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Economic and Finance Committee’s chair Kinley Wangchuk
Economic and Finance Committee’s chair Kinley Wangchuk

Committee says budget allocation is not decentralised

The economic and finance committee of the National Assembly yesterday reported that budget allocation for the fiscal year 2019-20 was not in keeping with the 12th Plan’s core theme of enhanced decentralisation.

The committee reported that the overall allocation to local governments for the new fiscal year is Nu 18,683.419 million (M).  This is 28.82 percent of the total national outlay of Nu 64.826.725M for the new fiscal year.

The total budget allocation to 205 gewogs was only Nu 2,863M, which is 4.41 percent of the total national outlay, and 15.32 percent of the total LG outlay.

Committee’s chair Kinley Wangchuk said, “This is not in keeping with the 12th Plan’s core theme of enhanced decentralization and the principles of 50-50 budget allocation between the LG and central agencies.”

The committee submitted that the budget allocation should be aligned with the main theme of the Plan and principles of budget allocations approved by Parliament.

“More so, budget allocations to 205 gewogs should be drastically enhanced to achieve comparable socio-economic development among the people and gewogs across the nation,” he said.

It was said that the government would ensure that 50-50 budget allocations between the central and local governments would be achieved by the end of five years and that it was not necessary to divide the budget equally every year.

Prime Minister Dr Lotay Tshering disagreed with the committee’s recommendation, saying that the government’s policy of allocating the capital budget on a 50-50 share between the central and local governments was a guideline for the 12th Plan. “At the end of the five years, it would be 50:50,” he said.

Finance Minister Namgay Tshering said that gewogs would get the money in various forms. Some of the national priority programmes will also benefit local governments.

He said that budget allocation for LG was increased by 100 percent in the 12th Plan.

According to the budget report, gewogs will receive a current budget of Nu 463.129M and capital budget of Nu 2,400M as annual grants.

In addition to annual grants, Nu 1,521.737M is provisioned for Common Minimum Infrastructure (CMI) for gewogs for respective dzongkhags.

The annual grant replaces the annual gewog development grant (GDG), which used to be provided at the rate of Nu 2 million (M) for each gewog.

The recently approved annual gewog grants guidelines 2019, which will come into effect from July, states that the grants will be provided as per the budget cycle and shall be part of the Budget Appropriation Act.

Panbang MP Dorji Wangdi said that LG mostly comprised gewogs but allocating only 4.41 percent for 205 gewogs was not in line with the 12th Plan policy. “The budget allocation did not match the government’s policy.”

The House also endorsed the committee’s recommendation to provide the dzongkhag development grant (DDG) as per the resource allocation formula (RAF) with a maximum ceiling of Nu 10M. Activities under DDG must be prioritised and approved by the Dzongkhag Tshogdu (DT).

The government has increased DDG from Nu 7M to 10M. However, the amount will be re-apportioned from within the total annual dzongkhag outlay that forms part of the annual budget.

“There is no guideline for utilisation of the fund. More importantly, the amount to all dzongkhags is same, which is in contravention of the RAF approved by Parliament,” the committee chair stated.

Lyonchhen said that DDG will help dzongkhags identify their priorities outside of the Plan and avail the fund and that the money would be allocated as per the RAF. He said the grant would form part of the dzongkhag’s annual capital budget ceiling.

However, MP Dorji Wangdi objected a clause that states the DT upon approval of the dzongkhag finance committee would endorse DDG funds. “It should be DT that approves the DDG.”

The DDG guidelines 2019 states that activities under DDG must be submitted to the dzongkhag finance committee for approval, after which the proposal will be submitted to the DT for endorsement.

Depending on the need, the dzongkhag would be able to use 20 percent of DDG preservation and promotion of cultural and religious heritages.

The department of national budget will periodically monitor the implementation of DDG. “The dzongkhag administration must institute a proper monitoring and asset inventory mechanism of the DDG activities and information must be made public.”

The government has allocated Nu 200M as DDG for 20 dzongkhags. The House will adopt the annual budget 2019-20 today.

MB Subba

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