairman, the chairman can be a
technocrat, a retired government officer or an eminent citizen. The Commission shall have
members including a minority and women from Islamabad municipal area. This commission
shall also include a serving member of Federal government not below the rank of BPS 19
nominated by Chief Commissioner Islamabad. This member will directly report to Chief
Commissioner Islamabad. Commission shall be a consultative body, shall discuss perks and
privileges of Mayor and deputy mayors. But the local government administratively shall be
under CAAD (Capital Administration and development) Ministry of interior government of
Pakistan. The CDA (Capital Development Authority) shall execute the development and
maintenance works of Islamabad.
7.1 Legal Relations
The federal government shall direct local government of Islamabad on a specific issue. On the
other hand the local government of Islamabad requests federal government to issue a direction
on a specific problem and prevailing situations. But federal government shall not issue
directions on day to day business of ICT local government. The rules of business are defined in
Islamabad local government bill 2015. The mayor has no power of ACRs of IGP Islamabad
Police, Chief Commissioner, Chairman CDA and all bureaucrats which are functioning in
Islamabad.
7.2 Powers of Court
The local government of ICT has powers of civil court. It can summons any person, give stay
orders, punish and stop any work, projects which are violating the By-Laws of Local government
of Islamabad. But it has no powers of Criminal court under CRPC 1889 act and local government
act of Islamabad 2015.
7.3 Powers to punish
The Schedules which are defined in local government act 2015 gives the structure of
punishment of cognizable offences. The schedule V defined as punishment of Fine of Rs 5 lacs
and imprisonment of 5 years. The schedule VI defined as fine of Rs 5 lacs and no imprisonment.
7.4 Collection of Fine
The fine shall be collected through ticketing system, and fine shall be deposited in National Bank
or treasury of government of Pakistan in account of Local government of Islamabad

21. 20
8. Critical Analysis;-
I. Capacity Issues; The members, Mayor and Deputy Mayors of Metropolitan Corporation
can lack knowledge, experience, and skill to understand and work under the new
system. As discussed above mayor give vision, set priorities and then make strategies
for to achieving these priorities but current Mayor Lack capacities to handle this work.
Capacity has emerged as one of the very important constraints on the functioning of
the system.
II. Political Affiliation:- Currently ICT local bodies election held on party bases a large
number of members belong to opposition party and their affiliation become constraints
in the fund transfer and other administrative issues. Part in power create hurdle in the
way of these members.
III. Overlapping and Coordination failure: - In ICT 2015 bill many roles of mayor and chief
officer overlap that will increase the transaction cost and lead to underdevelopment.
Also many departments involve in Metropolitan Corporation but they fail in properly
coordination.
IV. Dependency on federal/ provincial transfer: - there are number of resources of tax
generation but then also local government depends on the state government.
V. Capacity issues in tax collection: - Local government face many issues in tax collection,
as discussed in the act if local government fail to collect tax then government will
collect the tax.
VI. Audit Issues: - Mention in the ICT- LG act 2015 that chief officer will audit and written
that secrecy also audit the expenditure and cost. There is no proper channel of
recording and maintain the transactions of government.
VII. The federal government has a upper hand on Local government in its liaison with local
government
VIII. The opposition members of local assembly have reservations that they will not
be given funds for development as compared to treasury members.
IX. The dual legal system i.e. local government and federal government shall create the
problem of responsibility and execution.
X. The powers of civil court can be misused by the mayor and other treasury official for
political purposes.
XI. The working relationship of CDA and system of deputation of officers, Non Gazetted
staff and workers is also ambiguous.

22. 21
8. Reference
Zaidi, S. A. (November 2, 1996). Urban Local Government in Pakistan: Expecting Too Much
from Too Little? Economic and Political Weekly, 2948-2953.
http://www.pk.undp.org/content/pakistan/en/home/library/hiv_aids/development-advocate-
pakistan/local-government-acts-2013-and-province-local-government-relatio.html
http://www.pk.undp.org/content/dam/pakistan/docs/Democratic%20Governance/Federalism/Inte
rnational%20Conference%20Sept13/presentations/Day2/4th%20ppt%20Representitive%20LG%
20Sindh%20pdf.pdf
The ICT Local Government Bill (As passed by NA), 2015.
http://www.cda.gov.pk/