Lyonchhen and ministers meet the press

GNH Commission approves Nu 310 bn 12th plan

PM to travel to Delhi on 27 December

The Prime Minister Lyonchhen (Dr) Lotay Tshering announced that the GNH Commission had approved the final 12th FYP with an estimated outlay of Nu 310 bn. The Commission is headed by the Prime Minister as the Chairman and the Finance Minister as the Vice-Chairman.

The plan will now be sent to the cabinet which has to give the final approval.

The Prime Minister said that they kept the PDP’s pledges unchanged in the 12th plan to the extent of not even changing the language of those pledges. He said the government did this though it has the legal right to change everything.

Lyonchhen also said that some of the DPT and BKP’s pledges had also been incorporated into the plan and he called upon the media to do a comparison of the plan with the different party manifestos once the plan is formally released.

The PM said that the GNH commission had studied all the four parties pledges and after the the primary round it had come up with two versions of the draft plan based on the pledges of the DNT and DPT.

He said that for the government, apart from the 12th plan, drafting of the 13th plan would also be important as it would be for a period when Bhutan graduates to the middle income country status by 2023.

Lyonchhen said that the internal revenue of the government will depend on part on the Mangdechu tariff negotiations, the results of which will be known by this month.

He said based on the tariff negotiations, he would ask for a commitment of Indian assistance for Bhutan.

Lyonchhen will be travelling to Delhi on 27 December at the invitation of the Indian Prime Minister, Narendra Modi.

It has been learnt that the plan approved by the GNHC still has a provision of Nu 63 bn in total grant of which Bhutan plans to ask for Nu 45 bn from India, the same figure as in the 11th plan.

The Nu 45 bn figure from India is based in part on tariff rates that has been projected by GNHC to be got for the Mangdechu project. If the tariff rates fall well below expectations, then the grant component could go up.

The tariff negotiations are still going on and a few more meetings are expected to happen before both sides either come up with a common figure or give differing figures.

Ultimately, given the past experience like in Tala, the tariff rates for Mangdechu will essentially depend on a political decision of the two governments.

In short, if India is not amenable to the tariff rate expectation of Bhutan then Bhutan will be forced to climb down from its public position of seeking only Nu 45 bn grant from India and Nu 63 bn grant overall, to strengthen its self sufficiency.

The parameters and results of the Mangdechu project tariff negotiations will also impact the tariff negotiations for the upcoming P I and P II projects.

With hydropower becoming the strongest cornerstone of Bhutan-India relations, any outcome from the Mangdechu tariff negotiations also holds the potential to impact the quality of the Bhutan-India ties.

As of now, of the Nu 310 bn 12th plan the internal revenue is projected at Nu 218 bn and combined with the Nu 63 bn grants the revenue shortfall is Nu 29 bn.

The current expenditure is at nu 194 bn and the capital expenditure is at around 116 bn.

The 12th plan’s revenue projections have been hit by the delay of the Mangdechu, P I and P II projects and also the GST tax implementation.

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