Funny money?

For over a decade now, every time I’ve fueled up in Phuentsholing, I’ve asked the petrol pump cashier to exchange various amounts of Ngultrums for Indian Rupees. I’ve had little problems changing small amounts, like Nu 500. But for larger amounts, say Nu 5000, it would sometimes get difficult to change my money.

I’ve rarely needed the Indian Rupees for my stay in Phuentsholing, yet I’ve made it a point to request for the informal currency exchange every time I visit our border town. I’ve developed this odd tradition to give me a very rough idea of the state of our economy.

My assumption is simple – petrol pumps in Phuentsholing should always have a ready supply of rupees. Why? Because many Indians fuel up in Phuentsholing. And they pay for it in rupees. Plus, since fuel is cheaper in Bhutan, some Indian’s take away petrol in barrels, presumably to sell at a profit … but that’s another matter.

So if I can change my money easily, it would mean that rupees are easily available; that the ngultrum is at least as strong as the rupee; and that, overall, we export more than we import from India. This is good sign.

But if I can’t change my money easily, it would mean that the rupees from the petrol pump are quickly diverted elsewhere; that the true value of the ngultrum is not at par with the rupee; and that, overall, we import much more than we export to India. This is not a good sign.

All things considered, I’ve had no cause to be concerned. Like I said earlier, changing small amounts of money has generally been easy.

But now I’m very worried. It appears that small shops in Phuentsholing are doing a brisk business charging a whopping 10% to change ngultrums to rupees (read The ‘swop’ shops of Phuentsholing). That means that you get only Rs 10,000 in exchange for Nu 11,000. That means demand for rupees outstrips supply. That means we import much more than we export to India, our principle trade partner. That means the market value of the ngultrum is not at par with the rupee.

Huge amounts of rupees have been pumped into our economy to construct hydropower projects. Even larger amounts of rupees come in as Indian aid. And most of our government’s revenue is realized through the sale of electrical power to India bringing in yet more rupees. And still we have difficulty changing ngultrums for rupees?

We should be very worried.

But there’s little point in treating the symptom. So trying to stop small business from selling rupees at a profit, for example, won’t provide real relief. It won’t be possible to forcefully stop them, anyway. Instead address the problem: reduce unnecessary imports; decrease dependence on foreign workers; increase farm productivity; support rupee generating businesses; and strengthen the private sector.

We have free and full access to one of the world’s largest and fastest growing markets. Use it. Tourism, education, health, ICT, manufacturing, finance, agriculture, and hydropower … any one of them should be able to generate more than enough rupees. Used together, we should be able to fulfill His Majesty the King’s vision of creating a robust and vibrant economy for our country.


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  1. Strengthen the private sector? Yep, but NOT any private sector please.

    I want only those companies that run their business to make GNH real. It’s called CSR (Corporate Social Responsibility) – a business strategy executed because it’s good for business as well as for the society. After all, what’s good for the society makes business growth “sustainable”.

    And, I want only those financial institutions that invest in CSR companies. It’s called SRI (Socially Responsible Investment) – a financial strategy executed because it’s good for finance as well as for the society.

    Don’t believe such things exist? The future is here already, in Europe, Japan and even in America, faster than you could possibly have imagined. Especially because SRI funds have been doing well in spite of the current world financial crisis. Serious CSR companies have proven that they are sustainable even in crisis.

    Want to know more? See my blog about my company, on Kuzoo.Net titled “GNH, real and simple.”

    So, yes, use our free access to Indian markets by all means. But, use it as a springboard to the frontier of business, finance, technology, knowledge and information in the world-wide-web of the best practice.

    By the way, wanna know why Ngultrum is depreciating against Indian Rupees? The market is worried about fiscal irresponsibility creeping into Drukyul. Conservative fiscal policy was our shining hallmark. Not any longer.

    Where do markets smell the rotten apple? In all that debate about “Budget, is it a Bill or not a Bill?”, the sneaky “Constituency Development Grant”, and the 10th Plan that shows no regards for the real priority of the people or the fiscal-financial discipline. Ask any small-time dealers in Phuentsholing. They’ll tell you outright, in their own common-sense language.

  2. AT Zekom,
    “I want only those companies that run their business to make GNH real, It is called corporate social responsibility…” According to the fundamental rights of a Bhutanese, as mentioned in the Constitution of Bhutan, every individual has the right ot any lawful profession that he chooses.
    Are you saying that you want the government to regulate the kind of businesses that a citizen of Bhutan wants to run?
    If a tatoo artist wants to open shop in Thimphu, i guess this wont fall under your “good samaritan” business ideals. Are you suggesting the government deny such a person license to operate in BHutan?
    A government is created so that the people living in the country do not face anarchic problems, that no man violates the rights of another man. If the government itself takes away the rights of a person, what is the purpose of that government? If a smart man makes a lot of money doing a business that doesn not harm anyone, what right has anyone to stgop him? NONE!
    already, the system in Bhutan hampers enough creativity and resourcefulness in this country, please do not suggest more ideas.
    Also- the word “society” doesnt denote anyone, because a society is composed of individuals. It is a non entity. How can something be “good for the society?” It can be good for only parts of the society. there are always those who lose out on “society” oriented plans. Good laws ensure the rights of Individuals. Thank you la.

  3. A very simple way of putting up a complex issue. only simple answers that come to my head right now are…consider the rupees for hydro projects go back to india through their workers, most bhutanese students take millions of rupees to study in india, not to forget we even import what we can produce the story goes

  4. Your possible solutions, i quote, “reduce unnecessary imports; decrease dependence on foreign workers; increase farm productivity; support rupee generating businesses; and strengthen the private sector”.
    My take on that:
    1. reduce unnecessary imports- Govt. tried doing that through increasing tax in import of cars but your excellency so thoughtfully took them to Court, and in time legal scholars may sing a different song whether the decision in the proponents favor was right or not.
    2. decrease dependence on foreign workers-
    The ministry of labor and and human resources has already invested so much time, money and people into developing this sector whereby a lot VTI’s are visible around the country, now the question of whether the young who pass out of this institutions do want to get their hands dirty is a different story of which your excellency must be so familiar with.
    3. increase farm productivity-
    easier said than done, Govt. obviously cannot pass draconian laws making it mandatory for all people registered in rural areas to start doing it, perhaps some other people who come to power (if and when) can have a go. rupee generating businesses-
    Hasn’t the govt done enough, do some of us really think that the so called rupee generating businesses are run by Bhutanese, i think the support is still there as long as they learn to play the game with a rule that is only beneficial for Bhutan in the long run. Our country cannot be used as a place to clean up black money any longer than now. We have had enough! and finally

    5. strengthen the private sector-
    Do we expect the govt. even start running the private sector on behalf of them, for the pvt sector surely seems to be content from the commissions accrued from partners from across the border.

    Lastly, any solutions la????


  1. […] this year, sometime in February, I’d posted “Funny money” in which we talked about the growing shortage of rupees in our economy. In that post, I’d noted […]

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