As expected, the government has kept the Covid-19 response programmes at the heart of the annual budget 2020-21 with a primary goal – to stimulate economic activities and achieve a minimum GDP growth of 2 percent.
The government’s primary strategy is to ramp up public spending and reduce the current expenditure. Accordingly, 56 percent of the total budget appropriation of Nu 73,989 million (M) has been allocated for capital expenditure.
For the first time, the government has allocated a higher capital budget than the current budget. Despite the domestic revenue is expected to fall by 14 percent, the government has increased the overall budget by 14 percent.
The government also hopes that the budget would increase consumption offsetting the impact on GDP growth. But the austerity measures in civil servants’ allowances among others measures have resulted in a 5 percent slash in the total current budget.
Finance Minister Namgay Tshering said that the provisioning of the current budget as annual grants starting from the new FY would provide flexibility to budgetary agencies and help optimise the use of the current budget.
One of the measures taken by the government to enable smooth budget utilisation and fast track development programmes is to ease the procurement process to meet the material requirements for implementation of programmes.
The prime minister on June 1 notified all government institutions availing government supported feeding programmes to directly procure local products especially during the production season without following the prescribed competitive bidding process.
Some members however, expressed concerns if the notification could put the procuring agencies into a trouble due to possible audit issues.
National Assembly members said that the budget does not outline the government’s plans of action if the situation worsens. The prime minister said that the government was already working on such issues although they were not reflected in the budget.
The finance minister on Wednesday presented the budget in the NC, where members questioned the government’s ability to meet the recurrent through domestic revenue.
NC member from Sarpang, Anand Rai questioned the finance minister about what plans were in place, besides the austerity measures to meet the current expenditure.
The finance minister said that the initial requirement of recurrent budget by various agencies came to Nu 38B. “But given the limited resources, we had to reduce the recurrent expenditure to Nu 32B,” he said.
The finance minister said that the government had limited options. He added that there would be no options but to go for harsher measures if the situation worsens.
Flagship Programs worth Nu 5,148M are high priority multi-sector intervention activities. There are eight programmes in the areas of Water, CSI and Startup, Digital Drukyul, Organic Program, Tourism, Waste Management and Stray Dog Management and Health and Education implemented by selected lead agencies.
These programmes are expected to contribute towards economic diversification and employment generation besides strengthening sector coordination.
However, a former NC member, Tharchen, said that the flagship programmes could set a wrong precedent. He explained that the programmes diverted huge amounts of money and that they could be used as a political tool by governments.
“They could affect trust between the government and relevant agencies. For instance, while the organic agriculture flagship programme can be looked after by a relevant department under the agriculture ministry, a committee under the PMO has been set up for that,” he said.
He also said that flagship programmes could lead to unbalanced development.
Towards the achievement of reliable and energy security through diversified modes, the hydropower sector has been allocated Nu 372M.
Some of the major activities include preparation of DPR for Kuri-Gongri hydropower project, On-grid electrification of Rural Off-grid households, promotion of Renewable Energy and energy efficient technologies in building sectors and carrying out pre-feasibility studies of Burichhu and Udzorong Hydro-power projects.
But some observers said that these projects were not a priority during Covid-19.
Most parliamentarians were seemingly satisfied with the annual budget 2020-21, as they did not voice their disagreement on the allocations to various sectors.
Some of the good impacts of the Covid-19 are that the government has fast tracked three industrial parks at Dhamdum, Motanga and Jigmeling, and development of Dry Port and Industrial estates at Pasakha and Bjemina. A budget of Nu 1,653M is allocated.