The National Assembly yesterday endorsed the annual budget 2017-18, the third pay commission report, and the supplementary budget for the financial year 2016-17.
The house did not endorse the Fiscal Incentives 2016 after the members of the Opposition, citing the Supreme Court verdict in the first constitutional case of 2010, argued that the fiscal incentives should be tabled as a separate money bill.
The fiscal incentives was tabled as a report.
The house decided to vote on the fiscal incentives at a later date after resolving the issue.
The Fiscal Incentives 2016, which the government announced on April 4, covers the government’s tax measures. Among other exemptions, it provides tax exemption for 10 years on convertible currency earnings from export of goods by newly established manufacturing and IT companies. The total proposed budget for the financial year is Nu 60.77billion (B) and the supplementary budget for the financial year 2016-17 is Nu 4.525B.
The supplementary budget and the pay commission report was passed with all ayes from the 44 MPs present in the house. For the annual budget, however, Panbang MP Dorji Wangdi voted “No”.
Dorji Wangdi said the budget fails to address the critical challenges faced by the economy. The MP, citing an example, said that although the government has allocated a budget for addressing the unemployment problem, there was no clarity about how jobs would be created.
The Panbang MP said that allocations for some agencies such as the Bhutan Lottery and Bhutan Helicopter Services Ltd. are unnecessary. Also, he added that there are no proper plans and policies to accelerate the economic growth except for those that were put in place by the former government.
Finance Minister Namgay Dorji said this was the last budget of the 11th Plan. “Works are being executed very well,” he said.
The pay commission has proposed a 40 percent increase in the basic salaries of local leaders. A hike in other benefits, including their daily substance allowance and siting fees, has also been proposed.
The finance minister said that civil servants could expect a pay hike when some hydropower projects are commissioned. He said there was not enough revenue to give them a raise immediately.
Out of this total budget, the government will use Nu 41.84 million (M) for lending and Nu 2.82B for repayment of loans. The rest Nu 57.9B will be spent as government expenditure, 51 percent of which is capital expenditure and 49 percent current.
The new budget is Nu 6.397B more than last year’s revised budget of Nu 54.38B. This is an increase of 11.7 percent.
This is the largest annual budget of the 11th Plan. This significant increase, the finance minister said, will help the government complete all the ongoing activities within the plan period.
The total income estimated for the financial year is Nu 51.4B. This includes a domestic revenue of Nu 34.7B and external grants of Nu 16.7B.
The budget, which has come a year and three months before the government completes its term, also highlights major activities that will be undertaken during the financial year. The government will complete its term in early August next year.
During the FY 2017-18, major activities including the double-lanning of the East- West highway, the construction of the Gyalpoising-Nganglam highway and blacktopping of 42 gewog centre roads, will be completed. The construction of three new hospitals in Tsirang, Gelephu and Haa, which are ongoing, will be completed.
Also, the government will establish three new central schools that will take the total number of central schools to 63. According to the budget report, all domestic airports will be functional and the integrated livestock farm in Samrang gewog of Samdrup- jongkhar, will be completed during the financial year.
The government will also initiate construction of a new National Council building and a new Sarpang dzong.
As a new initiative, the government plans to establish an endowment fund for crop and conservation to compensate farmers for crops and livestock lost to wild animals and natural calamities. The government will establish a “stabilisation fund” to maintain stability of the economy.
The rural life insurance pay out will be doubled from Nu 15,000 to Nu 30,000. Management of rural life insurance scheme will be transferred to Royal Insurance Corporation of Bhutan Ltd.
Recognising the role of kenyer (caretakers) play in the upkeep of lhakhangs besides performing rituals in the community, the government will pay salaries to all registered caretakers under the Central Monastic Body.
Real GDP is projected to grow by 6.7 percent in the financial year. The main contributor to the growth will be the service sector.
The budget report and the pay commission report will be forwarded to the National Council for deliberations. Recommendations and objections are not binding since they are money bills.