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Indian ambassador to Bhutan clarifies burning issues

Publication Date : 16-07-2013


The subsidy on kerosene and cooking gas, which was withdrawn on July 1 resulting in the doubling and tripling of prices of these essential commodities, will be "resolved" soon, according to the Indian ambassador to Bhutan, VP Haran.

The ambassador also said that the Chukha tariff will remain at 2 ngultrum (3 US cents) per unit and the refund of excise duty to Bhutan by India will continue according to the 2006 trade agreement between the two countries.

These were clarified yesterday in the backdrop of these issues taking centre stage in the recent general elections that saw People’s Democratic Party win 32 seats to form the Bhutan government.

With the campaign zooming into Bhutan-India relations, Druk Phuensum Tshogpa president was said to have “strained” this close link because of his move towards China.  Removal of subsidies on cooking gas and kerosene that followed soon after validated the allegations for many.

Talks were also afloat of reduction in Chukha power tariff to India, and stopping of excise duty refund to Bhutan by India towards the latter part of campaign.
Post election analysis reveal these moves worked in favour of PDP, and also had many saying India “helped” the party win elections.

While Kuensel had tried to seek clarification on the issues from the Indian ambassador before the general elections poll day, he could not be reached.

“I avoided meeting press people before the elections for the simple reason that some effort was made from India’s side to explain what happened and it was reported in a newspaper,” ambassador VP Haran said. “Unfortunately, instead of quieting down the situation, it only led to drawing of inferences that weren’t called for.”

He said it could have led to more reports, saying India was siding this party or that.

However, the ambassador clarified that there were no political messages intended.
Explaining that India extended assistance to Bhutan in a number of ways, these being plan assistance, grants for hydroelectric projects and subsidies, he said the subsidies came from a different window, for which a separate approval of Indian cabinet was required.

He said the quantum for that assistance was also fixed and related to the 10th Plan.

“That plan ended on June 30 and 11th plan was yet to be finalised,” he said, adding budget for the current year was also yet to be finalized, because only a new government could come and pass the budget.

“So we were caught in the fix,” he said.

In between, finance officials had highlighted a problem that revenue expenditure for the current plan was exceeding the current revenue, which was a violation of the Constitution.  They had hoped for excise duty refund from India, which was not released.

Upon contacting Delhi, out of the budget approved by its Cabinet for the 10th plan, 3B Indian ruppee was remaining, which was less than the amount due as excise duty refund.  But the ambassador had asked to go ahead and release whatever the amount, so that remainder could be given latter.

“This is the background to the release of 3B Indian ruppee in the last week of June,” he said.

The ambassador said the authority to continue with the other subsidies could have come about, if there was an agreed program on assistance of 11th Plan.
“But the plan is not finalised,” he said.

What had also happened was that, in India, there were concerns on a sudden spurt in the level of subsidies in LPG and kerosene.

“There was a huge gap on what our commerce ministry reports as exports to Bhutan, and what your trade ministry gives as imports from India,” he said.

In 2010, the subsidies for these two items were 320M Indian ruppee and 330M Indian ruppee in 2011.  But in 2012, it jumped to 520M Indian ruppee.

Being about 66 per cent or two-thirds increase, they wanted to make sure why and how it happened.

“We’re acutely conscious of the difficulty it creates for Bhutanese people and we want to find an early solution to it,” he said.

Yesterday morning, the ambassadors had met Bhutanese officials and requested them to inquire about it.  The sooner they got back, the sooner they would resolve the issue.

“It’s not going to happen that we’ll stop it altogether,” he said. “We’ll properly discuss and see if there’s a need to switch over to new system.”

In the meantime, he said Delhi was also working on how to circumvent this technical problem and try and work out some modality.

On Chukha power tariff, the ambassador said the issue was within India, between state government and power trading corporation of India about the rates and did not affect Bhutan’s revenue in anyway.

“As far as government of Bhutan is concerned, it’ll continue to receive 2 Indian ruppee per unit from PTC,” he said.


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