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Bhutan: Economy, Corruption and other Issues: Update No. 109

Note No. 735                                    Dated 10-Mar-2015

By Dr. S. Chandrasekharan

Kuensel in one of its recent issues has a given a detailed account of the performance of the government in the past “year of the horse.” 

What is commendable is that the paper has given a very objective and candid account of the performance of the Tobgay Government in almost all fields from political to social, economic and cultural fields.  The paper has not spared the government where criticism was due but generally the criticisms and suggestions have been constructive and not offensive. 

The 28 page long report is long and detailed and what is being attempted here is to highlight a few points that need attention.

* On the economy, the report admits that the GDP growth has plummeted to an all time low of 2.05 percent from 4.6 percent in the previous year.  The slump is attributed to lower investment level and sluggish growth in the construction sector.  It must also have been due to delay in pushing in programmes related to the first year of the 11th plan.

The government’s poor performance came in for a severe criticism from the opposition.  The opposition wanted to know why the Nu 5 billion Economic stimulus plan did not have the desired effect in improving the economy.  Surprisingly the banks are flush with funds to the tune of 19.7 billion and yet are unable to give the money out for growth.  Expected investments from abroad had also not occurred.  The Prime Minister’s visit to Gujarat had also not brought forth any fresh investments though promises were made in the meeting.

The only silver lining in the economy appears to be that the “rupee reserves”  had reached a comfortable level of 20 billion.  This is also ascribed more on account of hydro power projects loans and grants and not because of any increase in the country’s earnings.  At any rate the government does not have to borrow from other private banks in India at higher rates of interest for the present as it did before.

* In the case of hydro power, the paper admits that the government has given up halfway its dreams of producing 10000 MW by 2020.  Surprisingly the Indian government was not in favour of proceeding with some joint projects that were included in the 10,000 MW and this has also affected the plan of reaching the target by 2010.  These include Kuri-Gongri, Sankosh and Amochu projects.  It will be a miracle if the government is able to add another 3000 MW to the already existing 1488 MW of power.  The Indian Government has generally been very generous but it would require an extra length to go for India to help improve Bhutan’s hydro power production which after all benefits India more than Bhutan itself.

* The government continues to depend on food imports and plans are being made to reduce the food deficit of Nu 4.2 Billion.  Top most priority is being given to self sufficiency in rice which still appears to be a distant dream.

* During the year there has been a conscious attempt to preserve Bhutan’s rich spiritual heritage and strengthen the spiritual well being of the country.  His holiness the Je Khenpo has been seen to be very active in visiting religious places, renovating historical dzongs and historical religious monuments.

* While relations with India were further strengthened by top level visits from both sides, the government has since April suspended all efforts to expand diplomatic relations and instead concentrate on consolidating existing ones on grounds that home affairs and economy needed addressing first.  This appears to be a right decision as the economy needs immediate attention.  The 22nd round of border talks was held in July in China and the only outcome was that field survey report of Bayul Pasamlung of northern Bhutan was endorsed. Progress as expected was slow.

* This year saw the departure of well known Chief Justice Sonam Tobgye on retirement after 43 years of an illustrious career.  He was the main inspiration for the new constitution and people who have met him would always come back on being impressed with his knowledge, friendliness and professional acumen.   He will be missed.

A new Supreme Court complex has just been completed next to Trashichhodzong and it is really an impressive building that goes well with the impressive landscape of the area.

* A large number of cases were taken for investigation by the Anti Corruption Commission. It is not indicative of any increase in corruption, but in the determined effort of the government to root out corruption to the extent possible.  Bhutan continues to remain on top among the south Asian countries in the corruption perception index. 

Several high profile cases were taken up that included embezzlement and fraudulent cases, corruption in immigration service, currency trading etc., but the most important was the one known as Lhakhang Karpo corruption case where the current foreign minister was involved.  This case was formally filed in Haa Dzonkhag Court.  Though no formal rules exist, the Prime Minister took the right decision to send the Foreign Minister on ‘authorised absence’ and took over the duties from him. There were several charges against the Foreign Minister that included violation of tender norms in awarding a bid to a local contractor, misuse of Dzonkhag truck for transporting his private timber and borrowing cement from a project for a private purpose. The project engineer and the project manager of the Lhakhang Karpo construction project have been suspended.  Some more heads are also to roll in this case.

* During the year there has been a setback in employment rate that was supposed to go up with determined efforts of the government.  Actually unemployment rate leapt from 2.1 percent to 2.9 percent.  The figure cannot be considered as high but for a small country like Bhutan, this should be considered serious enough. One comes across the familiar problem of mismatch of jobs available with skills on offer.

* Tourism is one area where the government has done reasonably well though there is scope for great improvement.  Surprisingly the Chinese accounted for the second largest number of tourists who visited the country after Thailand.   India does not figure at all in the statistics made available by the government.  With the current year being declared as “Visit Bhutan year” coinciding with celebrations to commemorate the 60th birth anniversary of Gyalpo 4, more tourists are expected.

* On law and order, there appears to be some unease on the southern flank with Bhutanese commuters being robbed along the Indian Highways.  There have been cases of abduction for ransom from the Indian side and some cases are yet to be solved.

Though crime rates were reported to have declined, there was an increase in cases involving controlled substances both in possession and in illegal transaction.  Thimpu maintained its top position in crime, followed by Chuka and Paro.  The rest of the country was relatively free and this is creditable.

Tobgay’s government has done well though the main slippage has been in economic development.  The previous government had spent millions of dollars in getting the famous McKinsey consulting firm to advice but it seemed to have drawn a blank.  This is where India can perhaps help and ensure that the economic prosperity that is expected in the years to come in India is shared by friendly neighbours like Bhutan.

 
 
 
 
 
 
 
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