The goodwill generated during Prime Minister Narendra Modi’s visit and the traditional ties of friendship between Bhutan and India has not been restricted to only kind words about each other.
This April 2014 to 2015 March annual budget of India has allotted a substantial amount to Bhutan’s 11th plan priorities and also for the construction of the 10,000 MW hydropower projects.
The Budget head titled ‘Grants and Loans to Foreign Governments’ allots Nu 17.159 bn as grant and Nu 30.08 bn as loan for the hydropower projects coming to a total of Nu 47.240 bn.
The budget then separately allots Nu 13.500 bn for Bhutan’s 11th plan and other developmental activities in Bhutan funded by India.
As per Bhutan’s July 2014-2015 June annual financial year budget India is expected to contribute Nu 4.781 bn to Bhutan’s 11th plan activities which are all capital in nature.
Of the Nu 4.781 bn expected from India Nu 1.7 bn is for program grants where Bhutan has flexibility to use the money and Nu 3.08 bn is for project tied grants which are for specific and indentified projects like schools, hospitals, bridges etc.
Though India has always been Bhutan’s biggest developmental partner what is significant about this year is that the hydropower budget has almost been doubled compared to last year and is three times compared to two years ago.
In the 2012-2013 budget of India, Nu 15.38 bn had been allotted for hydropower of which Nu 4 bn was grant and Nu 11.3 80 bn was loan.
In 2013-2014 budget this increased to a total of Nu 25.200 bn of which Nu 10.515 bn was grant and Nu 1468
Though the significant increase is in line with the increase in hydropower construction activities it will also be seen as a strong signal of India’s commitment to constructing the 10,000 MW project in Bhutan.
In fact when Bhutan’s Prime Minister Lyonchhen Tshering Tobgay visited India one of the first concerns raised by the Indian Prime Minister Narendra Modi was over the pace of progress of the 10,000 MW projects.
Some of the project activities had slowed down a bit in the past partly on the account of funds flowing in slowly.
Currently Bhutan is constructing the 1200 MW PHPA I, 1090 MW PHPA II and 720 MW Mangdechu project. Construction is also expected to start soon on the 600 MW Kholongchu which will be a 50/50 joint venture between Druk Green Power Corporation and an Indian PSU Satluj Jal Vidyut Nigam Limited (SJVNL).
In terms of assistance to Bhutan’s 11th plan and other developmental activities in Bhutan the budget in 2013-2014 was Nu 15.890 mn covering not only the 11th plan but also the ESP and spillover activities of the 10th plan.
In 2012-2013 it was lower at Nu 11.729 bn for the 10th plan and another Nu 7 bn as a short term rupee loan coinciding with Bhutan’s rupee crisis.
The ‘Grants and Loans to Foreign Governments’ comes under the purview of the Ministry of External Affairs.
Other beneficiaries for India’s assistance to their developmental activities are SAARC countries like Nepal with Nu 4.50 bn, Sri Lanka with 5 bn, Maldives with 1.8 bn, Bangladesh with Nu 3.50 bn, Afghanistan with Nu 5.50 bn.
African Countries get Nu 3.5 bn, Eurasian countries get Nu 400 mn and Latin American Countries get Nu 300 mn.
There also small amounts given to UNDP, SAARC, ADB, Colombo Plan etc.
Of the total Nu 63.123 bn foreign grants program of India to foreign countries and multilateral institutions Bhutan gets the majority with Nu 30.659 bn. However, as explained above the chunk of it which is Nu 17 bn goes to hydropower projects that benefit both countries.
Of the Nu 31.660 bn loans extended by India to foreign countries Bhutan has been allotted Nu 30 bn on account of the hydro power projects.