India keeps aside Nu 36.14 bn for Bhutan in its annual budget

India’s 2013-2014 annual budget has set aside Nu 36.14 bn for Bhutan in their financial year from 1st April 2013 to 31st March 2014.

According to the bulky budget report available on India’s Ministry of Finance website aid to Bhutan comes under the ‘Grants and Loans to Foreign Governments’ heading.

Of this Nu 10.89 bn is grant for Bhutan’s five year plans. For non plan activities in Bhutan which is primarily hydro projects Nu 10.56 bn has been set aside as grant while another Nu 14.68 bn has been set aside as the loan component.

These figures will come as an encouragement to the ongoing 10th plan and 11th plan talks between Bhutanese and Indian officials in New Delhi.

Bhutan is seeking the balance Nu 5 bn for the remaining portion of the 10th plan and another Nu 45 bn for the upcoming 11th plan.

According to a government official the Nu 10.89 bn grant for Bhutan’s five year plans could include the pending Nu 5 bn for Bhutan’s tenth plan that technically ends by July 2013. He said the remainder 5.89 bn could be India’s contribution to Bhutan’s 11th plan until 31st March 2013.

India’s plan assistance is usually staggered over a five year period.

Though the Indian government has budgeted a total of Nu 25.24 bn for the hydro projects the requirements of the ongoing three projects of Punatsangchu I, Punatsangchu II and Mangdechu is around Nu 28 bn.

Managing Director (MD) of the 1200 MW Punatsangchu I and 1000 MW Punatsangchu II project R.N Khazanchi said that the requirement for both P I and P II is 20.80 bn for the upcoming 2013-2014 financial year.

Similarly the MD of the Mangdechu Hydroelectric project A.K Mishra said the requirement for his project would be Nu 7.86 bn for the 2013 and 2014 financial year.

A Bhutanese hydropower official said that though it was not sure they would try and start preliminary pre construction works for 620 MW Amochu Reservoir project, 2,560 MW Sunkosh Reservoir project and the four Joint Venture projects of  Chamkarchu (670MW) in Bumthang, Kholongchu (600 MW) in Yangtse, and Wangchu (600MW) and Bunakha reservoir (180 MW) in Chukha.

The official said incase these projects start pre construction activities like access roads, offices etc then additional budget would be needed from India.

Bhutan’s financial year on the other hand is from 30th June 2012 to 1st July 2013.

As per the “Grants and Loans to Foreign Governments’ budget head the total aid and loans to various foreign governments and institutions is Nu 70.18 bn for 2013-2014 of which Bhutan’s share is more than 50 % at Nu 36.14 bn.

With the Indian economy slowing down and a growing fiscal deficit there was concern that foreign aid by India to various countries including Bhutan would suffer this year.

However, the state visit of His Majesty the King saw assurances from the Indian Prime Minister Manmohan Singh, Finance Minister P. Chidambaram and Foreign Minister Salman Khurshid that India would meet all its commitments to Bhutan.

This was followed up by a shorter thank you visit of Lyonchhen who was also given similar assurances.

India’s total Budget expenditure for its 1.2 bn population is around USD 305.33 bn to be spent in the 12 months between April 2013 and March 2014.

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