Learning from experience

The country’s budget for the 2016-17 fiscal year has been revealed.

One of the highlights of the budget includes the government’s proposal for a Dzongkhag Development Grant (DDG) of Nu 7 million for each dzongkhag.

This will be in addition to the Gewog Development Grant (GDG) of Nu 2 million.

The is another needed move in the effort to decentralise. Financial responsibility is a core requirement of the process as local works will be able to be executed more effectively.

Eventually, the central government should only be responsible for national affairs or overall policy like international affairs, monetary policy, national-level public services, and for setting standards.

Local governments, from the dzongkhag level down, should be involved in providing infrastructure and services.

Local governments will now have direct control over both budget and execution of certain works.

This will include the autonomous central schools, flood mitigation and preparatory work for yenlag thromdes, human resource development, health related work including awareness programmes, and construction of security walls in border towns.

However, there is a need to ask whether it is practical to provide a fixed amount of Nu 7 million to each dzongkhag.

The dzongkhags vary in size and population. Some dzongkhags may require more money than others.

It is also important to ensure that the funds are not spent on projects that are already funded by other agencies.

What is now also important is that responsibilities between the central and local government are clearly defined.

Last year, the National Council found that over 80 percent of the GDG was spent on purposes it was not intended for like construction and maintenance of farm roads, bridges, mule tracks, and cultural promotion, among others. In one instance, the fund was even used to construct an archery range.

The GDG was meant for creation of income and employment generation activities.

The assessment also found that local leaders did not consult the public for many of these works.

We cannot have this repeat with the DDG.

Besides the need for clear responsibilities and guidelines for the dzongkhags to follow on where the DDG can or cannot be spent, it must also be ensured that expenditure is conducted on a public consultative basis.

The experience with the GDG also raises the need for more transparency in the system. The central government must also play an oversight role and monitor how the grant is being spent. The public too need to have access to information on how the money is being spent.

1 reply
  1. irfan
    irfan says:

    This probably is going to be considered a positive move with this newly announced DDG. Only time will tell how much positive effect it’s going to create within the overall decentralisation effort of the government. Effectiveness and efficiency of such grants will largely depend on the ways the funds get invested.

    It’s not aways justified to blame poor planning or management if the funds get wasted a bit as it was the case in some of the previous investments from GDG. Every such project will consume some investment without returning anything. But if any project is non sustainable on purely technical grounds, government funds should not always be considered the final criteria for ultimate sustainability. Same way, even quality of the investment actually matters whether it’s for only generating returns or just for meeting the sustainability part.

    So somewhere there is this need that local governments opt for quality investment rather than simply consuming the budget. One interesting observation with consuming a given fixed budget is that one portion of it saved from mere wastage can be considered a bonus or premium to start with in the following budget.

    In that matter, there is a possibility in technically linking all the 20 DDG and 205 GDG at the investment or project execution level. It may probably help to adjust the deficits and surpluses in a YoY basis and hence result is enhanced fund management. Some one may also suggest a ‘Revolving Fund’ mechanism here.

    But one very basic thing we shouldn’t forget is that there it exists a natural limit to how much cream can be skimmed from a given amount of quality milk. So both quantity and quality of the development works will be responsible for the real values. Otherwise, there is the need to discuss much serious economic terms like ‘depreciation’, ‘inflation’, ‘recession’ and a situation when every asset creates an equated and balanced liability. We as common people can only pray that every investment doesn’t end up creating an equated and balanced wastage.

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