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The government’s decision on distributing utility vehicles to the 205 gewogs is indeed a good idea generating quite an extraordinary ‘feat’, but at what cost? By supporting the gewogs with essential mobility should equip them to be more capable of delivering better and timely services to the people.

BKP questions distribution of 205 utility vehicles

The government’s decision on distributing utility vehicles to the 205 gewogs is indeed a good idea generating quite an extraordinary ‘feat’, but at what cost? By supporting the gewogs with essential mobility should equip them to be more capable of delivering better and timely services to the people. Further, this move will also reinforce the principles of empowerment and decentralization of grassroot people doing the actual work deriving the benefits.

However, procurement of vehicles on such a scale requires colossal amount of money and the Bhutanese people must to be informed as to from where are the funds being sourced. With GDP to debt ratio looming at 114% and current account deficit at 35%, is it really a sound economic decision to force fund the purchase? Or shouldn’t the government conduct an objective test on the rightness or wrongness of the decision under such times? Under conditions where austerity measures are encouraged, one can only assume that the money has to come from somewhere by cutting expenses from elsewhere.

If the government is forcing consumption expenditure overwhelmed by campaign pledges, then such targeted spending may not necessarily percolate down to tangible economic growth but rather risks the nation slip deeper into financial debt. If unchecked, a tipping point will arise soon whereby current monetary measures taken by the Royal Monetary Authority will no longer hold water to a future financial tempest.

It is undoubtedly important to unlock potentials at the grassroots but equally more important to reckon implementation realities within the realms of the national pocket that is not only acutely finite but under severe strain. For example, the country’s public finance is under stark economic stress with all capital budget funded by donor grant, loan and aid money. In an economy that is totally driven by imports and aid money, is such a policy that fuels import justifiable? We must as a nation accept that our economic fundamentals are weak and therefore thorough economic rationale is mandatory prior to executing such policy decisions that is not only populace but unsustainable, and eventually counter productive towards nation building.

It is unthinkable to observe conflicting government policies with on one hand supporting import substitution while on the other hand mass imports of vehicles are propagated. It may appear that INR reserves is comfortable at 20 billion but the Bhutanese people should know that it comprises i) a Line of Credit with the Government of India worth 7 billion and ii) a currency swap worth another 7 billion. So in total 14 billion of the 20 billion INR reserves is funded by debt.

The second big question will be the issue of vehicle maintenance and operation costs in the future. Import of 205 vehicles will further escalate fuel imports and running parts. When maintenance and operation cost increases it should be commensurate with growth in internal revenue. Otherwise, there is the danger of recurrent costs exceeding internal revenue, which is in conflict with the Constitutional requirements.

There are also potential moral hazard issues with dominant brands and associated dealerships. Therefore, transparent procurement competition has to be enforced with no brands given any defacto opportunities. Thus, careful procurement audit with no due advantage to any particular dealer need to be enforced providing a level playing field to avoid damaging principles of good governance which our benevolent monarchs (His Majesty Fourth Druk Gyalpo) and His Majesty the King has painstakingly built.

If such a decision is not executed well bearing in mind principles of good governance, then there is alarming danger on possible fallouts even from development partners. There is a danger here and everyone should recognize it as responsible citizens. Every one of us is concerned for the future of our nation and effective performance at the local levels, but it can also be misconstrued as a political payback and that will be unfortunate.

 

 Contributed By

Sonam Tobgay

President

Bhutan Kuen-Nyam Party

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