Recently, I read a book Chalta Hai India: When ‘It’s Ok!’ is Not Ok by one Alpesh Patel. It’s about the so-called Indian attitude of Chalta Hai (‘it’s okay’, ‘let it be’). Somehow, I could not help drawing similarity with our own Kheymi (it’s ok, let it be) attitude. While there are many instances to support this, right from parking cars in the middle of the road to high officials cutting lines, to more serious official lapses, looking at the unreasonable pledges our politicians make, the Kheymi attitude seems to exist even for the national goal of a self-reliant economy.
In an Address to the NGOP in October 2008, His Majesty The King stated that ‘one of our primary objectives is to be self-reliant. When we talk about self-reliance it means that we should be able to stand on our own, without depending on others.’ The importance of working towards economic self-reliance has been emphasized in numerous other Royal speeches including specific directives to the Government during Parliament openings. His Majesty The Fourth Druk Gyalpo included the long-term goal of economic self-reliance as one of the main objectives of the 5th plan (1981-87). As a solemn reminder to future governments, the central theme of the 8th plan (1992-97), which was the last development plan before governance was handed over to an elected Council of Ministers, was to muster efforts towards achieving self-reliance. Self-reliance was then defined as “To be able to stand on one’s own feet, have the power of decision in one’s own hands, and not be dependent on others.”
Just as many things were put in place before embarking on important changes in our country, Their Majesties had laid strong foundations to enable future democratic governments to achieve this important goal. The 10,000MW hydropower goal was articulated by His Majesty The King a year before democracy. PHPA I and II, Mangdechhu, Dagachhu, Nikachhu, Sunkosh, Kholongchhu and many others were conceived at that time. For 34 years prior to 2007, His Majesty The Fourth Druk Gyalpo ushered in unprecedented socio-economic progress and prosperity supported by meagre revenue sources, with Chhukha hydro project only coming towards the later part of His reign and smaller ones like Kurichhu and Basochhu much later.
The 12th plan now under finalization, presents the best opportunity to work towards this goal. Prior to 2007, Bhutan’s hydropower generation capacity was 468MW. With MHPA now ready for commissioning, the new Government will soon have 2,334MW of hydropower at its disposal, and by the end of its term, the capacity would reach 4,672MW, ten times, pre 2007. Along with substantial revenue from the industries and services sector, the 12th plan has to consider the goal of economic self-reliance as the most important objective. If the Kheymi attitude prevails and the Government makes it a populist plan yet again driven by donors and imports, we would be losing a very opportune moment in time. Donor dependence must be scaled down even if it means compromising some of the spending ideas in the plan.
As dealing officials will confirm, donor dependence has implications, none more significant than the second point mentioned in the definition of self-reliance, i.e. the power to make decisions. When you are aid dependent, decisions concerning matters such as project scope, level of financing, when, whether and how much to disburse are often controlled by the donor. Which is why, post democracy, Government has been regularly resorting to ‘pre-financing’, an unconventional arrangement to fill up the frequent cash shortages caused by delays in fund disbursements for projects under donor funding. Other than few officers in the MoF, RMA and GNHC, many people including our elected representatives, perhaps did not notice that since the time of the elections in October, treasury bills of Nu 9 billion have been called by the RMA on behalf of the Government. Some of this money will go to fill up the pre-financing gaps. The stark reality is that even as the Government talks of a massive Nu 310 billion Plan, it has actually started its term with a large negative bank balance.
In my opinion, economic self-reliance can be looked at from four perspectives.
Fiscal: Vision 2020, EDP 2010, EDP 2017, 10FYP, 11FYP all prescribed 2020 as the target year to achieve self-reliance. Today, domestic revenue finances less than 60% of total government expenditure. Theoretically, 40% of our total financing comes from external sources, and 70% of our capital budget is still dependent on grants and loans. GoI has generously met bulk of this gap. Since the RGoB cannot seek external funds for meeting its recurrent costs, dependence has to be seen in the context of the capital budget. If the 11th plan level of aid is continued, GoI will still be funding about 40% of the 12th plan capital outlay. It is unsettling to hear media reports that if the anticipated MHPA tariff does not materialize, Government will seek more grant. Power tariff and budget support are two completely different matters and the Government should not mix the two. On the fiscal front, determined efforts are needed to contain unnecessary spending starting from ministers’ own expenses, while also considering measures to enhance revenue, urban taxes being a good one to start with.
Food self-sufficiency: Bhutan is heavily import driven for most food items. As reported by the media just last week, we are facing a serious food trade deficit. In 2017 alone, we imported Nu 1,600 million worth of dairy products and Nu 876m worth of vegetables and fruits. Even as we pride ourselves in being highly religious and environmentally conscious, we imported Nu 1.2 billion worth of meat items and Nu 660 million worth of packaged food. Import substitutions and changes in consumption pattern need to be vigorously pursued through appropriate policy interventions.
Employment: MoLHR statistics put the number of expatriate workers in Bhutan at about 50,000. On the other hand, youth unemployment in the 12th plan is projected at about 66,000. While a direct one-to-one relationship is not relevant, the fact is that unemployment is a serious issue. If there is one area where the new Government could be commended for deciding to bring in ideas from the manifestos of the other political parties, it’s unemployment. If there is one area where the Government needs to devote substantial effort and investment, it is this.
Trade: Ultimately, excessive government spending and uncontrolled private consumption leads to an unfavourable balance of payments position. Ignoring other aspects in the BoP, Bhutan’s trade deficit (imports minus exports) in 2017 alone was about Nu 30 billion or roughly US$ 430 million. Accepted, some of this is due to the ongoing hydro-power projects. The same consumerist culture led to the 2012 rupee shortage. Presently, the deficit is financed through generous donor aid. With the economy supposedly improving and imminent LDC graduation, external funding will diminish. The foreign reserves at the RMA, which have been accumulated over the years will have to be drawn down to meet the trade deficit. To avoid such a situation happening, the Government needs to consider some strong policy interventions to curb consumption imports and enhance exports.
I don’t know if anybody has noticed on their travels to the east, a large notice board which says “Welcome to “Trashigang Dzongkhag – A Dzongkhag which aspires to be self-reliant…” Surely, it cannot be just Trashigang dzongkhag and surely, it cannot remain an aspiration any more. With the goal of economic self-reliance, if the 12th Plan period is not late, it’s not early.
Contributed by Lam Dorji,