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12th Plan for sustained economic growth: Finance Minister

Presenting the 12th Plan in the National Assembly, Finance Minister Namgay Tshering yesterday said that the government’s fiscal policy was aimed at ensuring sustained economic growth by broadening tax base, and rationalizing capital and recurrent expenditures.

The finance minister said the Plan aims to maintain the fiscal deficit below the average of average 3 percent of GDP and cover at least 80 percent of total government expenditure through domestic revenue. According to the Plan, the tax to GDP ratio would be maintained at 12 percent and non-hydro debt below 35 percent of GDP.

Lyonpo Namgay Tshering said a medium-term revenue strategy would be adopted to strengthen domestic revenue mobilisation. He said replacing the sales tax regime with goods and services tax (GST) would be critical to achieve the fiscal targets besides introducing new taxes and revising existing tax rates.

Unlike the past Plans, the 12th Plan commences coinciding with the government’s tenure – from November 1, 2018 to October 31, 2023. “The future Plans will follow the incoming government’s tenure and the plan period will be aligned to government’s tenure,” he said.

However, Drametse-Ngatshang MP Ugyen Wangdi said that the Plan was not adequately discussed with the people at the grassroots.

“It is the people who know their needs best,” he said.

The finance minister said that the Plan was shaped by extensive consultations held over a period of two years with wide ranging groups of stakeholders. He said the 12th Plan was a national development plan reflecting the aspirations and concerns of the people of Bhutan.

According to the government, pledges of elected government as well as that of other three political parties that are in the larger national interest have also been incorporated into the Plan following rigorous assessment.

Responding to a question on what pledges belonging to the three political parties were incorporated in the Plan, foreign minister Dr Tandi Dorji said that incorporation of NKRAs aimed at achieving self-sufficiency, eradication of corruption and decentralisation were main essence of the three political parties and that all of them were included in the Plan.

“Our goals are the same. We have summarised all the manifestos,” he said.

With the objective of “Creating A Just, Harmonious and Sustainable Society through enhanced Decentralization,” the 12th Plan has 17 National Key Result Areas (NKRAs).

The indicative capital outlay in the 12th Plan is projected at Nu 136 billion (B), of which about Nu 1B is to be transferred to Bhutan Economic Stabilisation Fund (BESF). The remaining Nu 135B, he said, would be spent on spill over projects from the 11th Plan, flagship programmes, capital grants to local governments and projects that contribute to direct achievement of NKRAs and Agency Key Results (AKRAs).

The finance minister said that the capital grants allocation for local governments (LGs) in the 12th Plan has increased by 100 percent to Nu 50B compared to the capital grants allocation of Nu 25B in the 11th Plan. This increase, he said, would meet the increasing demand of public services from local governments.

“To promote ownership and quality delivery of local plan priorities and development by LGs, greater flexibility is being provided in the implementation of planning, budgeting and release processes and procedures within the overall government rules, regulations and framework,” Namgay Tshering said.

Prime Minister Dr Lotay Tshering said that the capacity of local governments would be improved since fund allocation has increased significantly. He also added that additional Nu 10B would be raised by increasing the tax base.

The total outlay for the 12th Plan is estimated at Nu 310B, an increase of 38 percent over 11th Plan. Current expenditure accounts for 62.5 percent of total outlay.

The total public debt by end of 12th Plan is projected to touch Nu 249.23B, which is about 87.6 percent of estimated GDP. However, according to the Plan, with the commissioning of Mangdechhu, Puna I, Puna II and Nikachhu Hydropower Projects in the 12th Plan, the external debt stock is projected to decline.

Flagship programmes

A notable feature of the 12th Plan, Finance Minister Namgay Tshering said, was the flagship programmes. The programmes are interventions to address high priority national issues in a concerted and holistic approach.

The programmes will be undertaken in addition to regular routine programmes and will have funds earmarked in the 12th Plan. “The programmes will be rigorously monitored with regular submission of updates to the Prime Minister and the government to ensure effective delivery through real time problem solving,” he said.

One of the flagship programmes would be a start-up and cottage and small industries (CSI) development programme. This programme is intended to provide comprehensive support to set up new production and manufacturing CSIs including up-scaling existing CSIs.

The programme will also provide support to promote start-ups through creation of entrepreneurship culture and start-up ecosystem.

Under the tourism development flagship programme, Bhutan will be promoted as an exclusive high-end travel destination by creating enabling policies, quality infrastructure, services and products. The Tourism Council of Bhutan will develop the detailed blueprint for the programme.

The One Gewog One Product flagship programme aims to provide income-generating opportunities for enhancing livelihood of rural communities across 20 dzongkhags.

The programme will build capacity of communities to produce and undertake preliminary post-harvest processing and packaging. It will sell produce through its One Gewog One Product (OGOP) brand.

The National Highland Development flagship programme will aim to improve standard of living of highland communities through provision of facilities and amenities and by enhancing and diversifying sources of livelihood. Under this programme, development of highland enterprises, supply of yaks and sheep and improve health, education and other facilities for highlanders will be promoted.

The House will continue deliberation on the 12 FYP today

MB Subba 

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