To bring about equitable development, the local government is for the first time getting 50 percent of the budget with the implementation of block grant in the 12th Plan.
This raises questions on how the local government administrations would plan, execute, monitor and evaluate development works.
Block grant is the money allocated by the central government to a local government with only general provisions as to the way it is to be spent, in contrast to a categorical grant, which has stricter and specific spending provisions.
During the first meet-the-press session with the new cabinet, Lyonchhen Dr Lotay Tshering said the government liked the idea of block grant, which was introduced by the previous government in the draft Plan.
“It will provide some opportunity for the local government to decide how they want to spend and where. It will test for capacity of local government,” he said.
However, Lyonchhen said that monitoring and evaluation will be strict and that there will be no change in the practice of Annual Performance Agreements. The only change, he said is in the mode of financing since the officials from the local government will not have to come to the capital to bargain on the capital requirement with the GNHC and finance ministry. “This is the biggest advantage,” Lyonchhen said.
The current norm has local government officials travelling to Thimphu to discuss their budget with the finance ministry.
“But that doesn’t mean we are going to throw the money into the local government’s account. They will have to execute the planed activities as per the plan,” he said adding that the local government will have the authority on how to use the fund.
Since this is the first time, Lyonchhen said the central government would be there to correct and rescue should the local government fail.
Even during the finalisation of draft 12th Plan, the former government highlighted that dzongdags would be the main drivers for the successful implementation of planned activities. It was also pointed out that it is important to ensure adequate technical competence, institutional capacity, and financial system are put in place at the local level.
The outlay for the 12th Plan is Nu 310B, of which only 20 percent is allocated for capital budget.