Economic Growth Projections for 10th plan GDP Growth 7.7% Agriculture and livestock 1.8% Mining 7% Electricity 7.4% Construction 15.2% Manufacturing 6.9% Trade and Finance 7.1% Public and social services 6% Transport and Comunication 9.3%

Manufacturing, construction and electricity although have a projected 10 percent growth rate still lags behind by a point compared to the Ninth Plan. Growth projections are also conservative for other sectors like trade and financial services, public administration and social services, mining, transport and communications.

The plan will witness an enormous rise in recurrent expenditure trends and high debt servicing costs, which could potentially affect the balance of payment situation.

Gross National Happiness Commission’s Secretary Karma Tshiteem said, “the projected figures mean that we have to try harder and the figures could increase or decrease based on how the strategies are implemented”. He said Bhutan could reach 9 percent growth if major 10th Plan targets for 10,000 mw by 2020, rail connection, medical college, electricity for all, farm roads were achieved.

“The model taken to project these growth rates was based on the historical data and growth scenario for the Plan.” It has taken into account the doubling of the plan size.

Historically, agriculture sector had the slowest growth due to factors like mountain terrain, soil productivity, loss of arable land but we hope to achieve the 4 percent target, according to the secretary.

He elaborated that to achieve 4 percent, strategic infrastructure like farm roads, electricity, communications, irrigation were needed and commercial agriculture and tapping non-wood forest products needs to be undertaken. On Industrial development he said, “in terms of FDI we need to improve the framework since without foreign investment our Industrial policy won’t take off.”

For the increase in recurrent expenditures, the secretary explained that the current fiscal deficit projection was an outer limit. He said that to reduce the deficit prudential medium term measures would be taken. He said a significant portion of the recurrent expenditure was on debt servicing and also partly the salary hike.

On the implementation capacity the secretary said that it had increased during the 9th Plan with more numbers of staff and contractors. Human resource development measures were also being taken and options like outsourcing, hiring project contractor and community contracting were considered.

Karma Tshiteem said that decision-making would be easier and faster due to a united cabinet and the red tape will also be cut with one-stop windows and IT solutions. “The bureaucracy was quite nimble and could adapt to changes and keep solving the problems as they emerged.”

On the possible impact of the global crisis, he said that it would affect the tourism industry and also possibly industrial development since external investors could be cautious. “But it would not have any direct impact on the Plan.”