Monday, January 7, 2013

Economic Crisis or Spending Fatigue?

The permeation of the Bhutanese lingua franca, sometime towards the middle of 2012, by a two-letters term - economic crisis - has me baffled completely. Talk to any Bhutanese - educated, uneducated and anyone in between and he/she will tell you that the country is going through a severe “economic crisis”.

Ask them why we have a severe Indian Rupee shortage and they will tell you it is because of our economic crisis. Ask them why the banks have stopped giving out loans and they will grimly tell you that the country’s economy is in a bad way. Ask them why the DPT government will not win the upcoming elections with the same kind of resounding victory as they did in 2008, they will give the reason that it will be because the economy did poorly under their term. Ask any Bhutanese why the government has suspended the import of vehicles and they will tell you - it is because we are going through an economic crisis.

Every Bhutanese is quite merrily blaming the “economic crisis” for all our ongoing woes. However, ask them to explain "how" our “economic crisis” is at the core of our problems and they are perplexed - they do a vigorous head scratching! They have simply no idea why they have been parroting the belief that our troubles are due to our “economic crisis”.

Do we really have an economic crisis? Nope, we MOST DEFINITELY DO NOT! On the contrary, published figures show that we are among the top performers in the region, in terms of GDP growth. Our growth rate was: 6.7% in 2009; 10.6% in 2010; 5.9% in 2011 and it is estimated that we will achieve a growth rate in access of 7% for the year 2012.

So then who is putting out this ludicrous idea that we have an economic crisis? The answer: by people who are clueless about what constitutes economic crisis and by those who wish to paint a grim picture of the country and the performance of the government! They simply have no idea what the term means or, even if they do, they are deliberately spreading the misconception.

Two of our most important economic activities are related to those of tourism and hydro-power projects. Thank you very much but both of these sectors are hail and hearty - in fact, they have been growing by leaps and bounds. Our industrial output has not fallen; no factories have failed; there has been no labor unrest that hampered production. The government of India has not reneged on their committed financial support. So then, what is our problem?

In my understanding, we have been subjected to a disorder that can best be described as: SPENDING FATIGUE!!

People seem to be totally oblivious to the fact that the country has had to undertake colossal expenditures in the short span of the last four years - expenditures that were a severe drain on our reserves and yet, those that had to be made.

We had two very expensive (uncontrolled and lavish spending) elections to the Upper and the Lower Houses of the Parliament. We had a series of local government elections. We had a Centenary Celebrations. We had to Crown a King. We had a Royal Wedding. We had to host a SAARC Submit. If all that were not enough, we suffered unprecedented natural calamities, one after the other, all year round. All these were unavoidable expenses but they certainly caused a severe and destabilizing strain on our finances.

Please do not bell the wrong cat.

7 comments:

  1. Given access to any shopping mall, whether Bangkok, Europe, or the USA, I can't imagine any Bhutanese admitting to a personal "Spending Fatigue." :-) Just my observation as a shopping-weary nonBhutanese tag-along to many extended & exhausting shopping sprees. What economic crisis?

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  2. Good Observation aue Yeshi....

    I think our GDP figure rose not because of overall long term development, but it rose due to our expenditure on social overheads. While it may not bring short term gain or return to our society, we should not forget the benefits those projects will bring in long run.........

    As you rightly said, we did spend a colossal amount on elections and SAARC summit, But I am of the opinion that all those money came from GoI......and If I am not mistaken, i think we did go reckless there......

    About the royal wedding and coronation, our King has decreed to keep things simple and humble. But its the committee who made things lavish.

    about the natural calamities, we did have a worst case calamities in our recent past. But I do not know how it affected our reserves and planned budgets.

    For me, i think we have this spending fatigue because we had a govt, who promised lot more than they could actually deliver....i think failed to look beyond five years......

    now that we already have this problem with us, every single Bhutanese individual should learn to save. ( meaning Bhutanese should reduce thier consumption level)Because as per the conventional Economics law, saving is virtue in inflationary situation...

    I think We should also have Central bankers, who not only speak like central bankers, but should also act and work like one. and same goes to our Politicians, Besides politics, they should also learn little bit of Economics too.....

    til then have a nice time .


    By the way, Aue Yeshi, can u remove that word verification process. It makes making comment very difficult...


    PSN

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    Replies
    1. You want politicians acting and working like politicians?
      Reading Diksha Chhetri's commentary below, it seems to me that you already have them.

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  3. Hi PSN

    OK I will see if I can locate where I can remove/disable the word verification thingie.

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  4. Good piece of writing. Those events were necessary and should be help with pomp and grandeur, but we as Bhutanese should reduce our expenditure on a personal level too. Import less of vehicles, might I say Land Cruisers, and make more of Bhutanese labourers than Indians.

    You know I met the Lyonchhen in my college and I suggested him that for Wangdue Dzong renovation we should hire all Bhutanese men and not foreigners so that the money remains in the country, and that all the materials for renovation to be as indeginous as possible i.e like how it was made before, but he replied that we would be getting materials from Japan. I had to argue that for flooring we could use doleps (flat stones...I know cus my dad is an engineer) and he said materials will be imported from japan only and bla bla. Felt like my suggestions were vague.

    Anyway, good day to you. :)

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  5. It's very tiring to hear those promises of our government. We want to see action rather than discussing this issue.

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