NC members suggest doing away with electricity subsidy

Choki Wangmo

At the National Council yesterday, the members suggested that the government could do away with 100-unit electricity subsidy in rural areas as the nation looks to cost-cutting measure in the wake of Covid-19 pandemic.

Finance Minister presented the National Budget Report for the FY 2020-21 and introduced the Budget Appropriation Bill for the FY 2020-21 and Supplementary Budget Appropriation Bill for the FY 2019-20 to the House.

After the government introduced several temporary budget policies to meet the recurrent expenditure from internal resources, it has been able to save Nu 3 billion.

The move could save the government Nu 1.5 billion yearly, according to the eminent member of the House, Phuntsho Rapten.

The government has allocated Nu 1,508 million subsidy for 100-unit free electricity in the fiscal year 2020-21. House member Ugyen Tshering asked whether any study was carried out to establish how many rural households had benefitted from such subsidies.

“While the provisions are helpful for the needy, isn’t it time we changed the provisions considering there are rural elites?” he asked.

And he added that most of the 100-unit free electricity was not used, wasting the government resources.

The domestic electricity tariff for the three-year cycle period began from 2016-17 with the progressive annual revision and regressive subsidy allocation.

A hundred units of electricity was more than enough to power rice cooker, water boiler, mobile phone and a few light bulbs for a month, members said.

Finance Minister Namgay Tshering said that the country’s economy was different from other countries—government spending and investment trigger the country’s gross domestic product.

The rural electricity subsidy, Lyonpo said, was necessary to help people buy essential items, which also kept the cash flow within the country’s economy. “If people do not have cash, there will be economic disruptions. That is why the subsidy is relevant today.”

About 117,000 households have so far benefited from the subsidy, Lyonpo said.

The allocation of the free electricity, he said, was based on the Election Commission’s boundary delimitation and would require reviewing thromde, dzongkhag and gewog delimitation if the government is to establish who should and should not get the subsidy.

Bhutan Electricity Authority reviews electricity tariff after every three years. The tariff for the low voltage block I (0-100 units), for both rural and urban consumers, is maintained at the existing rate. This means that rural areas will still enjoy free electricity and urban users consuming the same amount of power will still be charged the current rate of Nu 1.28 a unit for the next three years.

For the fiscal year 2020-21, a total budget of Nu 2.130 million has been provisioned as subsidies.

House members Sangay Dorji and Ugyen Namgay said that deferring leave travel concession payments and option to monetise the vehicle quota was inconsiderate of the civil servants’ needs.

Had the government come to this economic situation, they asked?

If the government was conscious of measures to reduce expenses, Sangay Dorji said that the waste and stray dog flagship programme could be deprioritised.

On June 6, the National Assembly’s economic and finance committee also recommended reprioritising Nu 248.54 million allocated for waste and stray dog management flagship programme to productive activities.

The House, however, decided to retain the proposed budget for implementation in the new fiscal year in view of the risks that waste and stray dogs could pose to public health.

Finance Minister said that the flagship programme was important as it included components like infection control, relevant during the pandemic where infectious waste is produced in huge numbers.

He said that incinerators were a requirement for public safety. The waste is either dumped at the landfill or burnt.

The House will continue the budget deliberation today.

1 reply
  1. bhutaneagle
    bhutaneagle says:

    Should we do away with electrical subsidy?

    When the rural electricity subsidy was started, one of the underlying reasons among others, was to curb rural-urban migration. Promotion of small and cottage industries could be another one.

    Considering the rising level of unemployment then and even now, most educated youths do not stay in rural areas. Many gungtongs in the country have also resulted because of lack of any income opportunities for people in rural areas on one hand, and the hard physically demanding life in villages/rural areas comprised of mainly agriculture and livestock rearing on the other. Lack of adequate water supply, both for drinking and agriculture, further discourages people to stay back in villages.

    Considering these realities, government should explore all policy interventions to encourage people to live and thrive in our rural areas as much as in our urban centres. For this, efforts should be to provide agriculture related-subsidies in addition to existing subsidies like 100-unit electricity to further encourage people to live in villages to take care of their ancestral homes and lands, and also preserve age-old tradition and culture in different parts of our country.

    It need not be about elites and not-so-elites who should or should not get the subsidy. It should be about what we want as a nation and how we want to develop/grow as a GNH nation. We cannot afford to have increasingly fallow agriculture lands in villages due to lack of water or increasing gungtongs because of people leaving their homes/farms due to rising living costs, and flocking to few urban centres looking for better opportunities. We cannot afford to let our beautiful villages disappear before us. Small interventions from the government like subsidies can go a long way in keeping our rural areas alive.

    More efforts and interventions may be directed towards encouraging our people to stay back in villages and take care of their homes and lands for future generations, and thereby prevent our villages from disappearing slowly.

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