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TWELFTH ROUND TABLE MEETING EXECUTIVE SUMMARY OF THE ELEVENTH PLAN:
TOWARDS SELF-RELIANCE AND INCLUSIVE
GREEN SOCIO-ECONOMIC DEVELOPMENT
11 to 12 December, 2013
THIMPHU, BHUTAN
Gross National Happiness Commission
Royal Government of Bhutan
TWELFTH ROUND TABLE MEETING FOR BHUTAN, 11-12 December 2013, Thimphu
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Table of Contents
CHAPTER 1: BACKGROUND .................................................................. 1
1.1 Introduction .................................................................................... 1
1.2 Development Planning Framework ............................................. 1
1.2.1 Results Based Planning.............................................................. 2
1.3 Operationalizing Gross National Happiness ...................................... 3
1.3.1 The GNH Index .......................................................................... 3
1.3.2 GNH Policy Screening ................................................................ 4
1.4 Key Development Milestones ............................................................ 5
1.4.1 Vision 2020 ............................................................................... 6
1.4.2 Economic Development Policy (EDP) 2010 .................................. 8
1.4.3 LDC Graduation....................................................................... 10
CHAPTER 2: CURRENT SITUATION..................................................... 12
2.1 Demographic trends ...................................................................... 12
2.2 Four Pillars of GNH ....................................................................... 12
2.2.1 Sustainable and Equitable Socio-economic Development ......... 12
2.2.2 Preservation and Promotion of Culture ..................................... 14
2.2.3 Conservation and Sustainable Utilization & Management of the Environment .......................................................................................... 14
2.2.4 Promotion of Good Governance ................................................ 16
CHAPTER 3: MACROECONOMIC SITUATION AND OUTLOOK ............... 18
3.1 Macroeconomic Situation ............................................................... 18
3.1.1 Real Sector .............................................................................. 18
3.1.2 External Sector ........................................................................ 19
3.1.3 Monetary Sector ....................................................................... 20
3.1.4 Fiscal Sector ............................................................................ 21
3.2 Macro-economic outlook ................................................................ 22
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3.2.1 Real Sector Outlook ................................................................. 22
3.2.2 External Sector Outlook ........................................................... 22
3.2.3 Fiscal Outlook .......................................................................... 22
CHAPTER 4: THE ELEVENTH PLAN .................................................... 24
4.1 Eleventh Plan Objective ................................................................. 24
4.2 Strategic Thrust Areas ................................................................... 24
4.2.1 Inclusive social development .................................................... 24
4.2.2 Green Accelerated Economic Development ............................... 26
4.2.3 Strategic Infrastructure Development ....................................... 28
4.3 National Key Result Areas & Key Performance Indicators ............... 28
4.3.1 Sustainable and Equitable Socio-economic Development ......... 29
4.3.2 Preservation and Promotion of Culture .................................... 29
4.3.3 Conservation and Sustainable Utilization and Management of the Environment .......................................................................................... 30
4.3.4 Promotion of Good Governance ................................................ 30
4.4 Monitoring and Evaluation ............................................................ 30
CHAPTER 5: SECTORAL PLANS .......................................................... 32
5.1 Sustainable and equitable socio-economic development ................. 32
5.2 Preservation and Promotion of Culture .......................................... 40
5.3 Conservation of Environment ......................................................... 41
5.4 Good Governance .......................................................................... 41
CHAPTER 6: LOCAL GOVERNMENT PLANS ......................................... 43
6.1 Background ..................................................................................... 43
6.2 Planning Process .............................................................................. 44
6.3 Summary of Local Government Plans ............................................... 44
Annex-1: Key Performance Indicators for NKRA1 to NKRA 4 ...................... 46
Annex-2: Key Performance Indicators for NKRA5 and NKRA 6 .................. 47
Annex-3: Key Performance Indicators for NKRA 7 and NKRA 10 ............... 48
Annex-4: Key Performance Indicators for NKRA 11 to NKRA 16 ................. 49
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AGS Annual grants system
AHB Annual Health Bulletin
BOC Bhutan Olympic Committee
BLSS Bhutan Living Standards Survey
BMIS Bhutan Multiple Indicator Survey
COP 15 Conference of the Parties, Copenhagen Climate Change Conference
CSMI Cottage, Small and Medium Industry Policy
DKRA Dzongkhag Key Results Areas
EDP Economic Development Policy 2010
EVI Economic Vulnerability Index
FDI Foreign Direct Investment
GDP Gross Domestic Product
GDS Gross Domestic Savings
GKRA Gewog Key Result Areas
GLOF Glacial lake outburst flood
GNH Gross National Happiness
HAI Human Assets Index
INR Indian Rupee
IPOA Istanbul Programme of Action
KPI Key Performance Indicators
KRA Key Results Areas
LDCs Least Developed Countries
LG Local Governments
LGEP Local Government Empowerment Programme
MDGs Millennium Development Goals
MPI Multidimensional Poverty Index (MPI),
MW Megawatt
NIA National Integrity Assessment Survey 2012
NKRAs National Key Result Areas
NMES National Monitoring and Evaluation System
NPAG National Plan of Action for Gender
NWFP Non-wood forest products
NRP National Rehabilitation Programme
NTD Neglected Tropical Diseases
ACRONYMS
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PHCB Population and Housing Census of Bhutan 2005
PlaMS Planning & Monitoring system
RBP Results Based Planning
REAP Rural Economy Advancement Programme
REC Royal Education Council
RISE Rapid Investment in Selected Enterprises Programme:
RMA Royal Monetary Authority
RNR Renewable Natural Resources
RTM Round Table Meetings
SDGs SAARC Development Goals
SKRA Sector Key Results Areas
SMEs Small and Medium Enterprises
TCI Transport Cost Index
TKRA Thromde Key Result Areas
USD United States Dollar
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1.1 Introduction
The Eleventh Five Year Plan builds on the strong foundations that have been
laid since the inception of planned development in 1961. It is guided by His
Majesty the King's Vision for Bhutan and the national priorities that have
been consistently underscored in Royal Addresses to the nation. The Plan
sets out an ambitious development agenda to realize its objective of “Self-
reliance and Inclusive Green Socio-Economic Development” and to fulfill the
Government's pledge of ensuring “Prosperity for All” through effective
empowerment of the people – “Wangtse Chhirpel”.
The Eleventh Plan document is comprised of:
Volume 1, which serves as the main document and provides an overview
of the socio-economic development progress; the key challenges,
opportunities and the outlook for the Eleventh Plan period; the goals,
objectives, overall strategies and the fiscal framework of the Plan; and
sectoral and local government plans;
Volume II, which provides an overview of the major programmes to be
implemented by central agencies; and
Volume III, which provides an overview of programmes to be implemented
by the local governments in 20 Dzongkhags, 4 Thromdes and 205 Gewogs.
1.2 Development Planning Framework
Bhutan's development planning framework continues to be guided by the
development philosophy of Gross National Happiness (GNH), which
encompasses the four pillars of sustainable and equitable socio-economic
development; preservation and promotion of culture; conservation and
sustainable utilization and management of the environment; and promotion
of good governance.
CHAPTER 1: BACKGROUND
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1.2.1 Results Based Planning
A key innovation of the Eleventh Plan is the adoption of a Results Based
Planning (RBP) framework that articulates clear outcomes and outputs that
need to be achieved in order to realize the Eleventh Plan objective of “Self-
reliance and Inclusive Green Socio-Economic Development”.
The outcomes are defined as Key Results Areas (KRAs) at the national,
sectoral, and Dzongkhag level and categorized under each of the four pillars
of GNH. At the national level, 16 National Key Result Areas (NKRAs) have
been identified. At the sector and Dzongkhag level, more than 150 Sector
Key Results Areas (SKRAs) and Dzongkhag (DKRAs) Key Results Areas that
are aligned to meet the 16 NKRAs have been identified. Furthermore, the
performance of all government agencies towards the delivery of the NKRAs,
SKRAs, and DKRAs are measured through corresponding outputs defined
as Key Performance Indicators (KPIs) consisting of a baseline and targets to
be achieved.
Maximization of Gross National Happiness
Eleventh Plan Goal: Self-reliance and Inclusive Green Socio-Economic Development
16 National Key Result Areas(NKRAs) & Key
Performance Indicators (KPIs)
Sector Level
National Level
Sector Key Result Areas(SKRAs) & Key
Performance Indicators (KPIs)
Agency Level
Result Based Programs
Box 1.1 - Eleventh Plan Strategic Framework
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The KRAs are a result of extensive stakeholder consultations right down to
the grassroots level. In defining them, key aspects of the Vision 2020, EDP
2010, the GNH 2010 Index, the Millennium Development Goals (MDGs), the
SAARC Development Goals (SDGs), the Istanbul Programme of Action (IPoA),
and the Strategy for GNH have also been taken into consideration.
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1.3 Operationalizing Gross National Happiness
Pursuant to Article 9-2 of the Constitution, which directs the State “to
promote those conditions that will enable the pursuit of Gross National
Happiness”, the operational aspects of GNH have been strengthened, most
notably with the introduction of the GNH Index in 2008 and the GNH Policy
Screening Tool in 2009.
1.3.1 The GNH Index
The GNH Index comprises 9 domains, 33 indicators and 124 variables and
is based on biennial surveys of 2008 and 2010. It tracks the progress across
the 9 domains of GNH which include 5 conventional domains related to
health, education, living standards, ecological diversity and resilience and
good governance and 4 holistic domains of psychological wellbeing, time use,
community vitality and cultural diversity and resilience.
Table 1.1 Nine Domains of GNH Index
Domains Indicators
1. Psychological Wellbeing 4
2. Health 2
3. Time Use 4
4. Education 4
5. Cultural Diversity and Resilience 4
6. Good governance 4
7. Community vitality 4
8. Ecological diversity and resilience 4
9. Living standards 3
Total 33
According to the latest GNH Survey of 2010, the national GNH Index score
was 0.743. The Survey indicated that 41 percent of Bhutanese were happy
based on a show of sufficiency in 73 percent of the domains, while the
remaining 59 percent showed sufficiency in 57 percent of the domains. The
top three sources of happiness at the national level were financial security,
good health and family relationship. Regionally, the five western Dzongkhags
and three south central Dzongkhags enjoyed higher levels of sufficiency in
the 9 domains, while Trashiyangtse, Lhuentshe, Trongsa and Samdrup
Jongkhar had lower levels of sufficiency.
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Source: GNH 2010 Survey
1.3.2 GNH Policy Screening
The GNH Policy Screening tool is used to assess the impact of introducing
new policies on GNH 1 . Policies are screened against 22 variables
representing the 9 domains of GNH. Each variable is subject to four
screening questions that are ranked on a scoring scale of 1 to 4, with a score
of 1 if the policy is perceived to negatively impact the variable; 2 if it is
uncertain as to how the policy might impact the variable; 3 if it is certain
that the policy will have no negative impact on the variable or if the policy
does not have any linkage to a variable; and 4 if the policy is perceived to
1 Refer www.gnhc.gov.bt for more information on the screening tool.
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have a positive impact on the variable. The threshold for a policy to be GNH
favorable is 66 (22 variable multiplied by the neutral score of 3).
Table 1.2 Twenty-two Variables of the GNHC Policy Screening Tool
Variables GNH Domain
1. Equity
I. Living Standard 2. Economic Security
3. Material Well Being
4. Engagement in Productive Activities
5. Decision Making Opportunity
II. Good Governance
6. Anti-Corruption
7. Legal Recourse
8. Rights
9. Gender
10. Information
11. Skills and Learning III. Education
12. Public Health IV. Health
13. Water and Air Pollution
V. Ecology 14. Land Degradation
15. Bio-diversity Health
16. Social Support VI. Community Vitality
17. Family
18. Leisure VII. Time Use and Balance
19. Culture VIII. Culture
20. Values
21. Spiritual Pursuits IX. Psychological Wellbeing
22. Stress
Since its introduction, twelve policies related to human resources, youth,
education, health and nutrition, land, natural resources, and industries
have been approved.
1.4 Key Development Milestones
Of special significance of the Eleventh Plan is that it serves as a vital
platform for achieving three key and related national development milestones
by the year 2020, which are namely the objectives articulated in "Bhutan
2020: A Vision for Peace, Prosperity, and Happiness" (Vision 2020); the
objectives of self-reliance and full employment of the Economic Development
Policy 2010 (EDP); and graduating from the list of Least Developed Countries
(LDCs). While our socio-economic indicators show that we are making good
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progress towards achieving the three milestones, with less than 7 years
remaining, there are important challenges that need to be urgently
addressed.
1.4.1 Vision 2020
Since its launch in the year 2000, “Bhutan 2020 – A Vision for Peace,
Prosperity and Happiness” provided the basis for the formulation and
implementation of successive Five Year Plans. As we approach 2020, a brief
review of the progress made and the challenges to be addressed over the next
seven years was made based on five thematic areas of Vision 2020,
encompassing our nation, our people, our economy, our environment and
our institutions.
Our Nation: Much has been achieved towards strengthening the peace,
security and prosperity of our nation. Today, Bhutan is a Democratic
Constitutional Monarchy with a democratically elected parliament and
government. State Principles based on which the country is governed, the
powers and responsibilities of various authorities and the fundamental
rights and duties of its people are clearly articulated in a written
Constitution.
While strong foundations have been laid, there are many new challenges for
a young democracy. The cornucopia of processes, interactions and systems
of a well-functioning democracy has to be learnt gradually through
experience. This needs to be complemented by education and awareness,
promotion of female participation in governance, capacity building of our
legislators, strengthening of the media and other such efforts.
Our People: The quality of life and the overall socio-economic status of our
people have improved significantly. Poverty has been reduced from 31
percent in 2003 to 12 percent in 2012. Our primary school enrollment rates
has increased from 72 percent in 1999 to near 100 percent in 2012, while
life expectancy has increased from 66 years to 68 years over the same period.
A full range of educational institutions for a knowledge based society have
also been established.
Notwithstanding the progress made, ensuring equitable access to and high
quality of social outcomes remains a challenge with evidence of growing
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disparities and inequalities across regions, gender and age. Some
Dzongkhags have poverty levels below 0.5 percent while others have a high
of 31.9 percent. Similarly, disparities are noted in health and education
outcomes. Unemployment is low at 2.1 percent in 2012 but youth and
female unemployment rates remain comparatively higher. With development,
new social challenges are also on the rise, particularly those related to youth,
domestic violence, crime, single parent households, abandoned children and
care for senior citizens.
Our Economy: Bhutan’s GDP per-capita has increased from USD 1,387 in
2006 to USD 2,590 in 2011. The economy has grown at an average of 7-8
percent per annum over the last five years, unemployment rates are below 3
percent and domestic revenue is able to cover about 65 percent of our
annual budgetary requirements. By 2020, the second transnational highway
will be completed and 10,000 MW of hydropower generation capacity, far
exceeding the Vision 2020 target of 3,000 MW, will be installed.
Our economy, however, continues to be highly aid dependent, import driven
and vulnerable. High growth rates and structural transformation have not
translated into commensurate increase in secondary and tertiary sector jobs.
Most significantly, agriculture continues to employ about 60 percent of the
population mostly in subsistence farming with significantly lower returns.
The economy lacks diversification and is predominantly driven by the
hydropower sector, which while being a critical sector has limited potential
for the creation of productive jobs to absorb a growing and an increasingly
educated labor force. Our vision of “high-technology” enterprises engaged in
high value low volume products and building internationally recognized
“centers of excellence” in health and education services remain a vision.
Most significantly, the recent and lingering Rupee shortage and its
consequences underscores the increasing complexity of our macroeconomic
environment; new vulnerabilities of our economy; the urgency and
imperatives of economic diversification; and the critical need for
strengthening our institutional and human resource capacities to address
new economic challenges.
Our Environment: Our environment remains pristine with 70.46 percent of
land under forest coverage; 19,751 square kilometers under protected areas
and biological corridors; and air and water quality within acceptable national
standards. Our efforts towards environment conservation are further
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reinforced by our Constitutional mandate of maintaining a minimum of 60
percent forest coverage at all times and our commitment to the global
community to maintain our status as a net sink for greenhouse gasses.
Although we remain firmly committed to our strong environmental policies,
we are confronted with many challenges, both old and new. Population
growth, urbanization, industrialization and infrastructure expansion are
putting strong pressure on the environment - particularly in terms of quality
of air, water security, solid waste management and human-wildlife conflicts.
Bhutan is also highly vulnerable to climate change related disasters such as
Glacial Lake Outburst Floods (GLOF), floods, landslides and drought. These
challenges call for more innovative approaches to balancing our
environmental aspirations and pressing developmental needs.
Our Institutions: Constitutional offices such as the Anti-Corruption
Commission, Election Commission, Royal Audit Authority, Royal Civil
Service Commission and the Supreme Court have been established. The
introduction of Gewog based planning framework in the Ninth Plan (2002-
2008) and the allocation of rationalized formula based grants to local
governments in the Tenth Plan (2008-2013) have further strengthened the
decentralization and democratization process.
However, given the nascent stage of development of these institutions, much
remains to be done to address the infrastructure and human resource
constraints to strengthen their effectiveness.
To address the key challenges related to Vision 2020, the Eleventh Plan will
accord high priority to strengthening the processes, interactions and
systems of a well-functioning democracy; ensuring quality of social outcomes
by closing the disparities and inequalities in health, education, income and
unemployment; addressing new social challenges arising from rapid
development and urbanization; diversification of the economy; balancing our
environmental and pressing developmental needs; and strengthening the
capacity of key national and local government institutions.
1.4.2 Economic Development Policy (EDP) 2010
The Economic Development Policy was launched in 2010 to enhance the
productive capacity of the economy and provide a strategic direction for
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economic development up to 2020. With a vision to promote a green and
self-reliant economy sustained by an IT enabled knowledge society, the
EDP's objectives are to achieve economic self-reliance and full employment of
97.5 percent by 2020. The strategies set out to achieve the objectives include
diversification of the economic base with minimal ecological footprint,
harnessing and value addition to natural resources in a sustainable manner,
increasing and diversification of exports, promoting Bhutan as an organic
brand, promoting industries that build "Brand Bhutan" and reducing
dependency on fossil fuel.
The first three years since the launch of EDP 2010 were devoted to creating
an enabling environment, preparatory works for infrastructure expansion
such as acquisition of land and promotion of Bhutan as a potential
destination for investments through road-shows in the region. Following the
adoption of a new Foreign Direct Investment (FDI) Policy in 2010, a total of
18 projects have been approved mainly for hotels, mineral and metal based
industries, agro and dairy products and the ICT sector. The Bhutan
Education City Act 2012 was enacted to establish Bhutan as an
international education hub. Among the policies approved were the Cottage,
Small and Medium Industry Policy (CSMI) 2012 and Alternative Renewable
Energy Policy 2013.Additionally, Fiscal Incentives 2010 was implemented to
stimulate private sector growth and employment generation.
While an enabling policy and regulatory environment are important, they
cannot compensate for structural bottlenecks, especially the lack of
infrastructure, trained manpower and access to finance. Much remains to be
done to overcome these challenges to private sector development and a
diversified economic growth path. Ultimately, the successful implementation
of EDP will depend on ensuring that its objectives are supported by clear-cut
strategies, policies, and support systems that harness our competitive
advantages and address our constraints.
An analysis of the EDP reveals that this vital linkage is weak at best and in
some cases an obvious gap exists. This lacuna has been underscored by the
Economic Affairs Committee of the National Council in its 2010 report
"Review of the Economic Development Policy 2010". The report points out that
four of the constraints listed in the EDP point to a lack of trained manpower
and emphasizes the imperatives to enhance labor productivity through
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market related skills development and technological innovation and
application, a critical strategy that is missing in the EDP.
Clear strategies and policies to address macro-economic issues related to
balance of payments, fiscal deficit and foreign exchange, which are
highlighted as vital constraints in EDP, also need to be formulated. The
timely provision of strategic infrastructure is another vital challenge that
needs to be addressed for the successful implementation of EDP. In
particular, the establishment of industrial estates, development of dry ports,
and completion of the alternate southern east-west highway needs to be
expedited on a priority basis during the current Plan.
Financing of the EDP is another vital constraint that needs to be addressed.
In this regard, while large business projects are important, special emphasis
needs to be given to SMEs and rural enterprises as they are crucial for
employment creation, rural income generation and poverty alleviation.
According to the National Statistical Bureau, 98 percent of the 24,605
industries registered as of 2012 fall into the cottage and small category,
which underscores the importance of this segment in self-employment and
income generation.
Similarly, in terms of the 8 competitive advantages listed in the EDP, the
most strategic is Bhutan’s proximity and open access to the Indian market.
The EDP is however silent on how Bhutan can leverage its location to its
advantage. In this regard, it would be vital to firstly identify the medium and
long term growth sectors in India and the region subsequently determine
those that are most feasible for Bhutan.
All the above require short, medium and long term strategies given
structural, institutional and human resource capacity constraints and the
time lag in addressing them. In this regard, the effective engagement of the
private sector and development partners in the design of a clear roadmap for
the implementation of the EDP 2010 during the Eleventh Plan period is
imperative and will be accorded a high priority.
1.4.3 LDC Graduation
As per the United Nations 2012 country data review, with a GNI per capita of
USD1700Bhutan fulfills the income criteria of USD 1,190 for graduation but
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remains below the graduation threshold of 66 on the Human Assets Index
(HAI)at 59 points and above the graduation threshold of 38 on the Economic
Vulnerability Index (EVI) at 44.2 points2.
The challenges confronting HAI include high malnutrition among children
with 12.7 percent classified as moderately underweight and 3.2 percent as
severely underweight(BMIS 2010); a high under five mortality rate of 69 per
1,000 live births (AHB 2012) and a low adult literacy rate of 55.3 percent
(BLSS 2012). EVI challenges include a small population size of less than
700,000; being geographically remote and landlocked; instability of exports
of goods and services; high vulnerability to natural disasters; and instability
of agricultural production.
Improving our HAI and EVI to reach the LDC graduation thresholds by 2020
will therefore be a priority during the Eleventh Plan. However, the
achievement of the objectives of Vision 2020 and EDP 2010 will be critical to
ensure a smooth transition and long term sustainability of Bhutan's
graduation from the LDCs.
2http://www.un.org/en/development/desa/policy/cdp/ldc/ldc_criteria.shtml
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2.1 Demographic trends
Population is a vital component of sustainable development and
understanding its composition and spatial distribution is necessary for
people centered development. According to the first decennial Population and
Housing Census of Bhutan (PHCB 2005) carried out in 2005, the actual
resident population of Bhutan was 634,982. Despite this declining trend in
the natural population growth rates from 3.1 per cent in 1994 to 1.3 percent
in 2012, the population is expected to increase to more than 800,000 by
2020 and to more than a million by 2050.
Of particular significance is the current age structure of Bhutan’s population.
With 56 percent of the total population below the age of 24 years, the
working age population is estimated to grow by around 73.6 per cent during
the period 2005-2050. With the right policies in place, Bhutan is thus poised
to reap significant demographic dividends. Other key demographic
considerations for the current and future plans include the rapid growth in
rural to urban migration and rising trend in the ageing population (65 years
and above), which is projected to increase from 7 percent in 2005 to 11.7
percent by 2050 due to significant improvements in life expectancy rates.
2.2 Four Pillars of GNH
In moving forward, it would be pertinent to take stock of key developments,
including the progress made and challenges to be addressed, under the four
pillars of GNH.
2.2.1 Sustainable and Equitable Socio-economic Development
A review of the poverty situation and the MDGs provides an overview of the
progress made and challenges under this first pillar of GNH.
According to the “Poverty Analysis Report 2012”, the income poverty
incidence has declined from 31.7 percent in 2003 to 12 percent in 2012,
CHAPTER 2: CURRENT SITUATION
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exceeding the Tenth Plan target of reducing poverty to 15 percent. These
gains can largely be attributed to the provision of infrastructure facilitates
and effective targeted poverty reduction programmes such as the Rural
Economy Advancement Programme (REAP) and the National Rehabilitation
Programme. The decline in the Gini-coefficient from 0.416 in 2003 to 0.36
over the same period indicates that inequalities in income have also been
reduced.
Despite the progress made in the reduction of overall poverty and income
inequalities, significant challenges remain. Most notably, a review of the
characteristic of the poor and non-poor on the basis of Poverty Analysis
Report of 2003, 2007 and 2012 indicate that poverty remains predominantly
a rural phenomenon. Considerable regional disparities also exist, with more
than half of the 20 Dzongkhags having poverty rates above the national
average of 12 percent and Lhuentse having the highest poverty rate at 31.9
percent.
Based on a multidimensional poverty index (MPI), the poverty situation in
Bhutan is less optimistic and is deemed to be 25.8 percent3. The MPI for
Bhutan measures deprivation in the dimensions of health, education and
living standards using13 indicators of equal weight.
The highest levels of deprivation pertain to sanitation, cooking fuel, years of
schooling and electricity. Of the three dimensions, education contributed the
highest to multidimensional poverty at about 41 percent, followed by living
standards at 36 percent and health at 23 percent.
3Bhutan Multiple Indicator Survey 2010
Table 1.3 Multi-dimensional Poverty Index
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Indicators
pri
mary
schooli
ng
School
att
endance
chil
d
mort
ali
ty
nutr
itio
n
food
insecuri
ty
ele
ctr
icit
y
housin
g
Cookin
g
fuel
dri
nkin
g
wate
r
Dri
nkin
g
wate
r
sanit
ati
on
asset
ow
ners
hip
land
appli
ances
3
DIMENSIONS
EDUCATION HEALTH LIVING STANDARDS
Percentage
Contribution
to MDI
41% 22% 37%
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Against this backdrop, the Eleventh Plan will strive to further reduce income
poverty to less than 5 percent and multi-dimensional poverty to less than 10
percent by 2018, giving special emphasis to Dzongkhags that have poverty
levels above the national average.
With regard to the MDGs, Bhutan has already achieved most of the targets
and is on track to achieve the rest by 2015. However, some of the areas of
concern such as malnutrition, female enrollment in tertiary education,
maternal and under five mortality rates, spread of HIV/AIDS and the
challenges of youth unemployment need to be addressed in the Eleventh
Plan.
2.2.2 Preservation and Promotion of Culture
The preservation and promotion of our rich cultural heritage is crucial to
strengthening national cohesion, identity and unity, which are vital for the
peace, stability and sovereignty of our nation. Accordingly, culture is
accorded high priority in our socio-economic development plans. Besides
the renovation of a several dzongs and monasteries, a number of new
initiatives have been taken in the areas of archeology, conservation,
infrastructure development, archiving and integrating technology to promote
Dzongkha.
Article 4 of our Constitution recognizes culture as an “evolving dynamic
force”, and the need “to strengthen and facilitate the continued evolution of
traditional values and institutions that are sustainable as a progressive
society”. In this regard, the preservation and promotion of our culture is a
vital source of livelihood, particularly for our rural communities, through the
development of cultural industries. Significant achievements have been
made in promoting local arts and crafts, nurturing the film and music
industry and diversifying cultural tourism. In view of the multiple benefits it
generates in terms of the promotion of culture, poverty reduction, enhancing
rural income and employment generation, the promotion of cultural
industries will continue to receive high priority in the Eleventh Plan.
2.2.3 Conservation and Sustainable Utilization & Management of
the Environment
As a result of the traditionally high priority accorded to environmental
conservation, Bhutan has been able to maintain aforest coverage of 70.5
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15
percent, exceeding the Constitutional requirement to maintain 60 percent
forest coverage at all times. With 51.32 percent of the country under a
protected area network, Bhutan is host to one of the highest percentage of
protected areas in the world.
During the Tenth Plan, initiatives under this pillar include the adoption of a
policy to promote organic agriculture production; expansion of community
forestry programmes; mainstreaming environment, climate and poverty
(ECP) in sector policies, plans, and programmes; enactment of new laws
such as the Waste Prevention and Management Act 2009 and the Water Act
in 2011; and a progressive green tax for vehicles.
Bhutan has successfully fulfilled its international obligations under the
Montreal Protocol. Pursuant to our pledge to perpetually remain a net
carbon sink and carbon neutral country during the COP 15, a National
Strategy and Action Plan for Low Carbon Development will become
operational during the Eleventh Plan. Preliminary studies to establish GNH
Accounts show that Bhutan’s natural wealth provides Nu.760 billion (USD
$ 15 billion) a year in ecosystem services and externalities, of which 53
percent of the benefits in services such as forest carbon sequestration and
watershed protection go beyond our borders.
While our achievements in environmental conservation have been laudable,
they have come at the cost of sacrificing substantial economic gains.
Ensuring a balance between our environmental aspirations and development
needs have become increasingly challenging due to persistent human-wildlife
conflicts and the growing demand for natural resources. Bhutan is also
highly vulnerable to natural disasters some of which are attributed to
climate change. In the last five years, earthquake, cyclone, windstorm, floods,
landslides and fires have been a frequent occurrence4.
Conservation of the natural environment to maintain a sustainable balance
between economic development and the environment and improving disaster
4Most notably: a May 2009 cyclone claimed 13 lives and caused extensive damage to public and
private properties with losses of Nu.719 million (US$17 million); the September 2009 earthquake - 6.2
on the Richter Scale - claimed 12 lives and with property losses estimated at Nu.2.5 billion (US$52
million); the September 2011, earthquake measuring 6.8 on the Richter scale, claimed one life with
property losses estimated at Nu.1.2 billion (US$24.46 million); and a devastating fire in June 2012
totally consumed the Wangdue-Phodrang Dzong, a 374 years old cultural landmark.
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resilience and management will therefore be given utmost importance in the
Eleventh Plan.
2.2.4 Promotion of Good Governance
Significant achievements have been made in the promotion of good
governance. Our democratic process has been further strengthened with the
successful conduct of local government elections and second Parliamentary
elections in 2011 and 2013 respectively. Key constitutional bodies have been
established and laws and regulations have been put in place to assist them
in fulfilling their mandates. Further, several initiatives have been taken to
strengthen public service management through civil service reforms and by
enhancing efficiency in the delivery of public services.
Transparency, financial accountability and control of corruption have been
enhanced, through regular audits (600 audits in 2012) by an independently
functioning Royal Audit authority; proactive measures by the independent
Anti-Corruption Commission (ACC), which include the enactment of Anti-
Corruption Act 2011 and the adoption of Gift Rules 2009 and the Asset
Declaration Rule 2012; and fostering the growth of a free and responsible
media, that includes 12 newspapers, six radio stations and two television
news channels. Most recently the Right to Information Bill was tabled in
Parliament in September 2013.The empowerment of women, gender equality
and the promotion of civil societies has also been an integral part of our
efforts to promote good governance through initiatives such as the National
Plan of Action for Gender (NPAG), 2008-2013; the Domestic Violence
Prevention Act 2013; building capacities for women leaders; the Civil Society
Organizations Act, 2007; and the establishment of the Civil Society
Organizations Authority in 2009.
Notwithstanding the achievements, our efforts in promoting good governance
needs to be consistent and relentlessly pursued as this pillar serves as the
fundamental basis for the other three pillars of GNH and is vital for
establishing a vibrant democracy. In particular, strengthening and
supporting institutions combating corruption will be accorded high priority.
While Bhutan the National Integrity Assessment (NIA) Survey 2012 reports
national integrity score of 8.37 on a scale of 0-10 5 and Transparency
International’s 2012 Corruption Perception Index ranked Bhutan a
50 denoting highly corrupt and 10 highly transparent
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respectable 33rd among the 176 nations, an improvement of five positions
from 38th in 2011, there can be no room for complacency when it comes to
addressing this challenge
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3.1 Macroeconomic Situation
Bhutan's economy remained largely unscathed by the global economic
downturn in 2009, primarily due to its limited integration with the global
economy. While in most countries, the global downturn resulted in increased
unemployment and setbacks in poverty reduction efforts, Bhutan saw a drop
in its unemployment rate and the Government's poverty reduction efforts
remained largely on track.
Although Bhutan weathered the global economic crisis, since 2011 the
economy has been experiencing unprecedented macroeconomic policy
challenges arising from a combination of related factors that include a surge
in capital inflows for hydropower development, rapid credit expansion,
successive build-up of current account deficits with India and consequently
an acute and persistent shortfall in Rupee reserves that has yet to be
effectively addressed. Remedial policy measures to address the lingering
Rupee shortfall has resulted in a severe credit crunch in the banking sector,
which continues to adversely affect private investment and growth.
Managing the rupee shortage is therefore of high priority to ensure a sound
macroeconomic policy framework for effective implementation of the
Eleventh Plan.
3.1.1 Real Sector
The economy has rendered a strong performance, with real growth rate
averaging 8 percent per annum over the five years of the Tenth Plan, fueled
primarily by huge Government investments, particularly in the hydropower
sector. The lack of economic diversification, which has resulted in a situation
of jobless growth, however poses significant macroeconomic challenges. This
has prompted the government to initiate efforts towards economic
diversification that will be intensified during the Plan period. Addressing key
constraints to private sector development through targeted initiatives such
as RISE (Rapid Investments in Selective Enterprises) to operationalize the
CHAPTER 3: MACROECONOMIC SITUATION AND OUTLOOK
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EDP 2010 will form the cornerstone of the government’s diversification
strategy.
Despite a relatively high savings rate of 33.7 percent, Bhutan’s Gross
Domestic Savings (GDS) has been inadequate to finance the significantly
higher investment rate of 52.3 percent during the Tenth Plan. Most
significantly, GDS has exhibited high volatility, experiencing a significant
decline to -5.73 percent in the fiscal year 2008/09 which was followed by a
growth spike to 43.17 percent in 2010/11. Smoothening the growth in GDS
to ensure greater predictability and effective intermediation through the
financial sector to promote private investments is therefore a major issue of
concern. Gross fixed capital formation grew annually at 7.2 percent during
2001-2011 and by 12.5 percent a year since 2007. Similar to savings, the
high investment rate also needs to be assessed in light of the declining
returns to capital and the high volatility in investments.
Robust growth performance of the economy, increase in disposable incomes,
and the rapid expansion of credit have contributed to a surge in imports and
successive current account deficits. Given limited domestic capacity, there
are concerns that the Bhutanese economy is overheating, putting upward
pressures on prices, wages and the real exchange rate. Inflation measured
by CPI averaged about 7.7 percent per annum during the Tenth Plan. The
year-on-year inflation rate peaked to 13.53 percent in the 2nd quarter of
2012 and has and since then been on the decline.
3.1.2 External Sector
The Tenth Plan period witnessed high volatility and a widening of current
account deficits ranging from 1.2 percent of GDP in 2008/09 to 27.6 percent
in 2010/11, which culminated in an acute shortage of Indian Rupee (INR)
reserves. While exports increased by 30.5 percent in the last five years
(2008/09 - 2012/13), imports grew by 132 percent during the same period,
mainly due to a surge in hydropower related imports and the rapid
expansion of credit for consumption related imports. A research study by
UNDESA on the underlying causes of the INR shortfall points to a
combination of factors. These include a surge in unsterilized hydro-related
inflows which have sparked a credit multiplier effect with a strong import
bias and thereby created a significant mismatch in INR inflows and outflows.
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The overall balance of payments position during the Tenth Plan has however
been positive, with successive Capital Account surpluses financing the
Current Account deficits. However, close to 74 percent of the Net Capital
inflows came in the form of external borrowings.
The long term outlook of the external sector appears bright with significant
increases in export revenues expected with the commissioning of hydro
projects. However, caution needs to be taken and appropriate measures
identified in the medium term to monitor external financing risks, given the
alarming increase in short term debt instruments that come at a
considerably high interest rate of 10 percent. A key issues arising from the
external imbalances is that of defending the Ngultrum-INR peg, which has
become extremely challenging given the magnitude of the imbalances in
recent years and the high costs of short-term borrowings to address them.
3.1.3 Monetary Sector
The monetary policy environment in Bhutan has come under intense
scrutiny with the emergence of a chronic INR shortfall and subsequent
liquidity crunch in the financial system that has severely affected the
economy since 2011. This lingering problem that has spilled over into the
Eleventh Plan has prompted the need for monetary policy objectives to be
better aligned with the longer term development objectives of the country.
Of particular significance has been the high growth in broad money (M2),
mainly due to the surge in unsterilized hydro power inflows, which in turn
has contributed to a rapid expansion of domestic credit, averaging 32.3
percent annually from 2008 to 2012. Most significantly, within the span of a
year net domestic credit increased by 176.8 percent, from Nu 6.8 billion in
2008 to Nu 18.9 billion in 2009. The rapid expansion of domestic credit has
largely translated into imports, thereby draining of INR reserves and exerting
pressure on the peg. Although central banks typically sterilize inflows or use
various types of macro-prudential tools to contain excessive credit growth, it
appears that there were little or no monetary policy interventions by the
RMA during 2009-2010 to curb excessive credit growth.
Another challenge of the monetary sector is that the banking sector has been
characterized by high volatility in its liquidity, with a volatility coefficient of
0.76 during the Tenth Plan.
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An increasingly important aspect of monetary policy in Bhutan involves the
management of foreign reserves. Convertible currency constitutes close to 90
percent of our foreign reserves despite the fact that a major share of our
current account transactions are denominated in INR. The lingering INR
shortfall and its effects provides a compelling argument for a more dynamic
reserve management system that appropriately balances the composition of
our reserves between INR and other convertible currencies and ensures the
sustainability of the pegged exchange rate regime.
3.1.4 Fiscal Sector
The government’s fiscal performance has also come under scrutiny as
excessive spending by the government has been cited as a key cause of the
rupee crunch. With government expenditure averaging 39 percent of nominal
GDP and the size of recent hydro power investments being nearly equivalent
to GDP, such concerns are not without merit. However, expenditure on the
current account is offset to a large extent by corresponding inflows of aid
and revenue from hydropower sales. Moreover, austerity measures that effect
critical investments in public infrastructure and services would undermine
broader national goals of inclusive growth and sustainable development.
Nevertheless, various reforms to broaden the tax base and rein in
unproductive and recurrent expenditure would help in addressing current
macroeconomic imbalances. The ceiling for fiscal deficit during the Eleventh
Plan has been set significantly lower at 3 percent of GDP to ensure that the
government limits deficit financing in view of the current liquidity crunch in
the domestic market.
The macroeconomic challenges that transpired during the Tenth Plan period
have also highlighted the need for effective coordination between monetary
and fiscal authorities. For a small open economy like Bhutan, such
coordination is critical to ensure a stable macroeconomic environment
through periodic joint assessments of the real, fiscal and monetary sectors;
formulation of mutually reinforcing preventive measures; and ensuring
effective remedial measures during times of crisis. The lingering INR crunch
has brought the importance and need for such coordination to the fore.
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3.2 Macro-economic outlook
3.2.1 Real Sector Outlook
Real GDP is projected to increase by an average of close to 12 percent per
annum, with the hydropower sector driving most of the growth. While the
projections show a very optimistic growth scenario, the macroeconomic
challenges of recent years underscores the need to prudently address
various issues in the real, external and monetary sectors. Given the huge
revenue gains expected from the hydropower sector, there is also a growing
imperative for preventive measures against the phenomenon of 'Dutch
disease". In this regard, the prudent management and use of hydropower
inflows towards an effective strategy for economic diversification,
productivity enhancement through knowledge and skills development and
employment creation will be critical.
3.2.2 External Sector Outlook
The external sector is expected to worsen with current account deficits
averaging 28 percent of GDP per annum over the Plan period and as high as
34.7 percent of GDP in 2015/16, largely on account of imports for
hydropower projects. External borrowing will continue to be the dominant
source of financing the Current Account deficit, accounting for
approximately 60 percent of all inflows. Gross international reserves are
projected to improve from USD 627.9 million as of 2011/12 to USD 1,049.5
million by 2017/18 which will be sufficient to cover around 20 months of
essential imports.
3.2.3 Fiscal Outlook
The Eleventh Plan expenditure outlay is estimated to be about Nu.213 billion,
of which 71 percent is allocated to the central agencies and 29 percent to the
local governments. Of the total outlay, the share of current expenditure is
Nu.121 billion while capital expenditure is Nu.92 billion, which is an
increase of 63 percent and 24 percent over that of the Tenth respectively.
Resources are projected to increase to Nu.198 billion, of which Nu.140
billion is on account of domestic revenues while Nu.58 billion is on account
of external grants. As such, the projected fiscal deficit stands at Nu.15
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billion, which is equivalent to 2 percent of GDP and will mainly be covered
through concessional borrowings. Domestic resources are projected to
increase by 55 percent due to the commissioning of three hydro-power
projects while grants are projected to increase by 13 percent over that of the
Tenth Plan, mainly on account of increase in Government of India’s
assistance from Nu.34 billion to Nu.45 billion. The overall level of assistance
from other development partners is projected to decline as a result of
phasing out of assistance by some partners.
The total public debt stock, 99 percent of which is on account of external
borrowings, is expected to increase by 135 percent in the Eleventh Plan,
from Nu.110 billion in 2013/14 to Nu.259 billion in 2017/18.Of the total
debt, 80 percent is denominated in INR on account of borrowings for
hydropower projects, which are expected to increase by 184 percent from
Nu.73 billion to Nu.206 billion. Although debt has been increasing
substantially and is expected to increase from 96 percent of GDP in 2013 to
121 percent of GDP by 2018, Bhutan's debt stock is classified as sustainable
since the debt is largely for self-liquidating hydro-power projects. The debt
servicing ratios as a percentage of GDP and exports are also within
sustainable thresholds and expected to average about 8 per cent of GDP and
19 percent of exports over the Eleventh Plan period.
Since inclusion of hydropower debt servicing obligations presents a more
favorable fiscal outlook then it actually is the above fiscal projections exclude
hydropower operations. For instance, when hydropower operations are
included in the fiscal projections, domestic revenues are projected to
increase by about 67 percent as compared to 55 percent when hydropower is
excluded, thereby inflating the level of revenue projections. Similarly, the net
lending projections present a favorable fiscal space with a fiscal deficit of just
Nu.112 million against a projection of Nu.15 billion without hydropower
operations, creating an artificial fiscal space.
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4.1 Eleventh Plan Objective
The underlying objective of the Eleventh Plan is to achieve “Self-reliance and
Inclusive Green Socio-Economic Development”. Self-Reliance is defined as
being able to meet all of our national development needs as articulated
through our Five Year Plans by 2020. Inclusive Social Development requires
reducing poverty and inequality by enhancing the standard of living and the
quality of life of the most vulnerable sections of our society. Green
Development means ensuring carbon neutral development at all times.
4.2 Strategic Thrust Areas
Pursuant to the objective of “Self Reliance and Inclusive Green Socio-
Economic Development” the three strategic thrust areas of the Eleventh Plan
are inclusive social development, accelerated green economic development
and strategic infrastructure development.
4.2.1 Inclusive social development
To address the disparities that exist in terms of poverty, health and
education outcomes among Dzongkhags, Gewogs, gender and area of
residence, inclusive social development has been identified as one of the
thrust areas of the Eleventh Plan. The main focus of this thrust area will be
to further reduce poverty, both in terms of income and multidimensional
poverty, address emerging social issues and improve social outcomes in the
health and education sectors.
Ensuring inclusive development requires that efforts are targeted as
evidently broad based national level programmes often miss out the most
vulnerable and isolated sections of our population. As such, the Eleventh
Plan will focus on targeted programmes such as:
The Rural Economy Advancement Programme (REAP)seeks to target
extreme poverty in 126 villages identified during the Tenth Plan as being
CHAPTER 4: THE ELEVENTH PLAN
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most marginalized. REAP focuses on sustainable livelihoods through
programmes for crop diversification to enhance food security and
nutritional intake; generating supplementary income through skills
development in non-farm livelihood activities; and building social capital
through formation of self-help groups for mutual collaboration. REAP I
was implemented as a pilot during the Tenth Plan where targeted support
was provided to 10 villages. Given its success, 116 villages have been
identified to be beneficiaries under REAP II during the Eleventh Plan.
The National Rehabilitation Programme (NRP)is a programme initiated
and spearheaded by the Office of Gyalpoi Zimpon with the objective to
reduce poverty by enhancing the productive asset base of marginalized
households through the provision of adequate land, transitional and
livelihood support and socio-economic facilities. Beneficiaries are
provided with a maximum of 5 acres (including residential land)
depending on the family size, number of able bodied persons dependent
on land and productivity of the land. In addition, transition support such
as temporary shelter, essential food supplies in the initial phase of
resettlement, agricultural inputs, health and education services, capacity
building for sustainable livelihood and free construction material are also
provided.
The Local Government Empowerment Programme (LGEP) seeks to
ensure that all local governments have basic facilities and necessary
financial resources to effectively deliver on their mandate.
The Special Programme for Vulnerable Groups caters to the needs of
senior citizens, differently abled persons, and vulnerable youth. Activities
will include facilitating construction of Tsamkhangs, development of
social protection schemes, and family friendly policies.
Targeted health and education interventionswill be pursued to
improve health and education outcomes. Innovative mechanisms to reach
the unreached will be developed for Dzongkhags with poor health and
education outcomes. Rationalization and consolidation of education
facilities will be explored to improve teacher to pupil ratio, educational
facilities, and address issues of informal boarding. Similarly, in the
health sector, programmes to reduce waiting time by improving doctor to
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patient ratio, improving medical facilities, and enhancing the use of IT
enabled services will be pursued.
4.2.2 Green Accelerated Economic Development
The emphasis of this thrust area will be on economic diversification with a
focus on development of non-hydropower sectors and fostering the growth of
a dynamic private sector that creates productive employment opportunities
and catalyzes Bhutan’s transition to a green economy. Key attributes of a
green economy include low carbon emissions, efficient resource use, and
socially inclusive economic growth and investments, which are closely
aligned with our development planning framework. The main programmes
for this thrust area include:
The Economic Stimulus Programme: The primary objective of the
Programme is to address the present credit crunch and ensure that
financing is available for targeted productive sectors by injecting Nu.5 billion
in liquidity through the financial sector.
The Rapid Investment in Selected Enterprises (RISE) Programme: RISE
is a targeted programme to accelerate growth and achieve the objective of
self-reliance through economic diversification. The Programme will identify
up to 5 non-hydro priority sectors in consultation with the relevant
stakeholders for end-to-end interventions in the Eleventh Plan. The criteria
for selection of the priority sectors include employment generation, revenues
to the government and returns to entrepreneurs. The tentative sectors
identified are tourism, agro-processing, construction, small and cottage
industries including cultural industries such as textiles, arts and crafts and
manufacturing.
The focus of the tourism sector will be to achieve higher yields per tourist,
increase tourist arrivals, expand tourist destinations throughout the country
and promote a year round seasonal spread in tourism. The initiative will
emphasize on strengthening tourism governance, developing new products,
facilitating development of tourist infrastructure and amenities in south,
central and eastern Bhutan and concerted efforts at promotion and
marketing to ensure that at least 20 percent of the tourist visit eastern part
of the country.
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The emphasis for developing agro-processing industries will be on cottage
and SMEs aimed at improving farmers’ income, import substitution and
export promotion and promoting commercial farming.
With seven new mega hydroelectric projects planned for the Eleventh Plan,
the construction sector provides an excellent opportunity to realize the goal
of full employment. Interventions in this sector will be directed towards
making it an attractive sector for youth employment by promoting
mechanization of the construction industry, improving working conditions
and facilitating higher remunerations by enhancing productivity through
skills development. Additionally, initiatives will be undertaken to promote
the use of local materials to reduce imports and strengthen the capacity of
local construction industries to participate in large infrastructure projects.
Cultural industries will be promoted by ensuring an enabling environment
for business startups and addressing supply side constraints such as
product development and quality assurance, capacity building of artisans
and craftsmen in textiles and arts and crafts, access to finance, availability
of raw materials and marketing.
To revitalize the manufacturing and mining sector, efforts to improve the
climate for doing business will be intensified through legislation and policy
support. Addressing issues such as access to finance, particularly for SMEs,
double taxation of dividends, excise refund, credit rating for Bhutan,
reduction in turn-around-time for Government to Business (G2B) services
and development of capital markets will be given priority. The development of
strategic infrastructure will also be accelerated.
A detailed blueprint of interventions under RISE will be developed, which will
include clear time lines, targets, resource requirements and accountability
structures to deliver on the initiatives. RISE will be rigorously monitored by
the Cabinet and Committee of Secretaries to expedite smooth and timely
implementation of activities.
Optimizing Opportunities of Accelerated Hydropower Development:The
Eleventh Plan will seek to harness the socio-economic opportunities arising
from the three hydropower projects already under construction and seven
new projects in the pipeline by promoting greater participation of the
domestic private sector and work force and aligning the corporate social
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responsibility initiative of power projects with the needs of local communities
and plans of local governments. Furthermore, to maximize the benefits of
additional firm power that will be available with the commissioning of three
new hydropower projects towards the end of the Eleventh Plan and to
enhance scale and competiveness of our products, the establishment of large
public companies in power intensive industries will be explored.
Enabling environment: Efforts to create an enabling environment for doing
business will be intensified through simplification of procedures; enhancing
efficiency in reviewing, streamlining and enforcing legislation, policies, rules
and regulations; and facilitating infrastructure investments such as surface
and air transport, dry ports and industrial estates.
4.2.3 Strategic Infrastructure Development
The thrust area on strategic infrastructure will focus on developing urban,
transport, ICT, energy, economic, social and cultural infrastructure that are
crucial for achieving the overall goals and objectives of the Eleventh Plan,
particularly to support and complement efforts under the other two thrust
areas and ensure that development is spread equitably across the country.
Some of the major activities include the development of 2 regional hubs and
infrastructure facilities and services in Dzongkhag headquarters and towns
in the eastern region based on a set of criteria that includes economic
potential, existing socio-economic facilities, land availability, and water;
expansion and improvement of road and air connectivity; exploration of the
feasibility of alternate modes of transport such as ropeways and waterways;
expansion ICT infrastructure including a national data centre, government
intranet system, national broadband master-plan, fiber optic connectivity
and facilities for G2C, G2G and G2B services; expansion of energy
infrastructure through the accelerated development of 10,000 MW of
hydropower, construction of transmission lines and substations and
expansion of rural electrification; the development of dry ports in major
industrial belts in the east, south eastern and south western regions; and
construction of educational and health infrastructure and Dzongs.
4.3 National Key Result Areas & Key Performance Indicators
The Eleventh Plan has identified 16 National Key Result Areas (NKRAs) that
need to be achieved over the next five years to realize the Eleventh Plan
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objective of “Self-reliance and Inclusive Green Socio-Economic Development”.
The 16 NKRAs are categorized under each of the four pillars of GNH with
corresponding Key Performance Indicators (KPIs) comprising a baseline and
target to monitor and measure their performance.
All central agencies and local governments contribute towards delivery of the
16 NKRAs through their respective Sector Key Result Areas (SKRAs) and
Dzongkhag Key Result Areas, which are similarly categorized under each of
the four pillars of GNH with corresponding KPIs to monitor and measure
their performance.
4.3.1 Sustainable and Equitable Socio-economic Development
Four of the NKRAs fall under the pillar for Sustainable and Equitable Socio-
economic Development as follows:
NKRA 1 defined as Sustained Economic Growth;
NKRA 2 defined as Poverty Reduced and MDG Plus achieved;
NKRA 3 defined as Food Secure and Sustained; and
NKRA 4 defined as Full Employment.
The corresponding Key Performance Indicators (KPIs) against which the
achievement of these four NKRAs will be measured are listed in Annex 1.
4.3.2 Preservation and Promotion of Culture
Two of the NKRAs fall under the pillar for Preservation and Promotion of
Culture as follows:
NKRA 5 defined as Strengthened Bhutanese Identity, Social Cohesion and
Harmony; and
NKRA 6 defined as Indigenous Wisdom, Arts and Crafts Promoted for
Sustainable Livelihood.
The corresponding KPIs against which the achievement of these two NKRAs
will be measured are listed in Annex-2.
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4.3.3 Conservation and Sustainable Utilization and Management
of the Environment
Four of the NKRAs fall under the pillar for Conservation and Sustainable
Utilization and Management of the Environment as follows;
NKRA 7 defined as Carbon Neutral/Green and Climate Resilient
Development;
NKRA 8 defined as Sustainable Utilization and Management of Natural
Resources;
NKRA 9 defined as Water Security; and
NKRA 10 defined as Improved Disaster Resilience and Management
Mainstreamed.
The corresponding KPIs against which the achievement of these four NKRAs
will be measured are listed in Annex-3.
4.3.4 Promotion of Good Governance
Five of the NKRAs fall under the pillar for Promotion of Good Governanceas
follows:
NKRA 11 defined as Improved Public Service Delivery;
NKRA 12 defined as Democracy and Governance Strengthened;
NKRA 13 defined as Gender Friendly Environment for Women’s
Participation;
NKRA 14 defined as Corruption Reduced;
NKRA 15 defined as Safe Society; and
NKRA 16 defined as Needs of Vulnerable Group Addressed.
The corresponding KPIs against which the achievement of these six NKRAs
will be measured are listed in Annex-4.
4.4 Monitoring and Evaluation
The monitoring and evaluation of the Eleventh Plan will be based on the
National Monitoring and Evaluation System (NMES) framework comprising
the monitoring and evaluation institutional set-up and procedures and the
Planning & Monitoring system (PlaMS). The Eleventh Plan will give particular
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emphasis to institutionalize the evaluation of programmes and projects
which are currently limited to those that are donor funded. Further, the
Mid-Term Review of the Eleventh Plan will assess progress in the
implementation of the Plan and make necessary adjustments in policies,
programmes and projects and reallocation of resources.
Two Round Table Meetings (RTM) will be held; one during the inception of
the Eleventh Plan to sensitize development partners on the priorities and
policies and the other during the mid-term of the Plan to share progress in
implementation. Additionally, bilateral consultations programme and project
specific reviews, and monitoring and evaluation meetings will be held
between the Royal Government and development partners.
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To achieve the 16 NKRAs, Sector Key Result Areas (SKRAs) with
corresponding KPIs have been defined for each sector. These have also been
formulated based on the four pillars of GNH to ensure that all sectors
contribute towards strengthening these pillars.
5.1 Sustainable and equitable socio-economic development
This pillar represents the Eleventh Plan priorities of the social and economic
sectors which include Health, Education, Employment, Human Resource
Development, RNR, Energy, Trade & Investment, Tourism, ICT &
Communications, Roads & Bridges, Human Settlement & Housing and
Construction.
Education Sector: The key issues and challenges of this sector include last
mile access to education, disparities in education outcomes at the local
levels and catering to the special needs of children with disabilities. A major
issue of concern is the relevance and quality of education. Although
improvements in efficiency indicators indicate that the quality of education
has improved over the years, a number of reports reveal that an increasing
numbers of students, including graduates from vocational and tertiary
institutions, are inadequately prepared to enter the workforce, which has
resulted in a paradoxical situation of relatively high levels of youth
unemployment and a critical skills shortage at the same time. Evidently,
changing realities, both domestic and external, are placing a demand on our
education system to achieve higher standards at a scale that has never been
met or required before.
According to Royal Education Council's (REC) research study on the quality
of education in Bhutan, the overall trend indicates that there is a big gap
between the current and the desired state in the quality of outcomes and
processes, with under-prepared teachers, lack of appropriate curricular
resources, and poor instructional leadership and in-service training as the
three critical reasons for the persistence of ineffective classroom practices
CHAPTER 5: SECTORAL PLANS
TWELFTH ROUND TABLE MEETING FOR BHUTAN, 11-12 December 2013, Thimphu
33
across schools and arguably also across vocational and tertiary education
institutions. A major challenge, which is also related to the above, is the
sustainability of financing the expenditure of the education sector.
The main objectives of the education sector in the Eleventh Plan are to
ensure quality of education service delivery; ensure education sustainability;
and achieve MDG plus. Strategies include targeted intervention programmes,
rationalization of schools through a consolidation programme; enhancing
professional development for teachers; improved service delivery and
promoting private participation.
Employment: Although the unemployment rate has declined from to 4.2
percent in 2008 to 2.1 percent in 2012, major challenges with regard to the
quality of employment remain. The Labor Force Survey 2012 indicates that
the quality of employment remains poor with the agriculture and forestry
sectors being the largest employer. Furthermore, only 23.9 percent of those
employed are regular paid employees and only 33 percent of those employed
earned monthly incomes of Nu.10,000 or more.
There is also a lack of synergy between the education system and manpower
needs given the shortage of skilled manpower across sectors, and a
mismatch of employee aspirations and jobs available given significant import
of labor, particularly in the construction sector. Related to this, a key
challenge of the Eleventh Plan is the creation of new jobs given with
approximately 120,000 youth, of which about 60 percent will have education
qualifications of Class X and higher, seeking jobs over the next five years.
The main objective of this sector is to achieve full and productive
employment.
Strategies to achieve this objective include implementation of the Rapid
Investments in Selected Enterprises (RISE) programme, which will focus on
prioritized non-hydro sectors such as agro-processing, tourism, construction,
manufacturing and cottage and small industries that promote employment
opportunities; making jobs in the construction sector more attractive to take
advantage of the construction of several new mega hydroelectric projects in
the Eleventh Plan; creating an enabling environment to facilitate creation of
new jobs in the manufacturing and cottage and small industries sectors.
TWELFTH ROUND TABLE MEETING FOR BHUTAN, 11-12 December 2013, Thimphu
34
Human Resource Development & Management: The key issues and
challenges of this sector are an unsustainable growth in the size of civil
service. While the overall civil service size has been on the rise, the
percentage of civil servants in various position levels not meeting the
minimum qualification requirements remains high and certain sectors
continue to face acute shortage of professionals, including in health,
education, engineering and ICT.
The primary objective of this sector is to create a highly skilled and well
qualified talent pool of human resources to develop Bhutan as knowledge
based society.
Strategies to achieve this objective will focus on creating a pool of skilled
manpower aligned to meet the objectives of EDP 2010, with an emphasis on
addressing the acute shortage of skilled professionals such as doctors,
educationists, engineers, architects and ICT specialists.
Health Sector: The key issues and challenge of this sector include delivering
quality health care; acute shortage of all categories of health personnel
against the growing need to expand health services; growing incidence of
non-communicable diseases; spread of HIV/AIDS, TB, Malaria and
outbreaks of Neglected Tropical Diseases (NTDs; maternal and child health;
nutrition; and sustainable healthcare financing.
The main objectives of this sector in the Eleventh Plan are to improve access
to quality and equitable health services, strengthen preventive, rehabilitative
and palliative health services and promote efficiency and effectiveness in
financing and delivery of health services.
Strategies to achieve these objectives include greater emphasis on preventive
and promotional measures; human resources development; sustainable
health financing; standardization of e-Health and interoperability; and
consolidation of health infrastructure.
Renewable Natural Resources (RNR) Sector: The key issues and
challenges of this sector are loss of agriculture land and declining
productivity of this sector (a compound rate of 1.84 percent over the last 27
years).
TWELFTH ROUND TABLE MEETING FOR BHUTAN, 11-12 December 2013, Thimphu
35
The key objectives of this sector in the Eleventh Plan Objectives are to
enhance food and nutrition security; improve rural livelihood; accelerate and
sustain RNR sector growth; and promote sustainable management and
utilization of natural resources.
The strategies to achieve these objectives include targeted and commodity
focused interventions; foster transition from subsistence to commercial
agriculture; ensure an enabling environment; and promote private sector
participation and contract farming.
Tourism Sector: The key issues and challenges of this sector include
accessibility, seasonality, the lack of regional spread and product
diversification, shortage of skilled manpower in the hospitality industry,
qualified and experienced professionals in product development, destination
marketing and other tourism-related services. The sector is still largely
dependent on international tour operators for arrivals.
The main objective of this sector in the Eleventh Plan is to continue
promoting Bhutan as a high value low impact tourist destination.
The key strategy for this sector will be to promote Bhutan as an exclusive
destination based on high level of services, diversified tourism products and
improved tourism infrastructure facilities. The focus will be on regional
spread, addressing seasonality issues and community participation.
Trade, Industries & Mines Sector: The key issue in terms of trade is the
lack of product diversification of our exports, with about 80 percent of total
exports consisting of electricity, mineral products and base metal, which are
all highly vulnerable. Diversification of our exports into agricultural and
non-mineral and non-metal products requires substantial investments. In
terms of industries, about 85 percent of Bhutanese industries are small and
micro industries, which are constrained by lack of access to capital,
technology, markets and labor resulting in low volume, high cost and inferior
quality products. The mining sector suffers from the absence of a clear
mineral development policy and human resource constraints.
The main objectives of this sector in the Eleventh Plan are to create an
enabling environment for private sector development and stimulating export
growth; ensure green and sustainable development of SME’s, private sector
TWELFTH ROUND TABLE MEETING FOR BHUTAN, 11-12 December 2013, Thimphu
36
development and industries; ensure sustainable geo-scientific investigation
and mineral development; and prevent and reduce risks associated with geo-
hazards.
Strategies to achieve these objectives include a coordinated implementation
of the Economic Development Policy 2010, and the formulation of an
accelerated green economic development plan that is focused on a few key
sectors and supported by necessary resources for its implementation.
Energy sector: This sector is the lynchpin of our economy, accounting for
about 18 percent of total revenues and about 20 percent of GDP. The key
issues and challenges of this sector include high upfront investment costs
for hydro-power projects, which pose significant challenges in terms of
raising financing for the project; maintaining the balance between the needs
of domestic consumption and export earnings and the demand by
households and industries; the viability of the cost of electricity generation
and supply and current tariff levels; infrastructure development; system
reinforcement; building human resource capacity; and GLOF and
hydrological risks.
The main objectives of this sector in the Eleventh Plan are to increase energy
security and the sector's contribution to revenue, economic growth and
employment and to strengthen hydrometeorology data to facilitate reliable
weather, GLOF and water related forecasting.
A key strategy to achieve these objectives is the creation of a new Ministry of
Energy, which will be vital to manage the accelerated development of
hydropower projects.
Information Communication & Technology and Media Sector: The key
issues and challenges of this sector include the significantly higher
telecommunication tariffs than those in the region which negates the other
comparative advantages; international redundancy being currently limited
solely through Siliguri, India; and a shortage of qualified ICT professionals,
all of which pose a challenge for Bhutan to serve as a potential hub for ICT
and ICT enabled services.
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37
The main objectives of this sector are to promote Bhutanese information
society, strengthen good governance, enhance economic development and
develop a responsible, vibrant and creative information and media industry.
The main strategies to archive these objectives are the implementation of the
e-Gov Master Plan, capacity building and expansion of ICT infrastructure.
Transport Sector: The key issues and challenges of this sector are
enhancing the capacity of Paro airport to serve double the number of
passengers, flights and air cargo; enhancing road safety with the number of
vehicles having doubled in the last five years and motor vehicles accidents
increasing from 696 in 2005 to 1,730 in 2011.
The main objective of this sector in the Eleventh Plan will be to increase
access to safe, reliable, affordable, eco-friendly, convenient transport services.
Strategies to achieve this objective include strengthening the capacity of Paro
International Airport, improving the three domestic airports, expansion of
air services to to and from international destinations, increasing access to
public transportation to rural areas and eco-friendly mass public
transportation services in urban areas, and improving driver licensing
procedures, motor vehicle fitness standards, public safety awareness
campaigns and equipping road safety authorities with necessary equipments
and tools to monitor road safety.
Construction: The key issues and challenges of this sector are low demand
for construction sector jobs due to low wages, lack of job insecurity, and low
levels of mechanization and limited design, planning and supervision
capability due to shortage of qualified professionals and a lack of basic tools
and technology which result in relatively high costs of construction, poor
quality of work, and high maintenance costs.
The main objective of this sector in the Eleventh Plan is to enhance the
quality of construction industry through the introduction of new energy
efficient technology, mechanization and human resource development.
Strategies to achieve this objective include training and capacity building of
professionals in the construction sector, consolidation of contract packages,
promotes mechanization of construction and use of local construction
TWELFTH ROUND TABLE MEETING FOR BHUTAN, 11-12 December 2013, Thimphu
38
materials, special service conditions to make construction jobs attractive,
and aligning vocational training programmes to the needs of construction
industry.
Roads & Bridges Sector: The key issues and challenges of this sector are
road safety; high transport costs; and financial sustainability of maintaining
the vast network of road constructed and blacktopping of unpaved roads.
The two main objectives of this sector are to increase efficiency and reliability
of road infrastructure to facilitate economic development and strengthen
national security and ensure sustainability through mechanization and
greater private sector participation.
Strategies to achieve the objectives include up gradation of road
specifications and standards through geometric improvements and regular
maintenance; exploring tunneling of certain stretches of the highways; and
involvement of the private sector in the maintenance of roads to ensure
financial sustainability.
Human Settlement and Housing Sector: The key issues and challenges of
this sector are a lack of clear legislation and polices in human settlement
planning, gaps in inter-sectoral coordination; limited human resource
capacity, both in terms of numbers and skills; and housing shortages given
that the National Housing Development Corporation housing stock is a
modest 1,122 units.
The shortages are particularly severe in Thimphu, Phuentsholing, Gasa,
Lhuentshe and Samdrup Jongkhar, where for example, many Bhutanese in
Phuentsholing are compelled to live across the border while in Gasa and
Lhuentshe civil servants are living in temporary makeshift huts. While
increasing the housing stock is imperative, making it affordable, particularly
for the low and middle income group, is a major challenge.
The main objectives of this sector are to ensure balanced and sustainable
development of human settlements; improve quality of urban infrastructure
and services; and provide safe, aesthetic, adequate and affordable housing.
Strategies to achieve these objectives include planned and sustainable
development of human settlements through new legislation and policies and
TWELFTH ROUND TABLE MEETING FOR BHUTAN, 11-12 December 2013, Thimphu
39
improved rules and regulations; accelerated development of valley plans,
regional hub plans and rural-urban development plans in order to contain
rural urban migration; capacity building of engineers, architects and
planners; adoption of new technologies and design innovation to reduce the
cost of construction while ensuring quality; increase low income housing for
rental; and promotion of home ownership.
Emerging Social Challenges: With development Bhutan is confronted with
new social issues such as those related to youth, senior citizens, single
parents, orphans, differently abled persons, domestic violence and crime.
The lack of a central agency that is responsible for coordinating efforts poses
a major challenge in effectively addressing these emerging issues. The efforts
being undertaken under the initiative of various sectors and civil society
organizations and associations lack proper coordination as well as technical
and financial resources. There is also a paucity of studies, baseline data,
and surveys to clearly ascertain the situation and recommend appropriate
interventions.
The main objective to address emerging social challenges will be to ensure
access to integrated critical services covering health, education, justice and
protection, counseling, welfare and rehabilitation.
Strategies will include the conduct of detailed studies on these emerging
social issues to enable appropriate intervention programmes and strengthen
partnerships with CSOs.
Sports: A key issue for the development of sports is that despite more than
three decades of establishment of the National Sports Association in 1972
and the Bhutan Olympic Committee (BOC) in 1983, a focused and coherent
strategy for developing this area remains lacking.
Major challenges in this sector include lack of infrastructure facilities,
human resources capacity and financial sustainability. The main objectives
of this sector in the Eleventh Plan are to establish a representative and
organized sport system that fosters excellence in sports and promotes
recreation throughout the country; promotes a vibrant sporting culture that
contributes to addressing youth issues, lifestyle related diseases,
employment, and community cohesiveness.
TWELFTH ROUND TABLE MEETING FOR BHUTAN, 11-12 December 2013, Thimphu
40
The main strategy will be the implementation of the “Strategic Vision and
Road Map for Development of Sports in Bhutan” by the BOC.
5.2 Preservation and Promotion of Culture
The Eleventh Plan takes cognizance of culture as an “evolving dynamic force”
and the need “to strengthen and facilitate the continued evolution of
traditional values and institutions that are sustainable as a progressive
society”6. As such, the preservation and promotion of culture is accorded
priority not just for strengthening our identity but is an economic imperative
to address poverty through the development of cultural industries.
A major issue and challenge to the preservation and promotion of culture is
related to rapid growth in rural-urban migration, particularly among the
youth. Consequently, many rural communities are confronted with the
challenge of keeping their age old local customs and traditions, some of
which are in danger of extinction. Another major issue is that with most of
our Dzongs serving as living historical monuments, the increasing use of
modern appliances within their premises poses a serious fire hazard, as was
evident from the fire destruction of the Wangduephodrang Dzong. The
promotion of cultural industries which is vital for poverty alleviation is
confronted with challenges arising from access to financing, poor economies
of scale, quality of products and access to markets.
The main objectives of this sector are to strengthen national identity, social
cohesion and harmony; and promote indigenous wisdom, arts and crafts for
sustainable livelihood.
Key strategies to achieve these objectives are strengthening institutional
capacity for inventory and documentation of oral traditions, history, arts,
living expressions, and architectural knowledge; preservation and promotion
of arts, social practices, Tshechus, rituals and festivals; host regular cultural
exhibitions and colloquiums; conservation and restoration of of cultural
heritage sites, including the incorporation of disaster resilient measures;
capacity development for research and documentation of the performing arts
and conservation and restoration measures through trainings/workshops;
archival surveys and documentation; and facilitating the growth of cultural
industries through access to finance, product development support, raw 6 Article 4 of the Constitution
TWELFTH ROUND TABLE MEETING FOR BHUTAN, 11-12 December 2013, Thimphu
41
material banks, promotion of craft clusters, craft bazaars and business
incubators.
5.3 Conservation of Environment
Conservation of environment is an integral part of our development strategy
to ensure that socio-economic development efforts are not at the cost of our
natural environment. Since 2009, all new policies introduced are subject to
a GNH Policy Screening to assess the impact of a new policy on GNH. The
GNH Policy Screening tool comprise twenty two variables of which three7 are
on environment, namely water and air pollution, land degradation and bio-
diversity health.
Due to the rapid pace of socio-economic development, land degradation, air
pollution, and solid waste management are major issues and challenges
facing this sector. However, ensuring water security is currently the most
significant issue facing this sector and has been identified as one of the 16
National Key Result Areas to be achieved over the Eleventh Plan period.
Water is a vital natural resource for our basic survival as well as for our
economy given our high dependence on agriculture and hydropower. Despite
having one of the world’s highest per capita availability of water, water
shortage is a major issue in both rural and urban communities. In 2011,
electricity sector experienced negative growth mainly due to hydrological risk.
The main objectives of the environment sector are to ensure carbon neutral
and climate resilient development, enhance sustainable utilization and
management of natural resources and enhance water security.
Key strategies to achieve these objectives include implementation of the
National Strategy and Action Plan for Low Carbon Development 2012;
mainstreaming of environment across all sectoral and local government
programmes and projects; implementation of the Integrated Water Resource
Management Plan; and addressing water security.
5.4 Good Governance
Being vital for sustainable and equitable socio-economic development, the
Eleventh Plan will continue to place emphasis on good governance by
7.
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42
strengthening democracy, improving public service delivery, promoting
gender equality, curbing corruption and enhancing safety.
The key issues and challenges facing this sector are lack of institutional and
human capacity, particularly at the local government level; growth in
quantity and complexity of the policy and regulatory environment; gender
related issues such as increasing cases of domestic violence, relatively high
female unemployment, and low female enrollment in tertiary education,
which are a concern particularly in terms of achievement of the MDGs; and
sustaining the progress made in combating corruption.
The main objectives under this pillar will be to further improve public service
delivery and strengthen democracy and good governance.
Key strategies to achieve these objectives include the implementation of the
Government Performance Management System, National Anti-corruption
Strategy, improving public service delivery through G2C, G2B and G2G
services, and capacity building and awareness campaigns to enhance
transparency, accountability, efficiency and effectiveness in governance.
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43
5.1 Background
Commencing with the Fifth Five Year Plan in 1981, the Royal Government
has actively pursued a proactive decentralization policy to promote
participatory development, which culminated in the introduction of a Gewog-
based planning approach in the Ninth Plan, whereby Local Governments
(LG) formulated their Five Year Plans based on priorities identified by
communities at the Gewog level. To further strengthen the decentralization
process, a formula based rationalized annual grants system (AGS) using
population, poverty and area as the criteria and that takes into account the
principles of equity, transparency and objectivity was introduced during the
Tenth Plan. A key objective of the AGS was to provide predictability of
resource availability to local governments and flexibility in its use.
To consolidate the progress made and provide further impetus to the
decentralization policy, a new element of the Eleventh Plan is the actual
inclusion of local government plans in the main Plan Document, which
underscores the priority accorded to achieving results at the grassroots level
and their integral role in achieving the overall objective of the Plan and the
corresponding 16 NKRAs. As such, in addition to the SKRAs, Dzongkhag Key
Results Areas (DKRAs), Thromde Key Result Areas (TKRA) and Gewog Key
Result Areas (GKRAs) with corresponding KPIs have been defined for each
Dzongkhag, Thromde and Gewog based on the four pillars of GNH.
The structure of the local government plans, whereby the
DKRAs/TKRAs/GKRAs and strategies are anchored to the circumstances of
each Dzongkhag/Thromde/Gewog, also emphasizes the need for a common
but differentiated approach to development. The high priority accorded to
local government plans in the Eleventh Plan is evident from the capital
outlay of Nu. 15 billion for local government plans, which is an increase of
25 percent over Tenth Plan outlay.
CHAPTER 6: LOCAL GOVERNMENT PLANS
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44
In order to enhance the usefulness and relevance of the AGS, both in terms
of viability and sustainability, the formula for resource allocation to local
governments has been revised for the Eleventh Plan with introduction of two
additional criteria, namely Multidimensional Poverty Index 8 (MPI) and
Transport Cost Index9 (TCI). To ensure equity, efficiency, accountability and
transparency for the realization of the Eleventh Plan goal and outcomes, the
responsibilities among Central agencies, Class “A” Thromdes, Dzongkhags
and Gewogs have been clearly delineated based on the division of
responsibilities framework, which is guided by the ‘principle of subsidiarity’.
5.2 Planning Process
Pursuant to the Local Government Act 2009 and guided by the Eleventh
Plan preparation guidelines, the Dzongkhag administrations and Gewog
administrations, with necessary demand-based assistance from the central
government, supported the LGs in the formulation and prioritization of their
plans. An exception was made for the education sector which is centrally
planned by the Ministry of Education to ensure that all children across the
nation have equal access to quality, adequate, efficient and cost effective
education services. The overall local government planning process was
undertaken in close consultations with the local communities to reflect
accurate ground realities and true needs and aspirations of the people.
5.3 Summary of Local Government Plans
Poor quality of farm roads, lack of proper irrigation channels, human wildlife
conflict, labor shortages, limited and fragmented landholdings, lack of proper
storage facilities and market access for agricultural and livestock produce,
capacity constraints of farmers to engage in large scale farming and access
to rural credit are some of the key challenges that will be addressed through
the local government plans.
Key strategies of the local government plans, which are anchored to the
circumstances of each Dzongkhag/Thromde/Gewog, particularly in terms of
their respective challenges and comparative advantages, include:
8Income, Life Expectancy and Education Index 9Ratio of distance (kms) from the nearest markets (P/ling, S/Jongkhar, G/phu)
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45
Improvement and development of infrastructure and amenities to
enhance rural livelihood and accessibility. Rural accessibility will be
further promoted through development of farm roads thus ensuring
better access to markets and socio-economic services.
Promote and support agricultural and livestock production and
productivity through product diversification and commercialization,
including support for organic farming. Efforts to enhance rural
incomes through increasing agricultural production and productivity
will also be complemented by sustainable management of natural
resources and harvesting of Non-wood forest products (NWFPs).
In the promotion and conservation of cultural heritage and
environment, emphasis will be placed on the promotion of handicrafts,
eco-tourism and community based tourism to supplement rural
income.
Enhancing health care facilities and quality services through the
construction of additional health facilities and maintenance of existing
health infrastructures, particularly to ensure delivery of health
services to households living in scattered settlements and in difficult
terrain.
Ensuring good governance and prudent financial management to
provide effective and efficient public service delivery and achievement
of quality plan outcomes.
Promotion of smart partnerships and greater collaboration with
stakeholders to foster focused and coordinated local development and
sustainable local economic development.
Integrated rural-urban development to address challenges of rapid
urbanization and fast population growth through improvement and
expansion of existing services and creation of new infrastructure and
facilities.
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Annex-1: Key Performance Indicators for NKRA1 to NKRA 4
GNH Pillar 1: Sustainable and Equitable Socio-economic Development
NK
RA
1
Susta
ined
Econom
ic G
row
th KEY PERFORMANCE INDICATORS Baseline Target
Annual average GDP growth 8-9 % >10%
Percentage of domestic financing to total expenditure 65% >85%
Annual average fiscal deficit over plan period 0.3% <3 %
Consumer Price Index 8.37% 7-8%
Priority sector lending TBD TBD
Exports (without electricity) Nu. In billions 15 (2012) >28 (2017-18)
NK
RA
2
Povert
y R
educed a
nd M
DG
Plu
s a
chie
ved
Income poverty reduced 12 % (2012) <5 %
Multidimensional poverty reduced 25.8% (2010) < 10 %
Gini Coefficient reduced 0.36 (2012) <0.3
IMR per 1000 live births 47 <20
MMR per 100,000 live births 255 <100
U5 MR per 1000 live birth 69 <30
Rural pop with access to improved drinking water supply (%) 94.1% near 100%
Rural pop with access to improved sanitation (%) 51 >80
Malaria incidence per 10,000 population 10 <3.5
TB treatment success rate 90% >90%
Severe mental distress (GNH Index 2010) 5% <5 %
Adjusted Primary Net Enrolment Ratio (6-12 yrs old)
i) APNER = 98% (M
97% & F 98%)ii) NER
96% (M 95 & F 96)
i) APNER
100%-M/F ii)
NER 98% -
M/F
Basic Net Enrolment Ratio (13-16yrs old) 94% (F 96% & M
93%)
>96% (M/F)
Ratio of females to males in tertiary education 71.00% >90%
GER at tertiary level (19-23yrs) M/F 18% >35%
% of people with adequate housing quality sustained - GNH Index
2010
74.20% >74.2%
% of Household with per capita income per person per month of
1.5*Nu. 1096.94/- or more (GNH Index 2010 -) 53.40% >53.4 %
NK
RA
3
Food
Secure
and
Susta
ined Cereal self-sufficiency* (%) 64 (2011) >75
Stunting (Height for age) % 33.5 % (2010) <30 %
Milk Self Sufficiency* (%) 90 (2011) 100
NK
RA
4
Full
Em
plo
ym
ent
Full employment 97.9% >97.5%
Youth unemployment reduced 7.3% <2.5%
% of regular paid employee 23.9% >40%
Long term/chronic unemployment reduced na TBD
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Annex-2: Key Performance Indicators for NKRA5 and NKRA 6
GNH Pillar 2: Preservation and Promotion of Culture
NK
RA
5
Str
ength
ened B
huta
nese I
denti
ty, Socia
l
Cohesio
n a
nd H
arm
ony
KEY PERFORMANCE INDICATORS
Baseline
Target
Cultural diversity & resilience Index sustained (GNH
2010 Index) 0.074/0.11 0.074/0.11
Community Vitality Index sustained (GNH 2010 Index) 0.088/0.11 0.088/0.11
GNH Index 2010 sustained 0.743 >0.743
NK
RA
6
Indig
enous W
isdom
, A
rts
and C
raft
s P
rom
ote
d f
or
Susta
inable
Liv
eli
hood
No. of rural households engaged in cultural industries 208 2000
No. of jobs created by cultural industries 1200 2500
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Annex-3: Key Performance Indicators for NKRA 7 and NKRA 10
GNH Pillar 3: Conservation and Sustainable Utilization and Management of the Environment
NK
RA
7
Carb
on N
eutr
al
Gre
en a
nd C
lim
ate
Resil
ient
Develo
pm
ent
KEY PERFORMANCE INDICATORS Baseline Target
Green House Gas Emission controlled 1559.56 Gg CO2 < 6309.6 Gg CO2
Ambient air quality sustained or reduced
Ambient Air Quality
national standard 2010.
Ambient Air Quality
Standards revised as
per national
circumstances.
NK
RA
8
Susta
inable
Uti
lizati
on a
nd
Managem
en
t of
Natu
ral R
esourc
es
Proportion of forest area under sustainable
forest management 6.60% >12%
Ecological footprint N/A
Study to establish
baseline & targets
conducted.
Population Status of umbrella species
(Tiger) 155 >155
NK
RA
9
Wate
r Securi
ty
24 hour availability of drinking water N/A 100%
Ambient Water quality maintained within
national standards
Ambient Water Quality
Standards 2010
Ambient Water Quality
Standards revised to
include new
parameters of total
hardness, grease and
oil.
NK
RA
10
Impro
ved D
isaste
r
Resil
ience a
nd
Managem
ent
Main
str
eam
ed
No of disaster response teams trained and
equipped in DM. 1 (NaSRT) 20 Dongkhags
Response time (no. of hours within which
emergency response time reaches site of
disaster)
N/A Within 2 hours of
disaster
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Annex-4: Key Performance Indicators for NKRA 11 to NKRA 16
GNH Pillar 4: Promotion of Good Governance
NK
RA
11
Impro
ved
Publi
c S
erv
ice
Deli
very
KEY PERFORMANCE INDICATORS Baseline Target
Avg Service Delivery TAT reduced for all G2C, G2B and
G2G services <70%
Average performance rating of government agencies >90 % >90 %
NK
RA
12
Dem
ocra
cy a
nd
Govern
ance
Str
ength
ened
Political Participation (GNH 2010 Index) 56.40% >70%
% of functional Community based groups (Water User
Groups, Road Maintenance Communities) na >90%
No. of functional registered CSOs 100% 100%
Voter Turnout sustained Parliament 66.1 %;
LG 56 %
Parliament 70 %;
LG 70 %
NK
RA
13
Gender
Fri
endly
Envir
onm
ent
for
Wom
en’s
Part
icip
ati
on
Draft legislation to ensure quota for women in elected
offices including the parliament and local government
bodies
Legislation
Drafted
Ratio of female to male in tertiary education 71% >90%
Female youth unemployment 7.20% <2.5 %
Agencies with gender sensitive policies/gender
mainstreaming strategies N/A >20
NK
RA
14
Corr
upti
on
Reduced
Corruption Perception Index - Transparency International
33/176 (2012) < 20
No of agencies reporting on implementation of anti
corruption strategy
All
NK
RA
15
Safe
Socie
ty
Nationwide reported crime (annually) by category, age
group and gender; 7/1000 <5/1000
% of people who feel safe (GNH Index 2010) 81% >81%
NK
RA
16
Needs o
f
Vuln
era
ble
Gro
up
Addre
ssed
Establishment of baselines and targets for emerging issues Baseline and targets established.