Budget report

The finance minister presented the government’s budget proposal on Monday. Here are some of my random thoughts on the budget.

Pay increase. Last year’s pay hike for public servants cost the government Nu 380 million.

PIT increase. The government made an extra Nu 247 million in personal income taxes last year, mainly because of the pay hike.

Tax refund. The government collected Nu 28 million by increasing vehicle taxes unlawfully last year. At the Supreme Court’s orders, the government has refunded that money to the taxpayers.

Government expenditure. The government’s expenditure for this financial year is budgeted at Nu 38,020 million. That works out to 45% of the GDP. But the government’s expenditure for the construction of mega-projects (several hydropower projects and one cement plant) is not included in the budget although it is included in the GDP. Similarly, the government’s expenditure on the armed forces is also not included in the budget. Factor them in the budget, and the government’s expenditure could get to above 80% of GDP. That goes to show how very weak our private sector is. That also shows how unproductive our farms are.

Current expenditure. The good news is that current expenditure (Nu 17,185 million) continues to be financed from domestic revenue (Nu 18,606 million)

Grants. 42.6% of the government’s total resources come from grants. 66.5% of the capital expenditure is financed through grants. India is by far the largest donor contributing 74.3% of the total grants.

Debt. The bad news is that the government’s debt will increase to Nu 55,721 million during this financial year. That works out to 66.02% of GDP. 60% of the debt is for hydropower projects. By 2014, total debt is projected to increase to Nu 79,472 or 71.63% of the projected GDP. By then, 68% of the debt will be from hydropower projects.

Hydropower. Revenue from hydropower is expected to fall this year mainly because of the “substantial investments required to address problems in the Tala plant”. The Tala plant was commissioned on March 2007.

Lottery. The government has decided to discontinue lottery operations in India. So it will forgo income estimated at Nu 200 million this year. The government should not completely pull out from the lottery business. Instead, it should clean up the current mess, and then improve the system so that much larger revenues can be earned from the sale of lottery tickets in India.

CDG. Nu 282 million has been allocated for constituency development grants for the past three years. 460 projects costing Nu 172 million have so far been identified. Of that only Nu 106 has been used. I still don’t agree with the CDG. But if it must continue, allow the local governments to use the funds. Another Nu 94 million has been kept aside for CDG this year.

More to come tomorrow. But in the meantime, please give me your views on these thoughts, and any others that you may have on the budget. The National Assembly will debate the budget on Friday.

 

Facebook Comments:

Comments

  1. How can our farms be productive?
    Investment in agriculture has been decreasing year by year.
    For over three decades, the agriculture policies have remained more or less same.
    Lack of irrigation facilities is one biggest problem the farmers of our country face. So far, no study has been carried out to tap the water from the rivers to irrigate the dry and cracked fields located about 10-200m above.In India, pumps are supplied and the cost of electricity subsidized.This will go far is helping our farmers:for every dry and cracked land, there is a river below.
    Bhutan Seed Act is also to be blamed.Farmers still use old( organic ?),low yielding local seeds. All imports are to be routed through National Seed Centre ,which is ineffective as hell. In practical, this is nothing short of restricting the import of high yielding seeds.

  2. What is funny is even our government admits that lots of renovations needs to be done at Tala to the extent of forecasting decrease in revenue, yet, all Punatshangchu works went to JP. JP should not have been given any works unless they fix all the Tala faults and give a warranty of atleast 10 years.
    Einstein defines insanity as doing the same thing again and again while expecting a different result. This is what Bhutan is doing with JP.

  3. It is really a sad thing to know that our agriculture sector is not receiving enough attention as required. it is understood that this sector employs more than 65% our population and our govt. wants to go for organic farming.

    how can our govt. push organic farming with least importance given to it in action.
    how can our country achieve food self sufficeincy when the policy is to encourage import.
    Making country self sufficient in food is only in papers…nothing has been done in reality… every year the fertile and land feasible for the agriculture purpose are lost to the development activities..
    how can goverment plan for underground tunnels and fly overs when our farmers got no time to sleep guarding the crops.
    how can our government think of Sky trians when it cannot give a enough drinking water to the population of thimphu.

    its time to wake up!
    its hight time to change our polic

  4. Phuntsho says:

    I would like to agree with Jigme regarding productivity of farms. I come from a village in the East where soil and climatic conditions are perfectly alright to guarantee year-round food and vegetable produce. Sadly, there is no irrigation facilities. Even to cultivate paddy in the summer, farmers depend on monsoon.

    Increasingly, men are turning to power chains. This has several impacts (you judge it whether it is positive or negative). When men turn to power chains, they have less time to do agriculture works. Fields are left fallow. When even our farmers who can otherwise provide their family through their own agricultural produce depend on imported foods, what about our policy of national food self-reliance/sufficiency?

    Then there is the issue of illegal felling of timbers, as already covered by a newspaper recently.

    People elsewhere do not have authority to look into these issues. Our parliamentarians should do some serious homework!

  5. “Agriculture, mining and manufacturing, roads, communications and energy have together been allocated Nu 9.7B” (kuensel 21/06/2011).

    In fact its sad thing to know that the sector which employs more than 65 percent of nation is not allocated the budget that of education and health including communications,energy and roads. this could be one reason why share of agriculture is decreasing every year.

    With this trend how can the goverment achive food self sufficiency. how can they encourage and promote organic farming.
    Can present policy regarding the agriculture retain our farmers and will it encourage young lots when thier fertile lands are lost to the development activities every day.

    we need to be more realistic than mere preaching.
    how can our goverment can think of fly overs and underground tunnels when they fail to provide enough drinking water for the population of thimphu.
    we need to turn our attention to poor farmers who are battling with the wild animals rather than thinking of sky trains.

    WE SAY OUR COUNTRY IS UNIQUE COUNTRY BUT HOW COMES OUR POLICIES AND GUIDLINES ARE BASED ON INTERNATIONAL COUNTRIES…FORGETTING GROUND REALITIES OF UNIQUE KINGDOM.

    wake up and be realistic….

  6. If I remembered it correctly, one of my school teachers who was from Kerela said that Bhutan has poor irrigation facilities although there are many water sources. Yes, I would definitely agree that we haven’t put good use of water resources regardless of few hydro-projects. Yeah we still have bad irrigation facilities. Sorry, I should also say that a very little could be done in improving irrigation facilities at this time because government’s substantial investment is being made to mega-hydro projects. Moreover, we should also be mindful that much of our government’s resources come from grants.

  7. JSingye says:

    The wild boar problem. 30-50% of the yield is lost to wild pest. There is no proper compensation in place. Farmers need to guard the crop in the night. It is 24 hrs job for farmers in eastern Bhutan. Something is wrong with the Forestry Act:it is not in touch with the reality.
    Rather than increasing the tax, I think the government should concentrate on decreasing the import through local production.

  8. budget of over nu 800 m for urban dev in Thimphu is excessive & wrong.why is so much being invested in Thimphu? what about balanced regional development?why do all ministries have to be in thimphu? we could have 1 ministry & corporate hqs in a separate dzongkhag.. this willsurely boost regional & balanced development. yeshi zimbas justification for supporting Thimphu is biased & selfish.. most of the money pumped into developing Thimphu comes via loans or grants.. this is public money, for the peopleof Bhutan.. it should not be used to enhance value of property of people in Thimphu alone when our rural folk don’t have a decent life.. it is all so wrong…

  9. TORISE dragon says:

    government increase PIT<BIT and everything..No wonder how much governmebt do…coz pay hike for govt services n price of goods increase but we private n self employed pple hav to take the burden paying high prices for grocery n daily living……….i guess govt making pay hike n collecting taxes makes no differences……coz theres no talk about private pples ..ONE THING TO VGOVERNMENT PEOPLES ….REMEMBER WE ARE ALSO BHUTANESE……..

  10. As the Bhutan is landlocked country and being insolated for long times … I feel that, You, Bhutanese People the people of dragon have strength, power, spiritual and kind at heart in yourself …

    And most of all, being independent you have more strength than other countries ..

    So, is it not time for you to show others your power, your abilities ?Neither always lay yourself in a country , or just rely on imported products.

    But you already have best resources in your hand.Why don’t you make your own products to be well known and Export them instead …

    Someone has said ” if we have good resources in our hand, we should always make it to bear fruits and in the best shape, not just good ”

    Everything has good and bad side .. So we should look and see what we should get and what we shouldnt. But most of alls, don’t forget your root. (and I’m do sure, you have very strong one)

    Aren’t you agriculture country ? You also have very famous Orange Jam, Ara, Yak Butter, Herbal Tea but if your government makes afford a lil bit … I’m sure you could make them well known in same standard as Swiss Cheese, France Jam or Swiss Ara ( I love the cherry favor one )

    Isn’t it another way for income ? To your people, your country ?
    And even given jobs to them… Protect their lands … ;)))

    Again .. It’s just an outsider’s eye

    BTW :: I’m happy to hear that RUB is already improved to another step.. I’m so eager to see the new graduates … And new entrepreneur So, may be you don’t have to hire all full teams catering from other country .. Or Even Make Up Artist .. 😉

    I just love the way Bhutan was and wish will always be 🙂

  11. I am bit confused about the CDG. Without the support of the NC it has been implemented at the first instance. I read in some article stating that the unauthorized withdraw of such funds from the government exchequer will be only for three years. But again shocking to know when Nu. 94 was allocated during the current fiscal year too. Sometimes the whole process of democracy and the budget appropriations becomes a bit difficult to understand. Anyways I am confident with the ways our opposition party justifies and submit to the parliament. I always feel that 4% representative is much much more dynamic and efficient than the 96% representative. Keep it up and i support you for all times to come.

  12. I am bit confused about the CDG. Without the support of the NC it has been implemented at the first instance. I read in some article stating that the unauthorized withdraw of such funds from the government exchequer will be only for three years. But again shocking to know when Nu. 94 was allocated during the current fiscal year too. Sometimes the whole process of democracy and the budget appropriations becomes a bit difficult to understand. Anyways I am confident with the ways our opposition party justifies and submit to the parliament. I always feel that 4% representative is much much more dynamic and efficient than the 96% representative. Keep it up and i support you for all times to come.

Leave a Reply