Economic impact of the creation of new provinces

Pakistan is often hit by “political epidemics”. In a matter of time an issue becomes the most pertinent problem faced by the country and the entire focus and energy shifts towards analysing that. The most recent epidemic to hit us is of the creation of new provinces. Although demands for new provinces have risen from time to time, this summer the voices grew stronger and political parties officially gave their stances on the idea of making more provinces in the country.
Economic impact of provinces
Despite the growing demands for the creation of more provinces, the issue of division is not as simple as it seems. Many factors will come into play, and the creation of new provinces shall have a huge impact on different aspects of the country, including the economy. Given the pre-existing weak economic condition faced by Pakistan the economic impacts of any decision regarding new provinces becomes of vital importance. The fundamental economic problem is that of unlimited wants versus limited resources. There are never enough resources to meet all the needs, therefore some compromises have to be reached in order to achieve an equitable distribution of income and resources. The problem worsens further when resources are not even remotely sufficient, like in Pakistan. People from different areas have always complained that less development funds are allocated for them. It is a known fact that metropolitan cities of any province get the bulk of the funds while the smaller cities are ignored. This inequality in distribution of resources has been a primary cause of the demand for new provinces, especially in Punjab. If there are more provinces then there is a chance that resources are likely to trickle down more equitably to other areas. For example, instead of a lot of money being spent in Lahore alone, some of it will be spent allocated for Multan, Bahawalpur and adjoining areas.
Increased localisation
Moreover there is a higher probability of the resources being spent in the right place, since the bureaucracy and administration will be more localised. There will be greater direct spending on the institutions that require it the most. A person hailing from Seraiki belt if given the charge of resources would be more aware of the intricacies of the problems in his region than someone hailing from central Punjab. Having said so it needs to be considered how these resources would be divided? We are well aware of the already existing issues that surfaced during the NFC award distribution. These problems are likely to exacerbate further with the creation of new provinces and thus it is more likely that the friction between provinces would grow affecting the political instability of the country. Political instability is a huge drawback for foreign investors who will be wary of bringing their investment in the country, which will lead to a potential loss of jobs and a curtailment in economic growth. Furthermore there is also the issue of dividing the issue of royalty of minerals and dams etc. For example there is only one dam in Khyber Pakhtunkhwa at present, the Khanpur dam. It is through this dam alone that all of Khyber Pakhtunkhwa is supplied electricity.
Distribution of resources
If Hazara is to be created the Khanpur dam will lie in the domain of the Hazara province. Thus the rest of KPK will be left without a dam giving rise to the problem of power generation for the rest of the province. The rich minerals present in the mountain regions of Hazara and the tourism generated there is a major source of income for the entire KPK. If Hazara becomes a province then the rest of the KPK will face considerable shortage of income and resources that may cause the region to slide further into a plethora of problems. Therefore, if new provinces are to be created a proper formula for the distribution of resources and royalty should be developed to overcome such hurdles. If the issue of distribution is sorted and all the provinces get their fair share there would be a likelihood of new industries developing. Each province would have space for its specialised industrial growth since the resources could be more focused. For example, Seraiki belt, already famous for its cotton, could differentiate in the area. Tourism in Hazara region could be developed further by focused and directed spending. Thus new provinces could help develop new industries while simultaneously strengthening the old ones. At present millions of people inhabit the four provincial capitals. As a result of increasing population the provincial administration are failing to provide proper civic services to the proletariat. More provinces would therefore ensure that there is not only an egalitarian distribution of income but the influx of migrants towards urbanised provincial centers like Lahore, Quetta, Karachi and Peshawar is also curbed. A few more cities would come under the radar of the administration which would enable them to create greater employment opportunities for its people and bridge the widening socio-economic disparities amongst different regions of the country. The impact of increasing non-development expenditure also needs to be taken into account. Non-development funds (funds for managing governor house, TADA of officers etc) would increase significantly if new provinces are made. This would add to an additional burden to the exchequer. Thus the management of such non-development funds would be a major issue to consider before arriving at any decision regarding the creation of new provinces. Thus to conclude it can be said that creation of new provinces would have major economic impacts, both positive and negative. The decision regarding this latest political epidemic should only be made after taking into account all these factors since Pakistan can hardly afford to make anymore mistakes in the economic front.