The Bhutanese Leading the way.
In the State of the Nation Address, the Prime Minister Dasho Tshering Tobgay said that the Rural Life Insurance Policy, Third Child Support Policy and Rules, Home Ownership Policy, and Education Loan Program have all been drafted, and the budget has been secured.
An official said that all of the above four programs which are the pledges of the government are expected to start implementation in the coming financial year of July 2025 to June 2026.
Nu 263 million (mn) has been kept aside in the annual budget for the Rural Life Insurance pledge. The current amount is Nu 30,000 which is expected to significantly increase though the exact amount is not decided yet.
The Ministry of Finance (MoF) is working out the mechanisms and modality of payment like who is eligible, mode of transfer of money, amount, government premium contribution, etc.
The Cabinet will give it the final touches. The money will be given by the government. The Nu 263 mn may have to be revised upwards later too.
The official said the Third Child Support is fairly simple, but it too needs some inclusion and exclusion criteria.
The official said that the Nu 10,000 is unlikely to be given to a rich family, and so there will be an economic criterion. The pledge is for Nu 10,000 per month for a third child per month until the age of three. Here too, the budget will be financed by the government.
An initial amount of Nu 31.5 mn has been kept aside, but here too, the official said the amount is likely to be revised upwards quite a bit later.
On the Home Ownership pledge, the Economic Stimulus Plan (ESP) has kept aside Nu 1.5 billion (bn). The official said two options are being looked at.
The first option is that the government use this money to subsidize the home ownership loan, whereby banks charging 8% to 9% home loan interest can give it for 4% with the government subsidizing the rest.
This would enable the scheme to be implemented in both rural and urban areas. However, here the Financial Institutions (FIs) have to agree. The home loan collateral could be the land on which the home is to be built.
However, if the FIs do not agree then the government will have to select one or two banks to directly loan out the ESP money of Nu 1.5 bn only for rural homes with a ceiling of Nu 1.5 mn per home which would just be enough for 1,000 rural homes.
In this less desirable option discussions are currently on with BoB and BDBL incase they have to implement it.
The exact modalities and options are being worked out.
The ESP has kept aside Nu 600 mn for the Education loan.
Here, the official said final approval is being sought on the modality. The BoB is likely to administer this loan.
Under this loan students can take education loans of Nu 1.5 mn at 4% interest rate for higher studies in Bhutan or India.
There will be no collateral for the loan, and the implementation bank is likely to be the BoB. The loan will also fund vocational education courses in India.
The official said that the Cabinet will have to finalize all of the above and then they will be implemented within this financial year with some likely to start within a month or two.
