Ludhianvi, known to be a staunch Sunni Islamist, is the leader of Ahl-e-Sunnat Wal Jamaat (ASWJ), a radical sectarian outfit that is accused of orchestrating several deadly attacks against minority Shiites in Pakistan over the past two decades.
Some experts in Pakistan believe the decision will undermine the state's counterterrorism regulations and its narrative that the country is targeting militant groups, along with their money-laundering and terror-financing efforts.
"We've just been placed on FATF's gray list and this decision would further complicate the situation," Rasul Baksh Raees, a Lahore-based political analyst, told VOA. "Two days ago, Pakistan presented a 26 point anti-terror-financing strategy in front of the FATF countries. Who will take it seriously if people like Ludhianvi are set free?"
Retaliation? While viewing the move as "irrational," Raees dismissed the notion that Ludhianvi's freedom is some sort of retaliation against the FATF's decision.
"The country has a caretaker government setup and cannot afford to take any such rash and foolish measures," Raees added.
Ahmad Bilal Mehboob, the head of the Pakistan Institute of Legislative Development and Transparency (PILDAT), said the announcement of setting Ludhianvi free has placed a question mark on the integrity of the caretaker government.
"The decision could be a result of any political pressure. I'm still unable to comprehend why would the caretaker provincial government set free the ASWJ leader, a group that has established terror ties," Mehboob said. According to Pakistani laws, with his name cleared, Ludhianvi can run in the upcoming general elections and will have access to his previously frozen financial assets. He also can freely travel within and outside the country.
Speaking to VOA, provincial government officials have downplayed the lifting of the ban on Ludhianvi.
"It is a routine matter for the provincial home department to revisit names on the terror list and remove those who are acting according to the law," Shaukat Javed, Punjab's provincial interior minister, told VOA.
"Ahmed Ludhianvi's name was taken out of the watch list after a close review of his case by the provincial government," Javed added.
Hasan Askari Rizvi, the caretaker chief minister of Punjab province, told Reuters the decision was made by the federal government. The "Punjab government is implementing decisions of [the] election commission and the federal government in this regard," Rizvi said. Raees is among the experts saying the decision is a "sheer mistake that should be corrected" and "it doesn't matter whether the decision was taken by the federal government, Punjab government or NACTA."
Ahl-e-Sunnat Wal Jamaat
ASWJ is a sectarian Sunni militant group established in Punjab province in 1985 to counter the Shiite Islam in the country. It was previously known as Sipah-e-Sahaba Pakistan (SSP).