Bhutan Country Strategy Paper 2007-2013 - the European External ...

Decentralised development planning
In recent years, effective measures were undertaken to deepen the decentralisation process with
special emphasis on devolving local development planning, implementation and monitoring. To
improve the quality and experience of the GYT leadership, a nation-wide re-election of Gups
(leaders of respective GYTs) was held on the basis of universal suffrage, from September to
December 2002. Another significant change was the replacement of the chairmanship of DYT,
from a civil servant to an elected representative, allowing a better response to the development
needs of the respective Districts.
Through a participatory and consultative process, involving discussions in all 20 DYTs and 201
GYTs, the National Assembly revised and enacted the DYT and GYT Acts in 2002, vesting
dzongkhags (districts) and gewogs (blocks) with greater administrative and financial powers including
the authority to retain and spend rural taxes for local development. The GYT and DYT while
keeping in line with the prevailing acts and laws can adopt and enforce regulations and guidelines
that are applicable within their dzonkhags and gewogs.
The 10 th Plan will also see the introduction of a new approach to development planning and
implementation. The result based 10 th Plan approach is expected to contribute to the realisation of
the various provisions of the draft Constitution pertaining to the principles of state policies and of
local governments.
2.2 Economy and Trade
ADB and WB have projected Bhutan’s economy to grow at an annual rate of 7-9 percent.
To achieve this growth projection, efficient and reliable infrastructure services, sound macroeconomic
policies and a strong domestic revenue base will be required.
The development of infrastructure is being accorded priority to create productive capacity both
in the economy and the people. Emphasis is laid on improving and expanding the national road
network, feeder roads, farm roads, telecommunication network, construction of irrigation
channels and bridges, urban development and housing, expansion of power transmission lines and
grid, and increasing rural electricity coverage. In the social sector, focus will be on consolidation
and improvement of the quality of services.
As 69 percent of the population is engaged in the agricultural sector, agricultural exports may
seem to be an option to generate foreign currency revenue while at the same time working to
enhance rural revenue and improve the standard of living. The Bhutanese government in recent
years has been encouraging production of cash crops such as apples, oranges, potatoes and
cardamom, aimed at neighbouring markets such as India and Bangladesh. An important issue in its
international economic relations has been the negotiation of lower tariffs on Bhutanese products,
mainly fruit, by the Bangladeshi government, ensuring a substantial increase in earnings for the
fruit (apples and oranges) sector.
As mentioned before, the Tala hydropower project will add substantially to Bhutan’s domestic
revenues and help the country better meet the increasing resource requirements for the Tenth Five
Year Plan. However, as the Medium Term Fiscal Framework has shown, additional revenues on
account of Tala will be largely offset by additional expenditures. Debt servicing, financing the
rapidly growing expenditure in the social sector, the cost of establishing institutions to support the
democratic political system and resource requirements to facilitate decentralisation are major
budget items in the upcoming 10 th Plan.
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