Rupee questions


Last Tuesday, during question hour, I asked the Prime Minister to explain the rupee crisis: what has caused it, what the government is doing about it, and when we can expect it to be over. I directed the question to the PM as I had assumed that our head of government would be the most concerned and, as such, would be happy to reassure the nation that he has contained the crisis, and that the rupee deficit will not spiral out of control.

Too bad then, that the PM made the Finance Minister answer on his behalf. Too bad also, that I had to remind the Finance Minister that his response did not satisfactorily answer my question. And too bad, that several MPs felt compelled to snap at me that it’s easy to raise questions, but difficult to come up with solutions.

Notwithstanding the fact that it is the government’s responsibility is to identify and address problems of national significance, and notwithstanding the fact that ruling party MPs should show more confidence in their government, I offered my services to help address the growing rupee crisis.

The government has not contacted me. Nor have they given me a written response to my question. I had asked an “unstarred” question. So they are required to provide a written answer.

Now some of you, our readers, have asked for my views. Naturally, I’ll be very happy to share them, especially since we must generate more discussion on this important issue. But first, by way on introduction, here’s what I wrote about the rupee deficit in February 2009. Here’s what I wrote six months later. And here’s what I wrote last month.

I’ll post my thoughts sometime next week, after we conclude this session of the Parliament. In the meantime, please share your views here: what, in your opinion, has caused the rupee crisis, and how, do you think, we can get ourselves out of this predicament?


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  1. May there is a need for a economic classes for those MPs who failed to answer your questions……

  2. i agree with you it is this government’s responsibility to sort out this mess, not yours..
    you asked what caused this mess – it is caused by the irresponsibility of jigmi thinley & his men collectively & the incompetence of wangdi norbu in particular..
    what can you expect of a finance minister who lacks the capacity to understand & interpret tax legislation, drags his government to court, loses 2 court cases, whines about the verdicts passed by the courts & shamelessly hangs onto his post..
    then there are the other stooges like yeshey zimba who talk for the sake of talking, lacking, he’s a man who has thrived in the system through his cunning ways..with nothing to show for his tenures in previous posts..
    let these idiots sort out the mess, if they can..if they do, then all credit to them..if they fail, let them kick rocks.. they will be remembered for their incompetence & can only offer your suggestions but they are ultimately accountable..

  3. I read all your articles and the only constant about them were that none of them offered any concrete solutions to combat the rupee crunch. Like I mentioned earlier, the only way we can solve this is to import less from India but doing so will lead to a host of other problems.

    It is also very obvious that the largest sector that is contributing to this rupee shortage are the building of our capital intensive mega hydro power projects, we can only hope that once they are completed and start generating power, it would lead to solving the rupee crunch. At this point in time, this is our only hope.

    The only other radical solution, maybe would be to use only Rupees in Bhutan and stop the printing of our own currency. As our currency is already pegged to the Indian rupee and the Indian currency is legal tender in Bhutan, this should not be a problem.

  4. The rupee crisis is for the simple reason that we import more from india than we export to them. The situation is exacerbated by our ambitious developmental goals which are probably not within our means. This is perhaps why the Governor of RMA has advised the government to reduce spending. The following are my suggestions;
    i. The Govt. is borrowing in dollars for its developmental activities, saving the dollars and showing it as an increase in our foreign reserves. However, the downstream effect is that most of the materials required for the intended developmental activity is purchased in rupeee. So, we have a situation where we are happy to accept and save dollars but are unwilling to replenish the rupee cost associated with it. We have to therefore convert the dollars into equivalent rupees to the extent of the amount required in rupees for the developmental activity.

    ii. Prioritize projects : Although excessive government spending is probably desirable to expand the economy in Bhutan Case because the Bhutanese inflation is directly linked to the Indian inflation and not our own spending. However, the excessive rupee dependency has adverse effect on our sovereignty. The global war today is played through economics and not guns. We have to therefore spend within our means which will mean prioritizing developmental activities although there may be many desirable ones in hand.

    iii. Import substitution : From an economics point of view, it makes sense for Bhutan to import from India and China where the cost efficiencies are probably the highest given their global competitiveness. However, from a self sufficiency point of view, we could try to make substitute products within the country which can be bought in Ngultrums, but would probably come at a higher cost because of the lack of economies of scale.

    iv. Increase exports : Hydro power and ferro silicon products are probably the chief exports of our country to India. We have to study the situation properly and start producing products or services which will earn rupees for us. Tax incentives and other short term incentives could be provided by the Govt. for such initiatives to help kick start the project and also to provide an artificial competitiveness to the product or service.

  5. Thank you so much for questioining about rupee crisis which goverment pretended to be comfortable for so long.

    Another worrying thing is about solutions to solve that crisis. one of the solutions proposed by the government and Central Bank is to CONTROL HOUSING LOANS.

    putting cap on housing loan will put lot of pressure on our construction sector. this will lead to further increase in house rents. this has got lot of spiral affects.let this not happen.( it is a dangerous move).

    DELINKING THE PEG AND CONTROLLING HOUSING LOANS is unwise and unrealistic move. i would pray not to happen these. if happens there is no doubt that bhutanese economy will be in big trouble.

    our ECONOMISTS and CENTRAL BANKERS NEED need to lots of home work before implementing all those proposed solutions.

  6. Kelpazangla says

    Before providing my suggestions, I would like to outcry my feeling that ultimatum of hydropower potential will never solve the Rupee crunch, especially the hydropowers built with Indian support and technology. Instead it will build a parallel security challenge. Cross-check the manpower requirement of two same size hydropower plants; Kurichu and Basochu. Kurichu HPP requires more than 100 people to man the plant whereas Basochu requires hardly 20 people.

    Taking into consideration of this manpower scenario, 10,000 MW HP will require more than 50,000 professional/technical people to mainatin and operate the plants. Will Bhutan be able to produce 50% of 50,000 professional manpower? Paying an average salary of Nu.30,000 for 50% (25,000) Indian engineers and technicians, Rs.750,000,000 (Seven hundred fifty million) will always have an outflow tendency. How will the Rupee sustain in Bhutan?

  7. Kelpazangla says

    To submit my suggestions for solving Rupee crunch;
    i) Restrict hydropower development to maximum 2500 MW. Assess and demarcate arable/productive land and non-productive land for forestation/conservation. Distribute land for agriculture/agro-industry and encourage agro-foresty farming.
    ii) Intensify, RNR base trainings/education and encourage youth involvement in farming practices.
    iii) Stop energy intensive industries and replace with in-country food processing/preservation industries. Intensify service and tourism industries.
    iv) Intensify alcohol/drug/tobacco control measures and hygienic camapigns. Stop referring (influential personnels) medical treatments to outside countries.
    v) Re-assess construction requirments, urban settlement plans and control import of professional/labor force.
    vi) Re-assess the value and techniques of locally available construction materails and control import of construction raw materials.

    Taking these simple measures, I am confident that our dependency on food resources and labor force will decrease to control outflow of currencies. We export our produce in seasons and import during off seasons at comparatively much higher price. We export our raw produce and import processed items (e.g. Potato and its chips).

  8. yours honorable ol… i have seen you questioning and great to know about it from you, i cant suggest any means to solve this problem, but right now i am concern where this money have gone, why so much of( i heard rs. 3000 million) borrowing money…. i can see some sort of fishy business with those money…

  9. tshering wangdi says

    firstly i am glad that your excellency has raised a very pertinent question of high significance during the question hour. i heard no answer to your question but i have been really enlightened on use of TIKCHUNGS once upon time in our country by the Finance Minister. when will our Ministers ever directly come to the point and answer the queries. ask about 2011 and they go back to 1950s.

    Hon Lyonpo, i really wonder if the Question Hour has anything to do with parliamentary functions since no resolutions are passed and most go as a talk of the town soon to be forgotten…

  10. My suggestions;

    1. Hydropower is the main buyer of rupee. But much of it is being used by industries in bhutan. This is mainly due to highly subsidized electricity tariff to industries. I think subsidies should be minimized or reduced.
    Much of our industries are highly inefficient. They do not seem to care because they are at advantage even with old machines and rougly designed machines with the subsidized tariff.

    2. Lyonchen needs to employ a good economist for economy of the country.

  11. Need to study the FDI coming to Bhutan. Should know whether the FDI will generate income in Nu. or foreign currency including Rs.Þ If they are going to make income only in Nu., we should not allow such FDI as they will drain away the Rs.

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