Big LG boost in 12th FYP as budget doubled to Nu 50 bn

A big change in the 12th Five Year Plan (FYP) is the fact that the preliminary capital expenditure to the local government has been doubled from Nu 25 bn in the 11th FYP to Nu 50 bn in the 12th FYP.

Of the Nu 300 bn 12th FYP the capital expenditure is Nu 115 bn. Capital expenditure deals with the creation of new assets like roads, schools, hospitals etc.

This would be in line with one of the key aims of the 12th FYP to enhance and empower local governments.

This budgetary increase is because activities which were budgeted in the centre in the 11th FYP has now been shifted to the local governments in the 12th FYP like schools, farms roads, Gewog connectivity roads, irrigation, etc.

Of the 50 bn for local governments 25 bn is for the Dzongkhags, 10 bn for Gewogs, 10 bn for Thimphu, Phuentsholing, Gelephu and Samdrup Jongkhar Thromdes and 5 bn for municipal facilities in 16 Dzongkhags.

The Prime Minister in the foreword of the 12th FYP guidelines said, “Additionally, the revised Division of Responsibilities framework also provides for greater decentralization of roles, functions and authority to the local government. While this will pose considerable challenges and risk, it is expected to take us closer to His Majesty’s vision of a democratic and responsible society.”

The PM called upon our local leaders to capitalize on this opportunity and contribute towards building a strong and responsible local government while at the same time addressing the development needs of their constituency.

The final guidelines of the 12th FYP approved by the cabinet says that in keeping with the government’s decentralization efforts, greater responsibility and resources are being shifted from the centre to the local governments.

The division of responsibility framework that was developed in the 11th FYP has been reviewed and revised in keeping with the Article 22 of the Constitution on LG, LG Act 2009, Good Governance Plus (GG+) and Organizational Development Report (2007) of the Royal Civil Service Commission.

The objectives of the framework is to decentralize expenditures with assigned functions to LGs and allow LGs greater autonomy and flexibility in terms of priority setting and choices for enhanced planning, implementation and provision of efficient goods and service delivery with enhanced accountability and professionalism.

It is also to strengthen coordination and implementation of policies, plans and programmes amongst levels of government by providing more clarity and distinct division of responsibilities.

In terms of resources, the framework provides basis for sharing of resources between central government and LGs in the 12th FYP for funding of functions.

The framework will also help to determine, plan and implement other aspects of decentralization such as size, levels and capacities of functional loads or burden, and human resource or staff allocation for functions.

Therefore, in view of increasing financial and functional responsibilities of the LGs and the need to improve the current framework, the revision exercise took into account government policies, regulations and reports.

The revision was guided by the “principles of subsidiarity and responsiveness” which suggest firstly that goods and service provision should take place at the lowest level of the government that is capable of efficiently undertaking these functions, and those national level public goods and services that benefit the entire nation are best performed by central agencies.

Subsidiarity is the principle that a central authority should have a subsidiary function, performing only those tasks which cannot be performed at a more local level.

Secondly that LGs are best placed to understand the needs of the people as they are situated closer to them and can respond to changing needs of the people quickly and easily.

Economies of scale, negative externalities or spillovers, equity, variety in demands of the people, transaction cost, levels of discretion in decision-making, and levels of technical skills required in terms of provision of goods and services by levels of government were also considered.

The 20 broad responsibilities clarifying and specifying “who should do what and who will pay for what” in the 12th FYP are assigned along five multi-dimensional attributes i.e. who will regulate, finance, plan, budget and supervise, require external technical support, and  produce, implement and deliver goods and services.

The assigned responsibilities in the framework will be monitored for compliance in the 12th FYP.

Based on the division of responsibility framework, the capital outlay for local governments has been doubled from Nu 25 billion in the 11th FYP to Nu 50 billion in the 12th FYP.

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