GoI budget implications can effect this substantial increase from last year’s 2.05 percent
Economy: The government projects Bhutan’s economy to grow by six percent, a drastic increase from last year’s growth of 2.05 percent.
This could be achieved by riding on the coattails of the economic movements in India, and the revised assistance the Indian government announced during the budget presentation on February 28.
Anything happening in India economically and financially, will impact the county’s economy. India has also set its inflation target at five percent, and since almost half of the inflationary trend in Bhutan is imported from India, the country can expect lower imported inflation figures.
Indian assistance, including grants and loans, increased by 26 percent, from Rs 48.7 billion (B) to Rs 61.6B. This would translate into more government investment to upsurge the growth.
The RMA governor, Daw Tenzin, attributed the INR shortage in the 2012-13 fiscal year to the current account deficit India faced in 2013.
Higher the current account deficit, the more it becomes difficult to pay for the imports, and the governor pointed out that, in such cases, the central bank had to resort to unconventional monetary policies, like availing overdraft facilities from the financial institutions in India.
But this, he said, was not required last year, because there had been a constant flow of grant and aid for both hydro and non-hydro projects.
This was highlighted in a discussion hosted by Indian Embassy on the Indian budget allocation, where panelists voiced that the “Make in India” initiative by the new government was another opportunity for Bhutan to capitalise on. “Make in India means either you produce in India or produce for the Indian market,” a panelist and the chief executive of the Druk PNB, Mukesh Dave, said.
The Indian government’s quest to boost its economy will be an opportunity for the Bhutan to capitalise on.
In the meet-the-press session yesterday, Prime Minister Tshering Tobgay said that, when the Indian economy is undergoing a major reform, and projecting a growth of at least 8.5 percent, it would translate into increased consumption.
He said this would be an opportunity for Bhutan to produce for Indian market, besides electricity.
Economic affairs minister, Norbu Wangchuk, said that the reason why the economy achieved a minimum two percent growth rate was because there were several restrictions and bans, which lowered private and public investments.
However, he said that a higher growth rate could be achieved, since government activities were now picking up, with most funds being disbursed to the gewogs, dzongkhags and other government agencies.
He said the Business Opportunity and Information center alone has approved 967 projects to boost the rural economy and small and medium scale industries.
The commissioning of the Dagachu project and Dungsam cement plant, more foreign investments coming in, and the registering of 21 new domestic companies, the minister said, would bolster growth.
Besides this, the fund for hydropower, lyonpo said, has stabilised.
But lyonchoen also said that the government would only encourage investments in clean and sustainable projects.
He said that an average growth of 10 percent in the 11th Plan, as pledged, could be achieved, going by the current figures and projections.
Meanwhile, the governor said that, while the Indian government had been generous with the aid, it was important for the country to invest the funds in areas that translate into economic development, and not just encourage consumerism.
By Tshering Dorji