The Opposition has raised concerns over the increasing proportion of recurrent expenditure and the corresponding decrease in the capital expenditure over the years.
The debate ensued when the Speaker opened the floor to comments from MPs on the annual budget 2019-20 in the National Assembly on June 12.
The Opposition blamed wasteful expenditures and outdated policies and programmes for the increase in recurrent expenditures.
Panbang MP Dorji Wangdi, who took the first opportunity to speak, said that the proportion of recurrent expenditure is projected to increase from 56.2 percent in the fiscal year 2019-20 to 61.40 percent in 2021-22 of the total budget outlay.
Accordingly, the capital expenditure is projected to decrease from 43.34 percent to 38.60 percent in the corresponding years.
A decreased expenditure, Dorji Wangdi said, would not only affect economic development but was an indication that the economic policies were not on the right track. He said that lack of investment would ultimately worsen the unemployment problem, which he described as the biggest challenge facing the government, due to stagnation in economic development.
Dorji Wangdi said that only Nu 2.8 billion (B) of the total capital budget of Nu 64B for the fiscal year 2019-20 was allocated for the 205 gewogs.
“The country is supposed to graduate from the club of least developed countries (LDC) by 2023, after which foreign aids are expected to decrease,” he said. However, he added that the decreasing capital budget casts doubt over the country’s ability to graduate into the group of middle-income countries by the time frame.
The 13-member economic and finance committee in one of its recommendations on the budget also presented a similar concern, saying that the trajectory of recurrent and capital expenditures was headed to only worsen in future.
“This is a clear indication of imprudent, inefficient and unsustainable public finance policy and management system. This will mean lesser investment, economic activities and diminishing job creation in the economy,” the committee stated.
Only 39 percent of the total outlay of Nu 310B in the 12th Plan, has been kept for capital budget while 61 percent is for recurrent expenditures.
However, the government argued that the trajectory must be looked at in the right context, saying that a lot of expenditures are related to maintenance of roads and infrastructure constructed by the past governments.
Foreign minister Dr Tandi Dorji said the government believes that it was more important to improve the existing facilities and infrastructure than to rush on building new ones.
He said that the government’s policies and programmes were long term. “Five years is not enough for a government to solve all the economic issues including the unemployment problem,” he said.
Opposition leader Pema Gyamtsho (PhD) said that some of the government expenditures were wasteful and unnecessary and led to the increase in recurrent budget.
Citing an example of government’s decision to provide scholarships to Class XI students who had failed to qualify for public schools, he said many parents who drop their children to school by car would be able to sponsor their children on their own.
“We cannot achieve self-sufficiency if the government takes over the responsibilities that individuals and parents themselves are capable of shouldering,” he said, adding that the Druk Gyalpo is looking after children from a very poor economic background.
He said that some of the policies and programmes that were in the fourth and fifth Plans were being continued despite them being obsolete in the present context. He questioned the relevance of Farm Shops, Farm Machinery Corporation Limited, Livestock Development Corporation and called on the government to study if such initiatives have caused unnecessary loss to the country.
Citing another example of wasteful expenditure, the opposition leader said, “Many power tillers distributed to villages are lying idle and defunct. Similarly, do we need to establish a livestock development corporation? People know how to rear pigs. Farm shops are selling goods including juice and milk powder to compete with small private businesses.”
Pema Gyamtsho was of the view that some of the government’s policies have pushed the country backward in terms of achieving the national goal of self-sufficiency. “The government’s main objective should be to empower the people so that they can fend for themselves,” adding that each government should build on the achievement of the past government.
Prime Minister Dr Lotay Tshering said that the definition of capital and recurrent expenditure were not clear and that the increasing capital budget was an indication of a developing country. “The current expenditure must increase as the country develops and the capital expenditure decreases accordingly,” he said.
He said that purchase of a vehicle is considered a capital expenditure where as the cost incurred for its maintenance is current expenditure.
Dr Lotay Tshering said that recurrent budget has increased from Nu 1B in the 6th Plan to Nu 3B in the 9th Plan and that it further increased from Nu 10B in the 10th Plan to Nu 11B in the 11th Plan.
The indicative capital outlay in the 12th Plan is projected at Nu 136B, of which about Nu 1B is to be transferred to Bhutan Economic Stabilisation Fund.
Most of the capital budget, the prime minister said, was being made in hydropower projects but not reflected in the budget. Interest payments on investments in hydropower projects were reflected as current expenditure.
While acknowledging that the government flagship promgrammes were useful, the opposition leader said major projects should be initiated to generate employment, economic development and export promotion.
He also stressed on strengthening food and energy security, calling on the government to come up with policies and programmes to reduce the import of LPG and food items. The government, he said, should see if the country could make use of its electricity to enhance energy security.
The prime minister said that the government recognises the need to promote export but that the country was in a challenging position geopolitically for promotion of export and growth of the private sector. “Replacement of import should be considered as good as reduction in import.”
The opposition leader said that the huge populations in the neighbourhood should be treated as an opportunity in terms of market.