The economic and finance committee of the National Assembly yesterday presented 18 recommendations to the budget report 2019-20, of which the House deliberated five and endorsed four.

The committee recommended the government to review and revise the Economic Development Policy (EDP) and the National Employment Policy to enhance economic growth and generate employment opportunities.

Presenting the recommendations, the committee’s chairman Kinley Wangchuk said that the Gross Domestic Product (GDP) is expected to grow between 6 to 7 percent during the fiscal year. He said that the growth is expected to be fueled mainly by service sector, increased production and export of electricity and that both the government and private investment trends have remained volatile.

The House endorsed the recommendation.

Prime Minister Dr Lotay Tshering said that a slow GDP growth rate was an indication of a developing country. “Developed countries like the USA have low GDP growth rates,” he said.

The House also endorsed the recommendation that called on the government to overhaul, restructure and re-engineer its fiscal principles and policy to ensure, productive and sustainable expenditures. The recommendation was aimed at controlling excessive burden of recurrent expenditure and to promote strong trajectory of investment and economic growth.

The committee shared concerns about the increasing share of recurrent expenditure in proportion to the total budget outlay.

The proportion of recurrent expenditure is projected to increase from 56.2 percent in the fiscal year 2019-20 to 61.40 percent in 2021-22. The capital expenditure is projected to decrease from 43.34 percent to 38.60 percent in the corresponding years.

This trajectory, the committee reported, was only expected to worsen in future.

“This is a clear indication of imprudent, inefficient and unsustainable public finance policy and management system. This will mean lesser investment, economic activities and diminishing job creation in the economy,” the committee stated.

Another recommendation the House passed with a minor change asks the government to carry out consultations with stakeholders on Goods and Services tax (GST) that the government is expected to introduce in the coming session.

The Prime Minister said that the government could not be certain about what would be the name of the proposed tax system although it was initially termed as GST.

The committee recommended that the common minimum infrastructure (CMI) budget should be used for construction, blacktopping and maintenance of gewog centre and farm roads, which was passed. It stated the budget under CMI was earmarked to fund such activities.

The committee reported that Nu 247 million (M) was provisioned for providing scholarship to class X students who do not qualify to government schools. However, it added that the expenditure was unsustainable and imprudent.

The committee recommended the education ministry to develop proper guidelines for scholarship and admission of such students in private schools. “The disbursement of the budget shall be made upon a guideline to Parliament.”

The House, however, rejected the recommendations.

Lyonchhen said that the recommendation would infringe onto the executive power of the elected government. The government’s decision to provide scholarships to the students did not violate any law, he said.

Opposition leader Pema Gyamtsho (PhD) said that government policies should empower people instead of providing handouts for attaining sustainability. He also said that some of the existing policies have to be relooked, citing the example of farm shops, which he said was competing with private individuals.

Panbang MP Dorji Wangdi said the 6 -7 percent of targeted economic growth in the new fiscal year was not enough to propel economic growth and create jobs in the country. “Investment and job creation must be prioritised,” he said.

Economic affairs minister Loknath Sharma requested the house not to be worried about the state of the economy and unemployment rates. He said there was no urgency to revise the EDP but that the Foreign Direct Investment (FDI) Policy would be revised and released soon.

The House will continue the deliberation today.

MB Subba