The governments of Khyber Pakhtunkhwa and Punjab recently announced their interest in operating their own airlines. A pertinent question here is: why? Why should provinces have their own banks or run airlines?
The federal government is already grappling with issues plaguing state-owned enterprises. Some of these are loss-making, while in some industries, profitability is very possible. Private sector firms are profitable in these areas. The federal government is actively considering privatization of various financial institutions, especially those running at a loss, and faces pressure to do so swiftly to manage financial deficits. There appears to be similar pressure from the IMF, other lenders, and donors, which is why the privatization of PIA has been prioritized over the past six months.
Given this scenario, why would provinces want to buy, establish, or run airlines? Why do they feel the need to operate banks or airlines? Numerous private sector alternatives are already available. Perhaps, in the past, Pakistan’s economy was too small, or private investors lacked the capital or expertise to establish banks or airlines. But we live in a different era now, with many local and multinational players in the business environment. Why would provinces want to enter this space? Take the banking sector, for example. What value can provincial banks add? All provincial banks have faced difficulties at some point.
Over time, many of these institutions have faced allegations of financial corruption on the orders of the political leadership of the time. Provincial governments do not possess the knowledge or market expertise that could benefit the banking sector. So, why should they own banks? And naturally, provincial banks have, in the past, been used to fund redundant projects or benefit friends of political leaders. Is it truly right for provinces to own banks? Would the situation be any different if a province owned an airline? If provincial governments ran an airline, what advancements or opportunities could they bring? Better knowledge? Improved business understanding? What’s the benefit here? They might impose restrictions, as they have in the case of provincial finance and banking, requiring provincial businesses to use this airline—but how would that help? It only creates yet another responsibility.
It is the government’s duty, and sometimes legally mandated, to provide goods and services that have a public welfare element or are considered rights of individuals. For example, Article 25A of the Constitution mandates that the state provide free and compulsory education to all children aged five to 16. This is enshrined in the fundamental rights section of the Constitution. It is both a right of citizens and an obligation, as the state is required to provide this education. However, we also know that around 26 million children aged five to 16 in Pakistan are not in school.
Should the state not focus on providing education to children instead of thinking about owning and operating banks and airlines? Public health faces similar issues, even though access to healthcare is not recognized as a fundamental right in our Constitution. Yet we are failing miserably in providing basic healthcare and welfare to the people of Pakistan. We cannot provide clean drinking water to all citizens; we have failed to ensure cooking gas for women to prepare breakfast for their children; we cannot vaccinate all children (Pakistan and Afghanistan are the only countries left where the polio virus hasn’t been eradicated). Forty percent of our children are malnourished, and most of the poor receive extremely substandard preventive healthcare in the country.
Despite the Prime Minister declaring an educational emergency this year, are there any efforts underway in any province to address these mentioned issues? And yet, provinces want to run airlines and banks. Provinces are trying to improve the quality of services in education, health, water, sanitation, and other sectors but have achieved little overall over the years. For the past 10-15 years, provinces have been expanding services and improving their quality through public-private partnerships (PPP), and successfully so, especially in education (mainly in Punjab) and healthcare (primarily in Sindh), with PPPs spreading rapidly. Recently, in Punjab, the government has decided to keep only 12,000 or 13,000 out of its nearly 35,000 primary schools.
Teachers, some parts of the education bureaucracy, and other stakeholders are criticizing the government over the “privatization” of education. But, whether we view it as privatization or not, the reality is that the government has failed to manage schools and is seeking help from the private sector to run them, while the same government wants to run banks and airlines. Should provinces run banks and airlines? The answer seems clear: would banks and airlines truly be better off under provincial management?