We recently witnessed a handsome salary rise for civil servants. While this move may be well-intentioned, it now falls upon the Royal Monetary Authority to implement appropriate policy measures to navigate potential inflationary challenges.

With limited tools at the government’s disposal to control inflation, it becomes crucial for fiscal policy to play a proactive role in safeguarding economic stability and the survival of the common people.

Monetary policy, primarily focused on altering interest rates, serves as one of the few mechanisms for the government to curb inflation.

However, in an economy where prices are on the rise, the demand for higher wages from workers is inevitable. The salary rise for civil servants is a testament to the government’s acknowledgment of their contributions and the need for a living wage in an evolving economic landscape.

Nevertheless, this adjustment can trigger a chain reaction, leading to increased demand, pushing prices higher, and potentially fuelling a wage-price spiral.

Such inflationary pressures, if left unchecked, can have profound implications for the common people.

As prices soar, the cost of living becomes burdensome, particularly for those with fixed incomes or those engaged in low-income professions.

Inflation erodes the purchasing power of ordinary citizens, creating financial hardships and exacerbating income disparities.

The essence of Bhutan’s Gross National Happiness (GNH) philosophy lies in the well-being of its citizens, and our economic policy must uphold this fundamental tenet.

The government’s fiscal policy must take centre stage in addressing these challenges.

By adopting prudent and timely measures, fiscal policy can complement monetary efforts and shield the vulnerable segments of society from the adverse impacts of inflation.

Prioritising investments in infrastructure, education, and healthcare can enhance productivity and create a more competitive workforce. Additionally, directing resources towards social safety nets and targeted subsidies can alleviate the burden on the common people, ensuring their survival during inflationary periods.

However, the efficacy of inflation-controlling measures lies in their prompt implementation. Delays in action can render these efforts less impactful, allowing inflationary pressures to persist and deepen.

Royal Monetary Authority must work with the government to devise agile and comprehensive policies that take inflation into account while safeguarding the welfare of the populace.

We must also recognise that inflation control is a delicate balancing act. While the economy’s long-term health depends on keeping inflation in check, excessively restrictive policies can stifle economic growth and hamper job creation.

Striking the right balance requires a nuanced understanding of the unique dynamics of Bhutan’s economy.

Our inflation control policies must be inclusive and considerate of the different sectors and regions within the country. Bhutan’s economy is diverse, with varying levels of development across dzongkhags. As the salary rise primarily impacts civil servants, it is essential to assess its effects on different industries and ensure that it does not inadvertently exacerbate disparities.

Bhutan’s recent salary rise for civil servants reflects the government’s commitment to recognising their contributions and providing for their well-being. However, this step should not be taken without addressing the potential inflationary consequences and their impact on the common people.

We need proactive fiscal policy policies to address the needs, not wants, of the vulnerable sections of society.