Real money



Recently, on the 9th of August, Kuensel published a story about the Rs. 5 billion that our central bank had borrowed in 2008 to meet the rupee requirements in the country. On that overdraft, our central bank is pays more than Rs. 500,000 every day on interest alone. That same story also informed us that the government total rupee debt with India stands at Rs. 22 billion, Rs 17 billion of which is for hydropower projects.

The next day, on the 10th of August, Kuensel ran an editorial telling us that we need to expand our economy – to sectors where we have a competitive advantage – and get serious about import substitution.

Most of our trade – about 80% of it – is with India. So India and their rupee are important to us. Here’s what we sell them: hydropower, minerals, fruit, potatoes. And here’s what we import from them: everything.

It’s obvious. We need to export more goods and services. And, where possible, we need to reduce imports by favouring local produce.

Our currency is pegged at par with the rupee. But, unless we generate enough rupees, that peg will be weak. The Kuensel editorial warns us that our ngultrum is already being traded at a discounted rate with the rupee. We should be very concerned.

I certainly am. Early 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 that: “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.”


Facebook Comments:


  1. Now, don’t I like this post about boosting economy, combating Inidan rupee shortfall, increasing export and ofcourse realizing His Majesty’s vision of creating a robust economy for our country. If we are not in tune with this important vision, it is our collective responsibility to look for ways to realize it or atleast be on the path of realizing this important vision.

    RECENTLY, THE SENIOR GOVERNMENT OFFICERS MEETING WITH THE PRIVATE SECTOR at BCCI hall seemed promising where the Honorable Prime Minister agreed to get back to the Business community by 15th September and also agreed that the government will be working on various issues raised by the private sector by the end of August. So we naturally feel the government is busy working on these numerous issues raised. PM also mantioned that the demands made by the private secotr were not unreasonable and that this will be expedited. Its all good!!!

    HOWEVER, I AM STILL WORRIED…because some of the government officials (not the ministers) became very defensive on the issues raised. These officers are RMA, Immigration, Trade, Finance etc and this attitude is very worrying for the private sector. The orders may come from the highest authority make situations conducive but aren’t these senior officers the main work force who will review the submissions. I have a feeling it will not gain much mileage with such attitude. The officers seem to become defensive with vengeance and ego is in the fore front which is unhealthy. The consensus should be that of following His Majestys vision laid out and we should all work towards that goal and not bring personal egoistic minds in the forum of making our economy robust.


  2. Kinley Wangdi says

    Very true, we need to export more, import less and we must favour the local product even if it’s slightly expensive. We have to do this for country’s economy and it’s people’s well being. One very important measure to be taken to achieve GNH on a larger scale.

    • True indeed that we need to pursue the many things mentioned above to elevate our economy to greater heights…. fish out the economy out of debts, create economic comparative advantages with our neigbours etc etc.

      Well done indeed that the Government, the public sector, private sector et al have chalked out ‘what needs to be done?’ to improve our economy (eg: framing conducive policies, coming out with revolutionary strategies etc etc).

      BUT then…. whats the point when …. alls said and nothing is done.

      The point is : our politicians, beaurucrats, legislators, policy makers are champions in …. ‘identifying problems/issues, coming our with relevant polcies/ instruments to address such issues’… but then, all remains in paper and not much is done in reality.

      The Djs are there, the music system is there, the cds are there…. the music rages on ….well none is dancing to the tune.

      Bottom line: we want action …action ..action

  3. I second you on this, Hon’ble OL.

    The need to strengthen the national economy is urgent. I prefer to call this a “national security” issue. A weak and floundering economy is a national disaster.

    Easier said than done. I say this because the issue is entangled in a complex array of factors ranging from policy environments to subtler value and cultural systems. Ethics, alike.

    We could put in place the ‘best possible’ policies, frameworks and economic environment. That’s the only thing we can do. Unfortunately.

    Wait. We could do one more thing. Wait. We can wait. Wait for some of the positive business culture and value system to seep in.

    I hate to say this. But, its time we start attaching money value to some of our actions and decisions. History says that men act best when they act for money.


  4. Wang Dungyel says

    I feel Rupee shortages will continue to remain a serious issue for Bhutan unless Government devise effective plan. Further, I don’t agree that the big hydro project bring in the rupee. From the total project budget outlay the maximum chunk of almost 80% will go back to India. Yes, it will generate rupee provided if it is generating power and selling to India.
    The RMA should also investigate, how much rupees is flowing out which is not taken into account. Let me give example: All most 99% Bhutanese people visiting the border town buy all their required stuff from across the border. This money although traded in Ngultrum is ultimately exchange back into rupees which accounts in millions. The huge out flow of rupees as school fees due to students studying in India is also serous rupee drainer. The huge amount of rupees out flow spent on pilgrims by Bhutanese people when visiting to places like Bodhgaya also run in millions. And etc etc. Are these money accounted? As OL rightly mention, we import everything. So there is no doubt rupees becomes precious tender.
    Of late, the Jaigaon Merchant Association is lobbying with the Central Government for stopping Bhutanese currency even in the border town. If that happens, then we are in trouble.
    Therefore, it is high time the government should device proper plan before it is too late. The honourable OL should also contribute in such decision.
    Some suggestions are: Make tax free in all border towns to encourage Bhutanese to shop within the country. Taxes may be levied on all items when it crosses respective check point going to different dzongkhangs. The Government should encourage the public to use locally available construction materials like steel, bricks, HDPE pipe, Bitumen and cables. This will drastically reduce rupee dependence. Please note that manufacturing industries also bring in rupee by way of value adding and selling back to India.
    Some investigation also should be carried out of any links with any bank official with money exchanger in border town. Otherwise, how do they get the Indian currency? How do they exchange the Bhutanese currency so quickly?

    Serious thought should be given to the rupee issue before it is too late.

  5. dorjiwangchuk says

    Start small. Start by substituting your waste paper basket with bamboo basket from Kheng. No rupee outflow on plastic bins. I am sure you have one right under your table.

    I have already done that at home and in my office. For those interested in following me, Tarayana rural craft shop (in front of Taj Hotel) and a roadside shop in Nikachu Bridge (near Rukubkji) have good stocks and offerings.

    Happy import substitution to all…

  6. ABTO's chela says

    We have one example to share of how some senior govt. officials don’t want to see private sector prosper. ABTO fights for reducing paper documentation with the government that seem to be keen to support. Here is a scenario : Home Secretary declares and issues a notification that the tourists passport copies are not required for visa processing (Which was a norm for last 18 years. Thank you Hon Home secretary. However, Immigration Director wants to supercede this resolution taken by Home Sect to help the Pvt sect and says no way passport copies are required and harrasses the tour operators in managing to make them submit many many copies of the document required. So who is the boss and who is being reasonable. Home secretary is obviously the boss but immigration director is playing with his ego and over rides Home Sects orders. So Dasho Secretary – all the tour operators thank you for your support but your director has overlooked your orders and hence we are still SUFFERING. So good Dasho – do something to reinstate your noble thoughts for the private sector.

  7. i agree with Wang Dunyel what he comments. In Bhutan we have to change our Bhutanese “ATTITUDE”. even my old mom she has has to buy goods from jaigaon. Now you get same goods with same quality at cheaper price in Phuetsholing also. But we Bhutanese cross the border town and do Shopping. Now Coming to shortage of rupee and the govt has to sort out as soon as possible.i found lot of building construction going on in Bhutan with rapid pace. Most of Bhutanese buy goods diretly from Jaigaon or siliguri. this is the main problem.Every Bhutanese should buy from Bhutanese traders after negotitation of price. RRCO should look into this issue also. RRCO charge indian invoice only 3%TDS and Bhutanese traders as 2% TDS. if RRCO charges indain traders 5-8% then our local traders will get good business.Lot of Bhutansese student go further studies in India…that is another problem. Education department should allow more private colleges in Bhutan depending upon the market segments. Royal Thimphu College is an example. RTC could not intake the students who are from low income segement..thats saddest part to me. One private college for low segment should be there in Bhutan as soon as possible(2011).Promote indain tourist coming to Bhutan. Lot of Indain agents across the border do our tourism business. Bhutanese dont do much. Indain tour operators bring diretly to Bhutan as they have access to do that job. Our Bhutanese tour operator cannot work out with low margin.They have to survive with operating costs like TDS,license fee, BCCI fee,rent,BIT 30%. Make our steel industries like Karma Co. many more to reduce tax on raw materials so that these companies can export the finished products to indian market with competative price and moreover supply within Bhutan with same price that our Bhutanese traders bring india. We have more advantage because due to Power.For Tandin Cables…the quality of cables is to the international standard and now Govt. has to make this company more competetative after reducing taxes of raw materials.RMA should regulate Banks in the border towns with detail market study(Indian ruppe).In Bhutan we have to encourge softwares companies from India to setup corporate office in Bhutan also.It was good part that we are having IT park very soon.For me to make Bhutan in proper shape. its better to hire top management gurus to study the “SYSTEM” and develop startegy to counter the problem.when i see in Govt offices i find lot of equipments under utization.E.g in every tender i find specs for computer or laptop too high ..but after procurement the equipment is meant for typing or chatting.Apply the rule” Just in Time” Japanese theory.

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