The Zila Nazims of Punjab have locked horns with the Provincial Government over the issue of auditing of district government funds. While the Punjab government asserts that the mother of all scams will be exposed after the special audit of district government accounts is conducted, the nazims, in turn, have challenged its writ and claim that they will brook no interference in their fiefdoms. In another development, the federal government has asked the provinces for their views on the devolved system of district governments. The government of Balochistan has reportedly informed the federal government that it wants to scrap the current local government system. Could these developments be attributed to the inherent contradictions and weaknesses of the current devolved system of governance, which have surfaced with the elevation to power of the elected provincial governments, or are these symptomatic of the power struggle within the political elite? Whichever the case, it may, perhaps, be the defining moment for the current system which was rather arbitrarily imposed upon the provinces by the Musharraf regime. It may be pertinent to analytically examine the local government system in the current political environment. The ambitious Devolution Plan was promulgated through the Local Government Ordinances, 2001 in all the four provinces. Devolution reforms have provided a three-tier local government system consisting of district government, tehsil/town municipal administration and union administration. Working under the direction and control of elected councils and nazims, the present local government system attempts to create institutions and mechanisms for public participation in governance, management, and monitoring of social service delivery. Many of the functions previously performed by the local offices of provincial government departments now fall within the domain of district governments and tehsil/town municipal administrations. There are 31 decentralised departments with management control and functional responsibility transferred from provincial government to the districts. These include agriculture, forestry, livestock, primary and secondary education, health, water and sanitation, to name just a few. Under the Devolution Plan the provincial governments are now required to be mainly responsible for giving sectoral policies in consonance with national and international commitments, setting and monitoring performance standards, providing guidelines and resources to meet the service delivery targets, and implementation of vertical programmes. Devolution reforms, as originally conceived and articulated, also envisaged large-scale fiscal decentralisation to complement the administrative and political decentralisation. While a fiscal relationship has, to some extent, been forged between the provinces and the districts, an extensive reorganisation of resources has not taken place and the vertical financial imbalance stays in place with major financial collections being made at the federal and, to a lesser extent, at the provincial level. The whole paradigm of devolution of power and decentralisation of authority is based on the assumption that it will bring decision-making closer to the grassroots communities through effective electoral institutions, catalysing the process of democracy via vibrant civil society and creating locally accountable and efficient bureaucracy. Many studies have been conducted in the recent past on the decentralisation experience in Pakistan, such as reports by the World Bank, Asian Development Bank, DFID, CIET and the Brussels based International Crisis Group. These studies have attempted to identify the merits and demerits of decentralisation. Some of these reporters have emphasized the gains that could be made from a decentralised system, particularly in terms of allocative efficiency and participation of the people at the grassroots, and have recommended further deepening of the initiative. Others cast doubts and have raised concerns about possible negative consequences, particularly in relation to macroeconomic policy and income redistribution. The International Crisis Group, in its report published in 2003, extensively criticized the ostensible intentions of General Musharraf as demonstrated by the historical reliance of military regimes on local governments, its rigged implementation, and the indirect party-less design. Further, the focus of existing literature on devolution is on evaluating the impact of fiscal, administrative, and political decentralisation on the state of service delivery. There are two issues involved in this behalf. First, these studies have been generally limited in scope. The perceptions that have been measured are not representative of the vast array of stakeholders that are influenced by or can influence the state of service delivery. Second, impact on service delivery is an important, but only one aspect of the comprehensive assessment of the devolution reform in Pakistan. Other questions are equally important. These include, but are not limited to, comparisons of the devolution reform as conceived initially under the Devolution Plan and as it unfolded under the LGO, 2001; inter-district and intra-district variance in implementation, partial rollback in certain areas by way of numerous amendments made by almost all the provinces in their respective Local Government Ordinances 2001, and, above all, tensions and frictions unleashed at the local levels. If public perception is anything to go by, service delivery has improved in education and health sectors, while it has shown no qualitative improvement in water, sanitation, agriculture, SMEs and infrastructure sectors. Widespread corruption, mismanagement and local power struggles can be cited as the reasons for deterioration of service delivery in these sectors. Besides, there are some inherent conceptual and design contradictions, which have been left unattended since the launching of devolution reforms eight years ago. Some of these can be discussed briefly. There are reservations at the provincial level about the transfer of its functions, responsibilities, and resources to the local level. This would not be the case if the federal government had, in turn, transferred some of its powers and resources to the provinces. Since this did not happen (although promised initially), the provinces became the losers in this zero-sum equation of financial and administrative authority. Such a situation has inevitably led to an environment of political and administrative conflict not only between the federation and the federating units, but also within the provinces among the political elite and senior bureaucracy on the one hand and the zila/tehsil nazims on the other. The resolution of this deadlock is necessary if the devolved system is to function smoothly.  It is, therefore, important that the federal government transfers functions and resources to the provincial governments in sectors like education, health, agriculture, forestry etc. which are essentially the provincial domain, and the provincial governments on their part do not encroach upon the legitimate domain of the district governments. Administrative and human resource capacity in local governments was not kept in view by the National Reconstruction Bureau while designing the district government system. These should be assessed and developed carefully, particularly if the regulatory and enforcement functions are to be performed by the district governments and the tehsil administrations as mandated in the local government laws. While some initiatives have been taken for capacity building of the manpower, structural changes like the creation of district cadres have not been made. There is also considerable diarchy in administrative control, particularly in matters of postings and transfers.    The NRB also failed to effectively provide any formal linkages between the District Governments and the respective tehsil municipal administrations although the administrative structure of a typical district has historically evolved on the assumption that it as an organic whole. This is not only administratively ineffective but also creates anomalies in infrastructure development. Tehsil Municipal Administrations should, therefore, be integrated more effectively with the District Governments. Recent amendments made in the Local Government Ordinance, 2001 by the outgoing Punjab government has empowered the Chief Minister to suspend district nazim. This is clearly a contradiction of the philosophy and design of the district government system. Similarly, the Chief Minister has been empowered to suspend any resolution or order of the local government at any tier and refer the matter to the Provincial Local Government Commission. Since the Commission is constituted by the Chief Minister himself, it is deemed to be subservient to him. Such powers of extreme action belong to the legitimate realm of an independent local government commission which should be set up by the Provincial Assembly with nominees of the opposition as its members and headed by an apolitical person. The issues concerning the absence of an enabling policy or legal framework, which could strengthen the regulatory capacity of local governments must be addressed at the provincial level. Presently, the district governments appear to lack the necessary wherewithal to perform regulatory functions. Putting in place the executive magistracy within the parameters of separation of judiciary and executive, as laid down by the Supreme Court, needs to be seriously considered. The provincial governments may also examine the desirability of taking out land administration from the purview of the local governments in view of the perceived widespread corruption and deterioration of this important segment of administration, involving title to ownership and its institutionalized hierarchy for legal redress within the revenue judicial dispensation.   The relationship of the district nazim with the DPO remains nebulous. Although the nazim has been given a role to comment in the performance evaluation report on certain aspects of the working of DPO, he has no institutionalized role to oversee police working in the district. On the other hand, the overseeing mechanism provided for in the Police Order, 2002 such as the Provincial Public Safety Commissions, the District Criminal Justice Coordination Committees, and Citizen Police Liaison Committees are by and large non-functional. It is necessary to clearly redefine the exact role of the zila nazim in crime control, law and order, and police functioning.      There is a strong case for enhancing fiscal powers of the local governments. These are currently limited. Collection of municipal taxes like the urban property tax may be transferred initially to City District governments. Furthermore, the district governments may also explore avenues for levying service related taxes, as provided in the Local Government Ordinance. Some of the more credit worthy jurisdictions may be authorised to tap the capital markets for raising resources for commercially viable projects. This approach could be tested on a pilot basis in a few districts that have already demonstrated the ability to raise and earmark resources for development. Sialkot has set an example of self-taxation for the purpose of improving infrastructure in the district, and it is widely acclaimed as a success story. The weight of backwardness in the revenue sharing criteria for current expenditure and development initiatives needs to be increased. The broad parameters and apportionment formulae may be made simpler. The Sindh Provincial Finance Commission award is perhaps an example where too many criteria, which in some way cancel each other, need to be avoided. The process of evolution of local governments has been characterised by a path of uneven development rather than a progressive one. The policies have lacked continuity, and whenever the local government system was revived, it was essentially a new experiment without real linkage with past practice and experience. The importance of the local government institutions in the overall government structures has varied depending upon the type of regime in Islamabad. Presently, with the newly elected governments in power, the system is yet again in a state of uncertainty. Will the government revert to the same course of action as its predecessor governments? Or will it allow the process of decentralisation of governance flourish in an effort to genuinely bring government closer to the doorstep of the people, while simultaneously resolving the inherent contradictions and attending to its weaknesses. The writer is a former chief secretary, Punjab.