Karachi’s woes: whose fault?

By Asghar Soomro

On December 31, 2025, Dawn published an article by Muhammad Younis Dagha titled ‘Misgovernance and Low Growth’. While some of his arguments were persuasive, others appeared weak and selectively framed—tilting responsibility towards the Sindh government while largely absolving the federal government. I shared these concerns in a letter to the editor, but it was not published. This article, therefore, elaborates on those reservations.

There is no disagreement with Mr Dagha on one fundamental point: Karachi has suffered decades of neglect. Its mounting challenges—water scarcity, decaying infrastructure, fiscal stress, unplanned population inflows, and governance failures—demand urgent, coordinated action by all three tiers of government: federal, provincial, and local. However, by focusing almost exclusively on the shortcomings of the Sindh government, the article presents a selective attribution of responsibility and risks obscuring the deeper, structural causes of Karachi’s decline.

This imbalance becomes evident when Mr Dagha notes that Karachi accounts for nearly 50 per cent of Pakistan’s exports and 76 per cent of its trade. Even if these figures are broadly accepted, they strengthen rather than weaken the case for federal responsibility. Revenues generated through ports, trade, and customs accrue primarily to the federal exchequer, while Sindh receives a limited share through the National Finance Commission (NFC) Award. In this sense, the argument is self-defeating: the city that underwrites the national economy remains fiscally constrained at the provincial level.

As economist Dr Hafeez Pasha has recently pointed out, provinces are constitutionally entitled to 57.5 per cent of the divisible pool, yet currently receive around 45.8 per cent—a share that may be reduced further. This persistent fiscal squeeze on provinces, including Sindh, is absent from Mr Dagha’s analysis. Any serious discussion of Karachi’s finances must begin with this reality.

It is also important to clarify how NFC resources function. Sindh receives its share to run provincial affairs and subsequently allocates funds among its districts. Karachi’s seven districts receive allocations that are equal to—or in many cases higher than—those of other districts. Under the Constitution, NFC revenues are divided strictly between the federation and the provinces. The recurring demand by some Karachi-based commentators for a direct NFC share for the city reflects a misunderstanding of constitutional design and international practice. Worldwide, local governments rely on their own tax bases and grants from higher tiers; they do not receive direct shares of federal or provincial taxes. Notably, Sindh remains the only province that has devolved property tax collection to a metropolitan corporation—the Karachi Metropolitan Corporation. Strengthening local government finances lies in improving tax collection under existing laws, not in constitutionally unviable demands for NFC redistribution.

Similarly, the claim that the Sindh government owes Karachi Rs3 trillion since 2010 warrants careful scrutiny. This figure appears to be derived from octroi-related assumptions. Octroi compensation received from the federal government—paid out of sales tax—is distributed across districts according to an established formula. Allocating the entire amount to Karachi alone would deprive other districts of their legitimate shares. The Rs3 trillion figure, therefore, appears misconceived and should be examined rigorously rather than asserted uncritically.

On water supply, the Sindh government must indeed be held accountable for ensuring Karachi’s needs are met. The K-IV project is critical and must be completed without further delay, and both the provincial government and international donors must explain the repeated slippages. However, it is puzzling that Mr Dagha criticises Sindh for seeking a separate water allocation for Karachi. Karachi is often described as a “mini-Pakistan,” drawing migrants from across the country, yet the demand for a dedicated allocation for a megacity of over 20 million is portrayed as parochial. Sindh has never argued against supplying water to Karachi; its demand from the Centre and IRSA reflects demographic and urban realities. The selectivity in this critique mirrors the broader pattern in the article.

Ultimately, the central contradiction remains unresolved. Karachi is repeatedly described as Pakistan’s economic engine, yet the federal government’s failure to undertake any transformative development project for the city goes largely unexamined. Ports, railways, national highways, and trade facilitation—core federal responsibilities—have suffered chronic neglect. To foreground provincial failures while overlooking federal underinvestment is to tell only half the story.

This is not an argument for uncritical defence of provincial governance. Sindh must be held accountable for inefficiencies and failures, just as the federation must. But Karachi’s crisis is the product of shared neglect, distorted fiscal federalism, and weak intergovernmental coordination. Any credible analysis must distribute responsibility accordingly.

Karachi deserves more than selective blame. It deserves an honest reckoning.

(Author is Karachi based colmunist and social activist. He can be reached at asgharsoomro@gmail.com)