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Preface

Since the inception of First Five Year Plan in 1961 by Late King Jigme Dorji Wangchuck (reign 1952-72), Five Year Plans have been the main instrument, regulating the pattern of investment across regions and sectors. The agrarian community that existed 28 years ago was largely self-subsistence oriented, rural and insular. The country faced several typical constraints of an under developed country. Skilled manpower was scarce as also was domestic financial resources. There were absolutely no manufacturing, road, electricity and banking. An insignificant number of hospitals and schools; high incidence of diseases and low expectancy of life were some of the social and economic features of that time.

    Over the last 28 years, we have been able to establish most of the basic infrastructural facilities. A glce at the key statistics on the back page would confirtn the long way we have come, though it may also indicate, paradoxically, how far we still are from our long terrn goals.

    In all the outlays of the previous plans, Public Works ( roads construction and related activities) was accorded very high priority, since means of transportation was prerequisite for further progress. It continues to impose heavy burden on public expenditure. Our development strategy also laid heavy emphasis on education, agriculture and health to enhance human skills and living standard in rural Bhutan. Having given serious priorities to the creation of basic infrastructure, a major focus of the objectives since the Fourth plan have been the mobilization of internal resources by investments in such revenue generating sectors as power, industry, forestry and agriculture.

    Against the backdrop of such impressive performances under earlier plans, the Sixth Plan was formulated. This document presents a comphrehensive account of the Sixth Plan, with an improved se of statistics. A number of officers in Planning Commission were asked to contribute chapters on various sectors in collaboration with related departments. Because of this, there will inevitably be some differences in the style of presentation.

    Chapter 2 contains an appraisal of the economic trends during the Fifth Plan with reference to selected indicators. This is follwed, in Chapter 3, by a review of performance vis-a-vis the objectives of Fifth Plan . Chapter 4 gives a discussion of the principal objectives of the S ixth Plan . Chapter 6 to 23 are devoted to exposition of sectoral programmes of the Sixth Plan.

    The objectives of the Sixth Plan stress government's special concern for the rural populace. Programmes .such as rural housing, resettlement, generation of farm incomes and a widespread distribution of public services and utilities looms large in the Sixth Plan objectives. Scarcity of skilled m.lllpower ar.d investible domestic surplus resource have been fundamental and lingering constraints faed by the economy. Human resource development and domestic resource mobilizatioll are, yet again, given very high priority in the Sixth Plan, Without alerted actions against these constraints, self-sustai ned growth, i.e. growth which precludes the need for foreign xvi Preface aid, would remain a distant goal.

- An important objective underpinning our development approach have always been the preservation of our culture and values. Programmes for social and economic change must not ever precipitate any decline in our hallowed tradition and institutions. We have witnessed, over the past three decades, the coming of modern conveniences in our soc,iety; and we are justly proud of advances that improve the general standard of living. But I am convinced that such achievements would be hollow if the development process leads to any loss of our culture identity and value system. Nor would the pursuit of such successes be worthwhile if their long run effects are adverse to our national self-determination and sovereignty of the Kingdom.

    As we enter the closing decade of the 20th century, the economy is poised for a decade of brisk expansion. The economy is endQwed with sufficient natural resources. The total estimated hydro-electric potential of the country is 20,000 MW. So far, only 1.71 per cent has been harnessed. HydrQ-electricity from Chukha has been providing the main drive to economic growth.in the last few years. The findings of mineral prospecting are also very encouraging. We have protected our environment through stringent rules and have an eco-system which is the envy of any developing country. We have managed to control the growth of bureaucracy. Manpower base is expanding every year and more and more trained people are getting into the productive workforce of thecountry. Planning and administration have been decentralized to the dzongkhags and decision-making has become more participatory.

    Though this document is intended to be the main reference for executing the national plan, it is possible for further changes to take place. Unintended repurcussions and unforeseen snags are likely to force upon us minor deviations from the plan and make modifications necessary. To adjust to the changing circumstances, the pan may be formally revised at such regular intervals as mid-term review (due in September 1989) and annual budgetting. However, the informations in this document are correct a! the time the document goes to the press.

    I am personally grateful to my colleagues in he government and officers in Planning Cornmission for their enthusiastic support in bringing out this - our latest publication. It has been brought out to meet the practical needs of administraters, policy-makers,consultants, donor countries, intemational agencies and others who wish to keep abreast of the development activities in Bhutan. I hope that it is a helpful blue-print according to which the complicated process of development is given direction and unity. Above al!, it is my deepest wish that its contents, when translated into actions, will meet the aspirations and future needs of Bhutan.

Deputy Minister

Phnning Commission, Thimphu            J

July 1, 1989 C. D(

GLOSSARY OF TERMS

Chapter 1 OVERVIEW OF THE COUNTRY

Position and Area

Bhutan comprises a land area of 46,500 square kilometres. The land lies between latitudes

2645'N and 2810'N and between longitudes 8845'E and 9210'E. The country has a maximum latitudinal distance of 170 kilornetres and the maximum longitudinal distance of 300 kilom etres.

Bhutan is landlocked. It is bordered by India in the south, an(l by the Tibetan Autonomous Region of China in the north and north-west.

Bhutan's borders are largely natural ones.  The border with Tibet is traditional following the watershed of he Chumbi Valley in the north west and the crest of the Himalayas in the north. The southern border with India was established by treaty with the British in the nineteenth century and in general, follows the line made by the Himalayan foothills with the plains.

Landforms

Bhutan is almost entirely mountainous with flat land limitted to the broader river valleys. The land rises from approximately 300 metres above sea level in the south to the towering Himalayan mountains in the north of over 7,000 metres high. The densely populaled central valleys are separated from the south by a 2,000 metre high chain of mountains.

Bhutan has three major landform features: the southern foothills, the inner Himalayas and the higher Himalayas. The southern foothills rise from the plains to hights of about 1,500 metres extending to the north by about 20 kilometres. Southern Bhutan consists of a heavy network of steep hills covered with large tracts of dense forest and jungles.

Central Bhutan consisting of the inner Himalayas rises  gradually to about 3,000 metres. This region contains  the broader river valleys- Paro, Thimphu, Punakha, Wangdiphodrang, Bumthang and Tashigang which comprise the economic and cultural heartland of the country. An infinite variety of plants, flowers and trees including apples, peaches ani plums grow in the fertile valleys. Rice is the principal crop and large tracts of forest including birch, pine, chesl nut and oak cover Central Bhutan.

The northern region cornprises the main Himalayan range of high snow-capped moun tains which separae Bhutan from Tibet. The Kula Gangri and the Gangkar Punsum (both over 7,500 metres) and the Jomolhari (7316 metres) are the highest peaks in the Bhutan Himalaya. The slopes of thc mountains are covered with birch, magnolia and rhododendron while for many months of the year the summits are decked with snow. Population in this zone is sparse.

Rivers

All but two of Bhutan's rivers rise in the higher Himalayas and flow south to join the Brahmaputra in India. Almos all the valleys have a swiftly flowing rivers or streams which merge ultimately into four major river systems as they flow south - the Ammochu, the Wongchu, the Sankosh and the Manas. The rivers are fed by the perennial snows or the sunlmer monsoons and are highest in the monsoon months (June to September3 and lowest in winter (December to March).

Climate

The country can be divided into three distinct climatic zones corresponding hroadly to the three main geographical divisions. l he southern belt has a hot humid climate with temperatures remainh,, fairly even throughout ,he year between 15C and 30C with rainfall ranging between 2,500 mm to 5,000 mm in some areas.

The central inner Himalayas has a cool temperate climate with annual rainfall averaging about 1,000 mm with the western region receiving comparatively higher rainfall. The higher and more northern region has a svere alpineclimate with annualrainfall around 400 mm. Much of the rainfall is concentrated in the summer months with the south west mon soon accounting for 60-90 per cent of the total rainfall.

There is substantial variation within these broad ranges and the climate and rainfall charac teristics change dramatically from one valley to an ;Idjacent one with consequent sharp changes in the composition of agricultural production.

Widespread flood rainfall may occur during the lmmer monsoons and the waters of the valley rivers may swell dramatically, spreading across the plains and tlooding fields, bridges and houses.

The Monarchy

On December 17, 1907, Druk Gyalpo Ugyen Wangchuck was crowned the first hereditary monarch of Bhutan by the civilian and monastic representatives.

It was as a result of the influence of the strength and far-sightedness of Druk Gyalpo Ugyen Wangchuck that for the first time Bhutan was united under a central authority which pro vided the country wlth stability and the opportu nity for development. In 1926 Druk Gyalpo Ugyen Wangchuck was succeeded by his son King Jigme Wangchuck, who ruled until his death in 1952.

The third Druk Gyalpo, Jigme Dorji Wangchuck began a campaign of modernisa tion and expansion of Bhutan's Government and society based on the accomplishments of his two predecessors in uniting the country under a strong central authority.

The present Druk Gyalpo, His Majesty King Jigme Singye Wangchuck acceded to the throne in 1972 on the demise of his father.

His Majesty the King is the Head of State and also the Head of Government. He is assisted by tlle Cabinet which consists of His Majesty's Represerlt;ltives in various Ministries, Ministers alld some sellior civil servants.

The Tshogdu (Nationl Assembly )

The National Assembly has 150 members of which 105 members represent the people. They are elected for a three year term by consensus in each of the dzongkhags. Twelve monastic rep resentatives are elected by the regional monk bodies while 33 representatives of the Govern ment are nominated by the King. They include members of the Council of Ministers and the Royal Advisory Council, secretaries of various governmentdepartments and several dzongkhag of ficers.

The National Assembly meets twice a year. The Assembly enacts legislation and advises the government on all matters of national impor tance. Decisions are passed by a simple major ity. A secret ballot is taken on all matters of national importance. Any Bhutanese over 25 years of age can be a candidate for membership.

The Royal Advisory Council

The Royal Advisory Council was formally established in 1965 to advise the King and government ministers and to supervise the implementation of programs and policies laid down by the National Assembly. It consists of 9 members: six representing the people, two representing the clergy and one nominee of the King.

The Monk Body

The Monk Body which currently has a strength of about 5,()()() is financed by an annual subsidy from the Government and is the sole arbiter on religious matters. The .le Khcmho equal in status to the King, is the lead of the Body chosen from among high ranking gelongs (monks). He is assisted by four high ranking "Lopens" of the Central Molk Body whicl consists of I ,()()() gclong.s . I he l.opens are eq u. in rank to the Ministers.

The Judiciary

Bhutan's legal code is based on th;lt l.i(l down by Ngawang Namgy.ll the frst Sn abdrung who arrived hl 13hul.lll hl 1 . I nadi tional Buddhist precepts are signific.lntly m;lhl 

There are courts in each dzongkhag headed by a thrimpon and assisted by Ramjams but minor disputes are settled by village gups.

Disputes which fail to be resolved by village gups go to dzongkhag court. A dzongkhag court have both original and appelate jurisdictions. The next higher court is the High Court in Thimphu. The final appeal is made to the King, who then delegates the Royal Advisory Council to investigate and ensure that the courts have dispensed justice in keeping with the law of the country.

Central Government

Bhutan has been administered by centrally based unctional departments and ministries. The organisation of central government comprises of seven ministries, their elated de partments and 3 commssions and several au tonomous bodies. The ministries are Ministry of Foreign Affairs, Ministry of Communications, Ministry of Trade and Industry, Ministry of Finance, Ministry of Social Services, Ministry of Agriculture and Ministry of Home Affairs. Of the three commissions - Royal Civil Service Commission, Planning Commission and Spe cial Commission for Cultural and Religious Affairs - the Planning Commission is headed by a Deputy Minister as its full time head. His Majesty the King is the Chairman of the Plan ning Commission.

The Royal Civil Service Commssion, estab lished in 1982, is reponsible for formulating and ensuring implementation of personnel policies in order to promote efficiency, loyalty and in tegrity among civil servants and to maintain a high level of morale. It is also responsible for ap pointments, transfers, promotions and discipline of all civil servants. The strength of civil service was about 13,363 in 1987.

Zonal Administration

The 18 dzongkhags are grouped into 4 zones on the basis of common natural features and geographical proximity. The Zonal Administra tions were initiated to develop, among other things, the inter linkages and potentials of the zone as a whole by introducing regional plan ning. The Zonal Administration will have vari ous functional bodies, e.g. Planning and Coor dination Division, Agriculture and Industries Division, Revenue and Customs and Excise Division.

Dzongkha Administrtion

Local administration has been strengthened to meet the requirements of decentralised ad ministration and development. There are 18 dzongkhags or districts each under the charge of a dzongda responsible for civil administration and development activities.

Each dzongdais assisted by a dzongrab. The larger dzongkhags are sub-divided into sub divisions (dungkhags) headed by a drungpa. Groups of villages have a headman - the gup (in the north) or mandal (in the south). In each dzongkhag, the dzongdais assisted in his devel opment functions by the Dzongkhag Yargye Tshogchung (or District Development Commit tee) which consists of people's representatives and officials.

Chapter 2

RECENT ECONOMIC DEVELOPMENTS(with special reference to the Fifth Plan)

Plan Outlays

Plan outlays have been growing at an impres sive rate. Table 2.1 and Table 2.2 refers to the outlays in absolute and percentage terms respec tively from First Plan to Sixth Plan. From a modest Nu. 107.2 million in the First Plan, the Plan outlay increased to Nu. 6511 (includes Chukha) million in the Fifth Plan. Fifth Plan outlay was about 4.25 times the outlay of the Fourth Plan. e revised outlay for the Sixth Plan is Nu. 95236 million, which is about 1.47 times the Fifth Plan outlay. In real terms, an average allowance of 10 per cent must be made for inflation. Therefore, the Sixth Plan outlayofNu.9559.23million,whilerepresent ing a substantial nominal increase over the Fifth Plan, is very reasonable and necessary to main tain the current rate of ectnomic development in Bhutan.

TABLE 2.1 Outlays of Development Plans, First Plan to Sixth Plan

                                          (Nu. in millons)

------------------------------------------------------------------

Sector             First   Second  Third Fourth  Fifth   Sixth

                    Plan     Plan  Plan    Plan    Plan  Plan

                (actual)(actual)(actual)(actual)(actual)(revised)

------------------------------------------------------------------

     Agriculture                 1.9       21.6   58.3   259.0   331.5   880.4

Food Corporation

     of Bhutan                    --         --     --     --      99.5   106.5

     Animal Husbandry     1.5       5.8    24.2   61.5   105.6    331.0

     Forestry                       3.2       6.9   28.4   110.3   200.2   418.2

     Power                          1.5       9.1    30.1   50.5   345.4  1,247.9

      Trade & Industries   1.1*      1.0*   25.2* 175.0*  303.5* 1,276.1

      Geological survey     --          --      --    --      --       35.3

      Public Works Dept.  62.9      70.5    84.6  128.3   719.2    887.2

Road Transport/

     Aviation                      7.5       12.0    9.5    --      60.4**  48.8

Post, Telcraph and 

     Wireless                      0.5       5.9   11.4    16.9    62.1    68.1

     Telecommunications    --       --     14.8   37.3    33.9   133.8

     Tourism                      --         --    14.1    12.5     --     --

     Druk Air                     --         --     --      --      --    391.0

     Education                    9.4       35.7   90.1   134.6   410.0   778.8

     Health                         3.1       16.7   38.1    54.6   205.6   339.1

Information & 

     Broadcasting               0.1     1.4    4.0    11.0    98.3    95.9

Urban Development    --     --      --     --    194.4    248.7

General 

Government***        --     --      --     --   1007.4    1,973

Dzongkhags ***       --     --      --     --    534.0    238.5

Others                    14.4   15.6    42.5    54.7    --      -Total Outlays      107.2  202.2   475.2  1,106.2 4711.2  9559.2

Recent Economic Development 7

TABLE 2.2 Percentage Composition of Outlays First Plan to Sixth Plan

                   (Percent)

              First   Second  Third  Fourth   Fifth    Sixth

              Plan    Plan    Plan   Plan    Plan(a)   Plan

-----------------------------------------------------------------

Agriculture     1.8    10.7    12.3   23.4      7.0       9.2

Food Corpora-

tion of Bhutan  --      --      --     --       2.1       1.1

Animal Husban-

dry             1.4     2.9     5.1    5.6      2.2       3.5 Forestry         3.0    3.4     6.0    10.0     4.3       4.4

Power           1.4     4.5     6.3    4.6      7.3      13.1

Trade & Indus-

tries           1.0*    0.5*    5.3*  15.8*     6.5*     13.3

Geological

Survey            --     --      --     --       --       0.4

Public Works

Department     58.7    34.9    17.8   11.6     15.3       9.3

Road Transport/

Aviation        7.0     5.9     2.0              1.3**     0.5

Post & Telegraph 0.5    2.9     2.4     1.5     1.3       0.7

Telecommunication --    --      3.1     3.4     0.7       1.4

Tourism          --     --      3.0    1.1      --         --

Druk Air         --     --       --     --      --        4.1

Education       8.8    17.7    18.9   12.2      8.7       8.1

Health          2.9     8.3     8.0    4.9      4.4       4.2

Information &

Broadcasting    0.1     0.7     0.8    1.0      2.1       1.0

Urban Develop-

ment             --      --      --    --       4.1       2.6

General Govern-

ment***          --      --      --    --      21.4      20.6 Dzongkhags***     --     --      --    --      11.3       2.5

Others         13.4     7.7     8.9    4.9      --        --

Total Outlays 100.0   100.0   100.0  100.0    100.0     100.0

----------------------------------------------------------------

   Sixth Plan revised outlays represent the fol lowing significant features. The percentage sh;lres of Agnculture, Animal Husbandry, Health, Education and Forestry have remained almost the same as in the Fifth Plan.

   Power and Trade & Industries have recorded significant increases in their shares in the Sixth Plan as compared to the Fifth Plan; power hav ing increased from7.3% to 13.1 % andTrade and Industry from 6.5% to 13.3%.

   Two sectors, namely, Public Works Depart ment and Dzongkhags have got substantially smaller shares. The shares of Public Works declined from 15.3% to 9.3% and the shares of Dzongkhagsdeclinedfrom 11.3%to2.5%.There is also a slight reduction on the shares of General Government, reflecting an attempt to economise the maintenance expenditure and reduce the civil service growth.

   It is thus evident that the Sixth Plan has accorded almost the same priority as the Fifth Plan to Agriculture, Animal Husbandry, For estry, Health and Education.. But Power and Trade & Industry have been given relatively higher priority in the Sixth Plan.

Gross Domestic Product (GDP) and Per Capita GDP

   The available estimates of GDP at constant 1980 prices indicate that over the Fifth Plan period (1980 to 1986) GDP increased from Nu. 1204.8 million to Nu. 1674.5 million recording a compound annual growth rate of 6.8%.

   Per capita GDP in current prices increased from Nu. 1()93 in 1981 to Nu. 2123 in 1986 or $ 168 when Nu 12.61 =$ 1. At current prices,

8 Sixth Plan

GNP was estimated at Nu.2387 million in 1986. Table 2.5 reports the GDP by kind of activity and Table 2.6 gives the rates of growth by kind of activity. 

   In terms of structural change the percentag shares of forestry, logging, manufacturing and transport sectors remained at the same levels be tween 1980 an 1986.

   The percentage shares of power and manu facturing rose substantially, whilst, the shares of agriculture, livestock andconstruction decreased.

TABLE 2.3 Summary of Budgetary Operations, 1981/82 to 1986/87 (a)

Item       1981/82  1982/83   1983/84  1984/85   1985/86  1986/87

           revised  actual    actual   actual    actual   actual

-------------------------------------------------------------------

Revenue

Tax revenue   65.1     75.7     113.7    133.7     135.9    173.8

Non-tax 

revenue       23.7     52.2      63.2    116.2      97.3    139.3

Other         30.8      9.8      19.1     26.3      24.3    27.0

Total revenue 119.6   137.7     196.0     276.2    257.5    340.1

Grants

India        195.3    259.7     256.2    355.6     334.1    486.7

Other        104.9    100.6     222.1    156.5     367.6    295.6

Total grants  300.2    360.3    478.3     512.1     701.7   782.3

Total revenue

and grants   419.8    498.0     674.3    788.3     959.2  1,122.4

Expenditure

Current      169.7    213.1     223.2    304.0     441.5    510.5

Development  267.1    274.7     476.0    454.4     776.2    798.1 Total 

expenditure  436.8    487.8     699.2    758.4   1,217.7  1,308.6

-----------------------------------------------------------------Overall surplus/

deficit      (17.0)    10.2     (24.9)    29.9   (258.5)  (186.2) -------------------------------------------------------------------

(a) Years refer to period 1 April to 31 march. Source: Ministry of Finance.

   Budgetary Operations

   Total govetnment revenue increased from Nu. 119.6 million in 1981/82 to Nu. 340.1 mil lion in 1986/87. Non-tax revenues includes operating surpluses of departmental enterprises, net profits transferred from non-financial and public enterprises, royalties and dividends, ad ministrative fees, etc . It increased over this period from Nu. 23.7 million in 1981/82 to Nu. 139.3 million in 1986/87. Tax revenue increased from Nu.65.1 million in 1981/82 toNu.173.8 million in 1986/87.

   Total government expenditure increased more sharply overthis period - from Nu.436.8 million in 1981/82 to Nu. 1308.6 in 1986/87. While current expenditure increased from Nu. 169.7 million in 1981/82 to Nu. 510.5 in 1986/87, development expenditure increased ,from Nu. 267.1 million to Nu.798.1 million over the same period.

   The expenditures exceeded the revenues by a large margin but the deficit was reduced by external aid. The year 1987/88 recorded a shalp increase in government revenues. The tax reve nues increased from Nu. 173.8 million in 1986/ 87 to Nu. 232.3 million in 1987/88 and the non tax revenue from Nu. 139.3 million to Nu.491.6 million. Total revenues increased from Nu. 34().1 millionin 1986/87toNu.753.1 rnillionin 1987/88. While the current revenue (Nu. 727.5 million) exceeded the current expenditure (Nu. 897.6 million), the total expenditure (Nu.2369.1 million) still far exceeded the total revenue (Nu. 753.1).

  The most important factor which contributed to the buoyancy in government revenues in 1987-88 was the commissioning of the Chukha Hydel Project. As against the total electricity generation of 390986 kilowatt hours in 1986/ 87, the total generation by Chukha done in 1987/ 88 was 1046941 kilowatt hours, about 95% of which was exported to India. ln 1987, total Chukha revenues amounted to Nu. 279.7 mil lion, of which Nu. 275.9 million were export earnings, and Nu. 3.8 million were accounted for by domestic consumption, the

correspond ing figures for the previous year being Nu. 42.5 million,Nu.42.0millionandNu.0.6million,re spectively. Chukha electricity has now the largest share in Bhutan ' s total exports, and would be a major factor is not only reducing the trade deficit with India, but also in substantially aug menting government revenue.

  Foreign Trade and Balance of Payments

   T he following signific;lnt facts emerge from an .ul.llysis of the av.lil.lt le dat;l relating to foreigll trade relatillg in the period 1982/83 to 1'3X7/XX. (See Table 2.4)

   Bhutan's total illlpoltS hlcre;lsed from Nu. 64(.5() million in 19X2/X3 to Nu. 143().()() in 19X7/88. Total exports incre.lsed from Nu. I 5'3.37 million to Nu.789 millioll over the same period. Inspite of a much highcr growth rate of exports, the total deficit in the trade account increased from Nu.487.13 millioll to Nu.641.()() million over this period. The deficit in the currellt accoullt also increased from Nu. 754.72 millioll to Nu. 92').32 over the same period.

       Recent Economic Developments 9

   Over the period 198V83 to 1987/88 exports to India increased faster than the imports from India              Whereas exports in creased from lu. 157.00 million in 1982/83 to Nu.780.00 rnillion in 1987/88, imports recorded a relatively smaller growth from Nu. 546.49 million to Nu. 1030.00 million. The deficit on trade account, therefore, declined from Nu. 389.49 million to Nu. 250.00 million. The deficit on current account also declined from Nu. 646.60 million to Nu. 357.19 million.

   The deficits on current account have, how ever, been more than offset by foreign aid in each of the years between 1982/83 to 1987/88 resulting in surplus in the over-all balance of payments. Total foreign aid (most of which is from India) increased from Nu. 788.67 million in 1982/83 to Nu. 1282.07 in 1987/88, thereby increasing the surplus in the over-all balance of payments from Nu.59.88 million in 1982-83 to Nu. 348.48 million in 1987/8B.

   Secular growth in foreign aid over these years has also resulted in continuous growth of international reserves. The rupee reserves in creased from Nu. 260.40 million in 1982/83 to Nu. 706.70 million in September 1988. The convertible currency reserves increased to US$ 38.S million over the same period;

   The facts mentioned above highlight the need for a vigorous export drive to boost exports, and also for measures designed to reduce imports to the extent possible.

   Money Supply and Prices

   An analysis of the available data regarding growth in money supply and changes in the consumer price index relating to recent years brings out the following significant facts. (See also Table 6.1)

   'Narrow Money' (currency outide banks plus demand deposits) increased from Nu.177.2 million in 1983 to Nu.356.9 million in 1988 (upto September'8X), thus recording an average annual growth rate of about 16% over this pe riod. ' Qu,lsi Money ' (time deposits plus foreign 10 Sixth Plan

currency deposits) increased from Nu. 147.4 to Nu. 283.3 over the same period, registering an average annual growth rate of 14%. 'Broad Money' (Ml + Quasi Money) increased from Nu. 324.6 million in 1983 to Nu. 640.2 million in 1988 (upto September'88) thus recording a slightly higher average annual growth rate of 14.5% over this period.

   ConsumerPriceIndex (1979 =100) increased from 116.3 in 1981 to 215.3 in 1988. The average annual growth rates of CPI over the periods 1981 to 1988, 1981 to 1986 (Fifth Plan period) and 1987- 1988 (the first two years of the Sixth Plan) have been 9.2%, 9.4% and9.6%, re spectively.

  While the CPI of Non-Food items recorded a higher average annual growth rate during the periods 1981 to 1988 and 1981 to 1986 (11.4% and 12.8% as against 8.3% and 7.9% in the case of food items, respectively), in the first two yearsoftheSixthPlan(1987-1988)thesituation has changed with food items recording a slightly higher (9.8%) than the Non-Food items (9.3%).

  The average annual growth rate of CPI dur ing the period 1981 to 1987 has been almost in line with the annual average growth rate in the neighbouring countries. While CPI in Bhutan increased at the average annual growth rate of 9.1% during this period, the corresponding fig uresforindia,NepalandBangladeshwere8.5%, 10.4% and 10.3%, respectively.

TABLE 2.4 Balance of Payments Estimates, 1982/83 to 1987/88 (a)

                                       (Nu. in millionsJ

Item     1982/83  1983/84 1984/85  1985/86  1986/87 1987/88(b)

----------------------------------------------------------------Exports,

     fob            159.4    160.7   206.4    272.0   427.1     789.0

India     157.0     157.2  200.0    270.09   424.4    780.0

Other       2.4       3.5    6.4      2.0      2.7      9.0

Imports,

cif       (646.5)  (730.0) (825.2) (1,041.6) (1,205.4)  (1,430) India     (546.5)  (600.0) (725.0)   (800.0)   (911.1) (1,030.0)

Other     (100.0)  (129.4) (100.2)   (241.6)   (294.3)  (400.0) Trade 

balance   (487.1)  (569.3) (618.9)   (769.6)   (778.3)  (641.0) India     (389.5)  (443.4) (525.0)   (530.0)   (486.7)  (250.0)

Other      (97.6)  (125.9)  (93.9)   (239.6)   (291.6)  (391.0)

Services & Transfer

receipts   131.3    156.4   204.3     234.9     271.9    313.0 India       89.8    106.2   133.1     158.5     173.4    200.8

Other       41.5     50.2    71.2      76.4      98.6    112.2

Services & transfer

payments   (389.9) (555.7)  (511.4)   (599.6)  (568.9)   (601.3) India      (346.9) (450.0)  (422.7)  (397.8)   (374.7)   (308.0)

Other       (52.0) (105.7)   (88.7)   (201.8)  (194.2)   (293.3) Current accounts

balance    (754.7) (968.6)  (926.0) (1,134.3) (1,075.3)   (929.3) India      (646.6) (787.2)  (814.6)  (769.3)   (688.1)   (357.2)

Other      (108.1) (181.4)  (111.4)   (365.0)  (387.2)   (572.1)

Foreign aid 788.7 1,085.0   989.0   1,224.3   1,231.1  1,282.1

India       679.5   856.0   819.4     760.8     786.5    579.8

Other       109.2   229.0   169.6     463.5     444.7    702.3

Other loans   --     --      --         6.3      (6.3)   (63.1)

India         --     --      --        --         --        -Other         --    --       --        --         6.3    (63.1)

Errors & 

ommissions   25.9   (37.2)   70.4     (29.7)     35.7     58.8

India        18.0   (16.7)   64.0      (1.7)    (22.6)    (5.0)

Other         7.9   (20.5)    6.7     (28.0)     58.3     63.8

Overall

balance      59.9    79.3   133.7      66.6     185.3    348.5 India        50.9    52.1    68.8     (10.2)     75.8    217.6

Other         9.0    27.2    64.9      76.9     109.4    130.8

-----------------------------------------------------------------

(a) Years refer to 1 April to 31 March periods. Figures are revised from 1987 issue of statistics. (b) 1987/88 figures are prcliminuy. Source: Roy-l Monetary Authority of Bhutan.

11. Recent Economic Developments

TABLE 2.5 Gross Domestic Product by Kind of Activity

                                 (in 1980 prices)

 1980   1981  1982   1983   1984 1985  1986  1987 compound rate                                                      of growth                                                   1980-87  1981-86

-------------------------------------------------------------------1.Agriculture, forestry & fishing

612.4  636.1  692.2 742.2  806.5  833.9 881.0  925.8   5.9    6.7

  1.1 agriculture

309.9  312.5  331.0 368.9  388.3  411.6 436.3  458.1   5.7   6.9

  1.2 livestock production

139.2  144.5  149.7 155.4  161.3  168.6 177.4  184.5   4.1   4.2

  1.3 forestry and logging

172.3  179.1  211.5 117.9  156.9  153.7 167.3  123.2   7.4   8.3

  1.4 fishing

  --    --    --     --     --    --      --     --   --     --

1. Mining & quarrying

  6.8    8.9  12.1    8.9   15.8  12.6   22.7   21.6 18.0   20.0

1. Manufacturing

 35.8   59.1  59.6   62.9   67.2  75.4   71.0  105.0 16.6    3.7

1. Electricity & Gas

  2.5    2.7   3.1    6.0    5.2   6.0   60.4  229.0 90.7   86.2

1. Constructions

 88.5  131.0 157.7  185.2  173.5 169.0  141.8  152.3  8.1    1.6

1. Wholesale & retail trade, restaurants & hotels

121.5  140.3  132.0 122.0  123.4  132.4 143.4  142.4   2.3   0.4

1. Transport, storage & communications

 47.9   54.9  57.4   64.8   66.4  79.4   83.9   91.3  9.7    8.1

1. Financing, insurance, real estate & business services

 70.2   80.3  77.0   91.1  109.4 110.1  126.2  135.7  9.9    9.5

1. Community, social and personal services (Govt. Admn & defence) 120.4 121.5  102.1  113.1 130.3  126.0  168.6 200.0   7.5    6.8

less:imputed Bank services charges

-20.0  -30.0  -24.0 -26.0  -32.0  -25.0 -24.0  -30.0    --   --

Gross domestic product

1095.0 1204.8 1269.2 1370.2 1465.7 1519.8 1674.5 1973.1  8.7   6.8

Rate of growth over preceeding year(%)

 --    10.0   5.3    8.0    7.0   3.7   10.2   17.8   --     --

-------------------------------------------------------------------

Source: Central Statistical Office

12 Sixth Pln

  TABLE 2.6: Rates of Growth by Kind of Aclivily

                       Compound rates of     Compounds rates of                           growth % growth % in constant 

                      (in current prices)  (1980) prices

------------------------------------------------------------------                       1980-87  Fifth Plan  1980-87   Fifth Plan

                                1980-86                1980-86   

1. Agriculture, Lives   stock, Forestry &

   Fishing               14.7     14.5         5.9        6.0

   1.1 agriculture

   proper                12.7     13.0         5.7        5.9   1.2 livestock         15.1     15.0         4.1        4.1

1.3  forestry          17.6     16.6         7.4        7.6

1.4  fishing            --       --           --         --

1. Mining & Quarrying    27.4    32.9        18.0       21.8
2. Manufacturing         28.3     25.1       16.6       12.1
3. Electricity & Gas    104.7    84.0        90.7       70.0
4. Construction          21.7     20.2         8.1        8.2
5. Wholesale & retail    trade, restaurants

   & hotels              10.7     11.6         2.3        2.8

1. Transport, storage

   & communication       14.8     15.6         9.7        9.8

1. Financing, Inssurance   real estate & busi-

   ness services         17.0     16.0         9.9       10.3

1. Community, social &   personal services

   (Govt.Admn & Defence) 19.4     19.5         7.5        5.8

   Less :Import Bank

   service charges        --      --          --          ------------------------------------------------------------------Gross Domestic Product   18.2     16.6         8.7        7.3

-----------------------------------------------------------------Source: Central Statistical Office

Chapter 3 REVIEW OF FIFTH PLAN OBJECTIVES

 The objectives of the Fifth Plan were to achieve a greater overall economic self-reliance, in particular, to fully meet the recurrent costs of the development process and to directly involve the people in the planning and execution of de velopment programmes.

 In light of these objectives, His Majesty the King enunciated five major strategies that have been incorporated in the formulation and im plementation of the Fifth Plan. The first three of the strategies enumerated below are related to decentralization either of planning or admini stration. The last two are about fiscal policy.

i)     Dzongkhag self-reliance

ii)   Decentralization of development admini stration

iii)People's Participationiv)  Mobilization of internal resources

v)   Control of maintenance expenditure

Dzonkhag Self-relince

 As self-reliance at the local and district levels are crucial to attain self-reliance at the national levell dzongkhag self-reliance was adopted as one of the important policy objectives and strategy of the Fifth Plan.

 There were numerous problems which needed to be addressed in order to implement this objec tive. Theproblems included, amongothers, low tax base, inadequate technical and managerial personnel, limited infrastructure and transporta tion difficulties in the dzongkhags. Various measures to overcome these constraints were adopted.

 Dzongkhag administration had been consid erably strengthened. The technical staff of all operational departments - agriculture, animal husbandry, etc. were placed directly under the dzongda. Accounting staff had also been pro vided and necessary administrative and finan cial powers delegated to the dzongkhag level. A dzongda wogma had been posted for each dzongkhag to function directly under the dzongdag, and made responsible for the entire development effort.

  Dzongkhags are now in a much betterposition to implement the Sixh Plan. A certain degree of capability for planning and implementation exists within the dzongkhags. The discussion of development activities in the Dzongkhag Yargey Tshogchung (DYT) and the production of the Dzongkhag plan documents has alsc increased the awareness and understanding of the people, at least, at the dzongkhag level.

  Dccentralisation Or Development Admini stration

  While decentralized administration has been a traditional practice in Bhutan, the devolution of responsibilities of planning and implementa tion of development programmes to the local administrations is new and was only introduced in the Fifth Plan.

  Before the Fifth Plan, the plans and program mes were implemented either directly by the central government functionaries or through regional of ficen, who had little systematic inter action with the local people. In contrast, in the Fifth Plan, the implementation of all rural devel opment programmes and other programmes of local character, meant for the benefit of the local people, were entrusted to the dzongkhag or gewog level functionaries. They have been brought under the administrative control of dzongdags.

  Fifth Plan documents had been prepared for inlividual dzongkhags, each plan reflecting the needs and specific priorities of the dzongkhag concerned within the over-all national frame work of priorities.

  Dzongkhag plan formulation had been left largely to the DYT's;- the Central Departments provided technical guidance only. substantial portion of the Fifth Plan outlays (40%) were planned for by the dzongkhags and their popu lace, and implemented with the voluntary hbour

14 Sixth Plan contributions of the local people.

  One of the most visible impact of this policy is that from a total staff of only 361 in 18 dzongkhags, prior to the start of the Fifth Plan in 1981, manpower strength has reached 3270 in 18 dzongkhags by the end of the Plan. Dzongkhag administration is now established as an invalu able part of the development process. It is evident that the experience of decentralization programmes will prove invaluable for the implementation of the Sixth Plan.

  People's Participation

 People' s participation in community and public works is not a new practice in Bhutan; it has a long tradition. It was, however, recognized that this practice was being increasingly un rmined and it needed to be restored in the lnterest of both the government and the people.

 The forum of DYT for decision making has been successful not only in giving more articu lation to rural problems and in bringing their concerns to decision makers, but it has also improved the perception of people toward par ticipation. DYT's functions included:

i)     forrnulationofthedzongkhagplan within the over-all framework       provided by the Government;

ii)   supervising plan implementation; and 

iii)ensuringthat the plan prepared was in keeping with the             capability of the people toprovide voluntary labour, which        would form a major input both for execution of plan projects       and maintaining them oncompletion.

 The dzongkhag administration collected all requests emanating from the DYT members and others for local developmental works. Each request was examined from the viewpoint of technical feasibility, availability of the required voluntary manual labour, national priorities and sectoral guide-lines and also the technical capa bility for their implementation at the dzongkhag level. The schemes satisfying these criteria were included in the Dzongkhag plan proposals after obtaining the approval of the DYT. Their ultimate inclusion in the Dzongkhag plan de pended on their being found suitable on the basis of the same criteria by the concerned Central Government Departments, and the Ministry of Finance allocating necessary funds for their implementation.

Woola

  The implementation of Shabtog Woola was fairly successful; but the implementation of Chunikang faced many difficulties. Chunikang mobilization for development activities were carried out satisfactorily only in few Dzongkhags. In some others, although labour was contrib uted, the quality of work was not up to the standard. In many Dzongkhags no activities under Chunikang were carried out at all. Many development programmes, particularly in the roads sector, were adversely affected due to problems faced in the mobilization of Woola labour. Nevertheless, Chunikang is likely to remain an important source of participatory labour and renewed emphasis must be placed on it both by the people and the government.

 Mobilisation of Internal Resources

 The actual revenue receipts for the Fifth Plan (1981-87) was Nu.1327.114 million. The reve nue mobilisation has increased from Nu. 119.6 millions in 1981-82 to Nu. 340.1 million in 1986-87. It also includes Nu. 22.706 million as receipts from Chukha Hydel Project in 1986-87. It can be seen that revenue realisation increased every year except in 1985-86 when there was a slight drop to Nu.257.5 (by Nu.18.7 million) as compared to Nu.276.153 million. This decrease was, inter-alia, due topartial remittanceofprofit by Penden Cement Authority and due to fall in revenue from excise duty on account of short supply of spirit from India.

 The main instruments of tax policy through which the objectives of resource mobilisation was sought were direct and indirect taxes. The major sources under the direct taxes were corpo rate tax, business income tax, rental income tax, contractor tax and tax on salary etc. The main contributor amongst indirect taxes are sale tax and excise duty including refund of excise duty from Government of India. 

 There has been a steep rise in direct taxes from 1982-83 onwards. This increase was attributed to the introduction of corporate tax of 30% on net profit of selected public undertakings, viz., Bank of Bhutan, RICB, Unit Trust of Bhutan, Bhutan Tourism Corporation and its Hotels, Penden CementAuthorityetc. in 1982. Besides, the rate of business income tax, was raised from 1% of the annual sales turnover to 2% of the annual sales turnover for all categories of traders.

  The indirect taxes have registered only a modest increase during Fifth Plan. Revenue from indi rect taxes increased from Nu. 54.() millioll during 1981-82 to Nu. 109.3 million dllling 1986-87. This was due to in.ldelu.ltc covel;lge of the indirect taxatioll. 'I he excise duty was imposed only on domestic distillery products and a few locally manufacture goods such as steel furniture, wooden furniture, jhari(tea balls), cement and forest products. There was no major changes in the area of excise duty during Fifth Plan period.

  In order to keep tl1e prices ot the goods competilive with lndian prices, the BST rates have been kept lower than the rates of Indian Sales Tax. There is no customs duty on import of the goods imported from third countries are for Government requirements and free of customs duty, the revenue from customs duty has been negligiable.

  The resource mobilisation under non-tax revenue was Nu. 493.530 million during Fifth Plan period rising from Nu. 23.7 million in 1981/82 to Nu.491.6 in 1987/88. The later includes Nu. 22.706 million from C.H.P. during 1986-87.  The increase in attributable to the revenue generation from Penden Cement Authority, Bhutan

Lotteries, Forest Royalties and Dividend from Bank of Bhutan and R.I.C.B.

Control of Mintennce Expcnditure

  As a result of stringent financi;tl and adminis trative measures to control civil service growth and consolidation of social services,the recur rent expenditure growth has been kept below 10 percentperanllum. Someoftheinitiativestaken by the Royal Government to control unneces sary expenditure include: reorg tnization, merger of comr)lemelltary departments, rationalization of government properties including pool ve hicles, privatisation and commercialization of certain government organizations such as Druk Air, BGTS, Press, the Central Workshops and Tourism. Under the various retrenchment and reorganisation exercises the government has been able to reduce about 3427 employees from 1977-7X to date. While this is an encouraging outcome simil.uefforts must becontinuedduring the Sixth Plan.

  Mobilization of internal resources was closely related to the ohjective of meeting recurrent cost and reducing govemrllent expenditure. The maintenance expenditure in the last year of the Fourth Pl.ln 19X()/19XI was of Nu. 169.5() millioll while intern.ll revenuegeneration in the same ye,tr was only of Nu. I()l.tS() million, leaving a gap of Nu. 7.9 million which was coveredfromotllersources. Incomp.trisorl in the financi.ll year 19X/X7, the annual mainte nanceexpenditurewasNu.51().5million,against the annual internal resources of Nu. 34().1 mil lion, leaving a deficit of only Nu. 17() million.

  Table 3.1 indicates revenue generation as a percentage of expenditure during the Fifth Plan period.

Sixth Plan

    TABLE 3.1 Revenue Mobilization and Maintenance Expenditure                   1981/82 to 1986/87

                                         (In Nu million)

-----------------------------------------------------------------

   Year      Maintenace     Revenue    Revenue as % of total

                                        Maintenance expenditure

---------------------------------------------------------------- 1981-82     169.705        119.634              70

 1982-83     213.057        137.732              65

 1983-84     223.166        195.995              88

 1984-85     304.007        276.153              91

 1985-86     339.248        257.953              76

 1986-87     368.039        335.249              92

----------------------------------------------------------------

   Total    1612.222       1322.716              82

----------------------------------------------------------------

Source: Department of Revenue and Custom

Chapter 4

FRAMEWORK FOR SIXTH PLAN

   To ensure tllat all plans and programmes for tlle socio-economic development of the country are clearly directed towards enhancing the secu rity, sovereignty and well-being of the people a tlle country, His Majesty the King was pleased to approve the following specific objec tives as a basis for the formulation of the Sixth Plall. The text is reproduced in its entirety.

i)     "Strengthening of the Developmcnt Admillistrtion of the Government

   During the last 27 years, due to the heavy ernphasis on development activities, sufficient attelltion and importance was not given to im proving the efficiency and capability of the development administration. The call for streIlgtllening the Government is not an indica tion of weakness as the standard of administra tion is higllly satisfactory despite the late start in devclopment; it is rather a recognition of the fact th;lt in order to accomplish national goals and to implement any policies and objectives in an effective manner, it is essential to reorganise and restructure the Government machinery from time to time.

   It is also absolutely essential for the Govern mellt to be strong, responsible and capable of me,lllillgful leadership that deserves the confi dence and respect of tlle people. It is necessary for tlle administration to develop a well defined codeofethicsanddisciplineemanatingfromthe age oId values and a strong sense of responsibil iy for tlle welfare and the security of the people alld the COUlltly. In tlle discharge of its respon sibilities, the Government must ensure that there is appro te decentralization and delineation of responsibilities to of ficials and organisations to facilit.lte botll initi.ltive, productivity and ac countability It must be fully recognized that eflective implementation of development plans and the security and sovereignty of the country will depend on a strong, efficient and dynamic Governmellt.

   Initial steps towards the implementation of this important objective such as reorganization of bureaucracy, timely auditing of accounts and stringent procedures for employment of civil servants have enhanced the productivity and efficiency of the government administration. Further measures under consideration include increased renumerations and merit based pro motions. In general, a vigorous system of 'reward and punishment' is being adopted in pursuance of the objective of building an efficient admini stration.

ii)    Preservalion and Promotion of Ntionl Idcntity

   For a small country like Bhutan maintaining and strengthening a distinct national identity will always be an important and vital factor for its continued well-being an(l security. It must be remembered that throughout the centuries Bhu tan has remained a sovereign independent coun try mainly because our past generations greatly cherished the unique national identity which had been forged by the high values of the Bhu tanese System and the rich cultural and religious heritage of the nation. Therefore not only must this unique identity be preserved and safeguarded against the negative attitudes and influences that emerge with the growth of the develop ment process but constant efforts must be made to foster an unfailing faith-in and, love and respect for the nation's traditional values and institutions. Concrete steps must also be taken to promote all those aspect.s of the nation's traditions, culture and customs that are relevent and practical for strengthening the country's unique national identity. At the same time it must be realised that such measures are not taken because of sentimental values ororlh (xlox views to uphold past practices but that they are crucial steps that must be taken to consolidate and safeguard the sovereignty and security of the nation.

   Actions o further this important national objective were initiated even before the start of the Sixth Plan. Among the measures taken were the re-organisation of the Central Monastic Body, strengthening of the Special Commission for Religious and Cultural Affairs and the produc tion andcirculation of information on traditions and culture which must be carried out regularly.

   In order to promote the nation's rich cultural heritage, all such institutions of learning in the Kingdom as Sanskrit Partshallas, Shedras Dubdras, Rigney schools etc. will be further strengthened and the establishment of important new institutions will be given high priority. Other important strategies to translate the objec tives into reality include an education system that recognizes and promotes loyalty to the monarchy, a sense of pride and commitment to the nation and a feeling of communal harmony and shared destiny based on the country's rich traditions and customs and the values of the Bhutanese System.

iii)  Mobili7tion of lnternal Resources

   The fact that the process of development in Bhutan was initiated and to a large extent still sustained by external assistance has been fully recognized by the Government. While this was unavoidable in the past due to changes in the fiscal system and non-monetization of the econ omy; since the Fifth Plan the Government has been extremely concerned that the country must assume increasing responsibility of the finan cial requirements of development.

   It is the policy of the Royal Government that the country should not only be in a position to meet the maintenance cost of all current devel opment works but that the nation must also become less dependent on external assistance for implementing new development program mes. To achieve this end, the Royal Govern ment declared the mobilization of internal re sources as a priority objective in the Fifth Plan. A target for meeting all current expenditures was also set. Although the performance in fulfilling this objective during the Fifth Plan was satisfactory, the continued importance of this vital goal cannot be under-rated as it is an integral part of the country's policy of self reliance. Recognising the great importance of this goal it has again been adopted as one of the main objectives of the Sixth Plan.

   In order to fulfil this objective, further strengthening of the tax collection system is required, together with the introduction of new taxes. While taxation must increase, the levels and mechanisms must be simple and conducive to economic growth. The main thrust for in creasing internal resources lies in encouraging industrial growth for which an outlay of about 13.3% of the Sixth Plan outlay has been ear marked. Investments in viable industrial ven tures in the private, joint and public sectors are extremely important for generating internal resources in view of the government's policy not to increase taxes in the rural sector. In fact the total 1986/87 rural tax of Nu. 3.4 million hardly constituted 0.67% of the annual mainte nance cost of that year. On the other hand, the total internal resource mobilisation efforts suc ceeded in meeting 67% of the total maintenance cost of Nu. 897.6 million for the 1987/88 fiscal year.

   During the current plan, the major changes initiated during the Fifth Plan for increased internal resource mobilization such as improve ment in the management and collection of reve nues (taxes, royalties etc.), reduction and better scrutiny of government expenditure and broad ening of the revenue base will be continued.

   An important aspect of mobilizing internal resources is the need to increase the ability to earn as much foreign convertible currencies as possible to meet the country's foreign exchange requirements. To achieve this end, several export incentive measures have been framed to encour age the agencies and companies involved in earning convertible currencies. These measures includes duty free import facilities for machin ery and equipment needed for export industries; rebate on corporate and turnover tax for export sales; export finance facilities at a nominal inter est rate of 12 per cent per annum by the Bank of Bhutan; refunding of excise duty and sales tax; price support incentive at a flat rate of 30 per cent; and allowing exporters to retain and use 15 per cent of the foreign exchange earned by them subject to a maximum limit of US $ 30,000 per annum.

iv)  Enhancement of Rural Incomes

   While the overall growth and development in the country has been steadily increasing, there has not been an equally satisfactory rise in rural incomes. Given the fact that 80 per cent of the collntry's population live in rural areas, the present level of incomes of the rural population is a matter of serious concern, as enhancing the per capita income is essential for raising the standard of living. The increase of rural in comes that had been achieved over the past years were offset by inflation and rising prices. There fore, it has been decided that a determined effort must be made to bring about the enhancement of rural incomes and accordingly this has been adopted as an important objective of the Sixth Plan.

   The mai n source of increasing rural incomes would be through the improvement of agricul ture and livestock productivity, diversification and enhancementofcashcrop productionand through improved marketing of farm products. The importance attached to increasing rural incomes is reflected in the sectoral outlay of Nu. 880.499 million just for agriculture develop ment and Nu. 331.000 million towards the de velopment of livestock. It is expected that these expenditures will lead to the enhancement of rur.ll incomes. This import;lnt objective must be seen within the context of the national goal to bring about a fair and equal distribution of economic growth and prosperity among the Bhutanese people.

   It is necessary to realize that unless farming becomes a good means of livelihood, there is every possibility that the increasing numbers of school going children and people joining gov ernment service or seeking urban employment may result in a situation whereby only the old and infirm may be left to stay in the rural areas. It is also necessary to recognize that with 80 per cent of the country's population presently living in rural areas, agriculture and livestock farming take on great importance both as a source of employment and as a means for meeting the country's basic food requirements. That is why high priority has been given to the development of agriculture and livestock farming not only to increase rural incomes but also to promote the important national goal of self-reliance.

v)   Improvement of Rural Housing and

   Resettlement

a)     Rural Housing: During the past decade there has been an enormous increase in theconstruction of houses both in rural and urban areas. In fact between 1980 and 1986, the Gov ernment alone disbursed a sum of Nu. 8.87 million as "kidu soilra" for rural house con struction (approximately 5000 houses). The number of houses built without "kidusoilra" has not been included. However, a majority of the houses built were without any improvement in design, structure orquality. Theydid not include improvements in any of the important aspects such as sanitation and insulation which are vital for comfort and an improved standard of living. The designs were also not cost effective and durable.

   Since a comfortable house is a source of security, happiness and contentment for people particularly in the rural areas, the objective during the Sixth Plan will be to improve the overall standard of rural housing and enhance the quality of village life and living standards. To ensure that substantial improvements are brought about in the stanard of rural houses constructed, a system of giving subsidies to those who adopt the improved features and changes is being formulated. Rules and regula tions for availing this subsidy will soon be printed and circulated. Rural carpenters and craftsmen (zowos) many of whom have now received training in constructing improved rural houses will also be given incentives for carry ing out such works.

   An important aspect of this objective is to ensure that there are no wide disparities in the living conditions between urban and rural areas.

b)      Resettlement: The Government is consid ering to resettle rural people who live in scat tered, remote and poverty striken areas where it is not feasible to provide essential services and

introduce development progr.lmmes. The past ystem of granting land to the poor and lan (lless on an adhoc "kidu" basis had many negative impacts. It did not benefit the people concerned as all productive land were already privately registered and the new allotments in most cases were either in remote locations or unproductive lands. As the allotment was done on an adhoc and highly dispersed basis the formulation and provision of development services on a planned and comprehensive basis, was also not possible. Besides failing to achieve the intended objective of improved livelihood and higher incomes for the villagers, the past policy on "kidu " land al lotment also aggravated the shortage of rural manpower as more hands were required to cul tivate the newly alloted land. Moreover the limited availability of land and the ever increas ing number of households due to the fragmenta tion of the family unit made it impossible to continue alloting "kidu" land on a perpetual basis.

   Under the proposed new resettlement policy c,lreful stulies will be carried out to select suit able areas in various Dzongkhags for settling landless villagers. Such an approach would enable the government to provide essential serv ices like schools, Basic Health Units, extension roads and power on a more cost effective basis to the new settlements. This, in turn, would enable the poorer and landless people of the country to receive the full benefits of develop ment programmes and services.

   Therefore, during the Sixth Plan enhance ment of rural incomes and resettlement has been adopted as another important objective. This is a recognition of the highest importance attached to raising the rural living standard and improv ing the quality of rural life.

vi)  Consolidtion and Improvement of Development Services

   While a significant headway was made in providing social service facilities to the people, notenough impact was achieved in actually improving the quality of life of the people as they were scattered in 192 gewogs. Therefore, substantial work is necessary to strengthen and rationalize ural services so th?t they can be

effective in improving the standard of living. The tasks include standardization of facilities and ensuring efficient and effective distribution of services particularly in education, health, agriculture and livestock extension, and the grouping of such facilities into Rural Service Centres (RSC) wherever required and neces sary. Such centres which must be carefully selected to ensure maximum coverage and cost effectiveness would not only provide better social services to the people in the areas covered but also act as vehicles for local level economic growth and administration. The RSCs would become units viable for providing physical in frastructure such as roads, water supply and power.

   In addition the RSCs would have the poten tial to serve as markets for farm products by virtue of the number of salaried people that will be concentrated there. Once RSCs are properly established they would become important growth centres which would also provide mobile serv ices to effectively cover even the remotest cor ners of their areas, and thereby ensure maximum coverage of essential services.

   Measures taken to implement this objective so far include an evaluation tour of all the Dzongkhags in 1985, to assess existing services and to identify-possible RSC sites. Project reports and master plans for several Rural Serv ice Centres have already been prepared.

vii)    Development of Human Resources

   In Bhutan virtually all sectors of the econ omy including the government service and development activities are constrained to some extent by the severe shortage of manpower, particularly of appropriately trained and experienced personnel. The situation is deteriorating with each passing year as the requirement for more specialized manpower is generated by the development process as compared to the num ber of people available from the educational and vocational institutions and from the popula tion at large. Consequently Bhutan employed over 113,000 expatriate personnel in the begin ning of the Sixth Plan as compared to about 10,000duringtheFourthPlan period(19781). 80 per cent of the country's development work was therefore dependent on non-nationals.

   In the past Plans there have been major ef forts on the part of the Government to promote increased literacy, orient the majority of chil dren towards vocational skills, especially farm ing which absorbs over 80 per cent of the popu lation and to ensure that eligible students re ceived higher education. For this purpose about 192 learning and training institutions existin the country as of date. In addition the Royal Gov ernment also carries out various kinds of in service and on the job training both within and outside the country. These efforts must be continued and a greater emphasis given to the education sector and the development of voca tional and higher }evels of technical, administra tive and managerial skills. This is in line with the Government's objective of developing a smaller and more professional civil service, introducing new and advanced technologies appropriate to the nation's requirements and building a dynamic and self-sufficient econ omy. Therefore, the Government has decided to adopt human resources development not only to support the development process, but also as an important development objective in itself. Concerted and determined efforts must be made to enhance and develop the human resources available in the country in all fields through education and extensive training so that the needs of manpower for the development of the nation can be fully met.

   The fulfilment of this objective is of vital importance if the country is to narrow the gap between the volume of its development pro grammes and its ability to implement them. It is essential to close this gap to a manageable level by developing the nation's own human resources. Otherwise, the need to ptotect the country's long term security and well-b-eing would make it necessary to slow down the pace of work and cut back on development rogrammes.

viii)  Promotion of People's Participation

   The Fifth Plan was a combined effort of the people and the government. There was close coordination both in decision making through the forum of Dzongkhag Yargye Tshogchung (DYT) and implementation of programmes at the Dzongchag level, though Shabtogwoo}a and, to a lesser extent, Chunikang. While there is reason for satisfaction, it has not been without difficultiesbothatthegovernment'sandpeople's level. During the implementation of the Fifth Plan, genuine problems of work scheduling and the lack of'required skills and equipment at the village level emerged. As it is the Government's intention to continue this important co-opera tive mechanism whereby the people are fully involved in development works and nation build ing, this objective has again been given high priority in the Sixth Plan. As it was not a fair or effective system, the Chunikang Woola ( 1 month for each household) has now been replaced by a new system of "Gungda Woola" (15 days for each household on daily wage).

   The most striking feature of the last 27 years of development work is the fact that while the government had shouldered the full burden and responsibility of implementing and providing socio-economic development services, the people in most cases were just passive recipients of such benefits and services. Henceforth, not only should the people take a more active part in decision making and the implementation of development projects, but they should also real ise the immense constraints under which the Government has been providing heavily su sidised development services and programmes. The Royal Govemment now expects the people to come forward and work hand in hand with the govemment in shouldering the heavy responsi bilities of building a prosperous, secure and self reliant nation.

   The objective of people's participation for the Sixth Plan recognizes that money and mate rial are not the only key factors for the successful implementation of development plans. It is equally important that thepeople have the will to extend their full commitment and co-operation in carrying out the development works under taken by the govemment. Indeed, the active participation of the people is vital for the en hancement and achievement of all the nine ob jectives of the Sixth Plan.

ix)     Promotion of National Self-reliance

The objective of self-reliance in the Bhutanese contextmeans ultimately to be able to stand on one's own feet, have the power of decision in our own hands and not be dependent on others. This is one of the most important national objec tives of the country. All development program mes and policies are directed towards achieving this objective and preserving the sovereignty and security of the nation by strengthening the country's unique national identity and promot ing the high values of the Bhutanese System.

   Prior to the initiation of development activi ties, the country even without extemal aid assis tance was fully self-reliant. With the introduc tion of major development programmes in 1961, including large scale development infrastruc ture works, it became necessary for the Govern ment to rely on extemal assistance. Every effort must now be made to bring the country to its original self-reliant state as soon as possible. In order to give further impetus to the national goal of self-reliance, this has been again adopted as one of the rhost important objectives of the Sixth Plan.

   The economic and social capacity for en hancing and sustaining production must be es tablished firmly. All programmes and plans must be clearly directed towards achieving this objective. There must be prope planning and co-ordination of the various sectors of the economy so that gainful investments andcareful management of the country's financial, human and natural resources lead to steady growth and development towards self-reliance.

   In fact all social, economic, political, cultural and development objectives and efforts will have no meaning if an acceptable level of na tional self reliance is not achieved. The quest for self reliance be it at the household, village, dzongkhag ornational level - is vital for the sovereignty and dignity of the people and the country".

Chapter 5 EXTERNAL ASSISTANCE AND AID MODALITIES

International Assistance

   Assistance from Government of India has been traditionally the main source of external assistance. Indian aid has generally doubled in each successive plan period. In the Fourth Plan, Government of India grant for the developmen tal activities was Nu.695.74 million. In the Fifth Plan, Government of India assistance was Nu. 1888.36 million.

   The most important development project financed by Government of India during the

Fourth and the Fifth Plans was the Chukha Hydel Project, with a capacity of 336 MW, on 60% and 40% grant and loan basis respectively. Compared to assistance from otherinternational agencies, the untied nature of government of India assistance permits more flexibility in budgeting. The grant from India taken together with the intemal resources, forms the main budgetary support of the plan. The total amount of budgetary andproject tied assistance from the Government of India for the Sixth Plan is ex pected to be around Nu. 3499.004 million, an increase of about 85% over the Fifth Plan assistance.

   With the increased number of development programmes in each successive plans, to go for more assistance from international agencies other than Government of India was inevitable.

   The total assistance received in the Third Plan from the UN system and under the Colombo planwasin theorderofUS $ 1.98 million. In the Fourth Plan, with increased number of donor agencies, the contribution increased to US $ 24.21 million. Starting from a mere 3% contri bution to the total plan effort in the Third Plan, international agencies contributed 19% of the total Fourth Plan outlay. Assistance from multi lateral and bilateral donors, other than India, in creased during the Fifth Plan. The total share of international assistance to the plan expenditure was around 27%. Loans from international financial institutions such as lFAD, Asian Developmen Bank, World Bank, Kuwait Fund for Arab Economic Development became an important component of international assistance during the Fifth Plan. This enabled the implem entation of some large scale development projects.

   The total external indebtness signed so far amounts roughly to $ 95.5 million. Out of total Sixth Plan outlay of Nu. 9559.236 million, the internal resource mobilization (including inter nal borrowing) is expected to meet around 38% of the plan expenditure and the remainder would be met from the external assistance, both grants The total international assistance, other than from Government of India, is expected to be around Nu.2404.464 million for the Sixth Plan.

   Aid Modalities

   Till the end of Fourth Plan, assistance re ceived from various donors was in the form of grants obviating the need for repayment. Since substantial portion of assistance during the Sixth Plan is coming in as loans, debt servicing and repayment liabilities are of great concem. Therefore, special attention is to be given to the accumulation of hard currency reserves and to boost export for hard currency earning. It is envisaged that the foreign exchange require ment is likely to remain limited in the near future. Therefore, the government will resort to borrowing only on the most concessional terms, and also seek for grants as much as possible.

   The government has been trying to concen trate the efforts of donors in particular sector where their technologies are prefaable and appropriate to Bhutan's development. This should be continued in order to avoid overlap ping, inconsistency and improper co-ordina tion.

   Bhutan has been receiving assistance from the multilateral donors generally, in the form of technical assistance. While technical assistance programmes are important fordevelopment, it is necessary to give importance to the capital in puts too.

   As the investment expenditure is increasing in each successive Plan, the local cost, particu larly the foreign exchange component, is of great concern.

   With the increasing number of donors and inflow of considerable external assistance, proper co-ordination has to be ensured in order to avoid overlapping and duplication. Also the gestation period between the initial request and the final disbursement of the project and programme assistance should be made as short as possible to avoid lengthy procedures of further investiga tion and approval anddelays in implementation.

   In order to mobilize the external assistance, the question of predictability of assistance flows is of great importance. There were aid co ordination meetings at the beginning of the Plan period where some pledges by donors are made. Government of India gives commitment of as sistance at the beginning of each plan and UN system prepares country programmes which have annual indicative planning figures for a period of five years. The same structured aid proce dures have not been evolved for bilateral do nors. Hence, aid negotiation and reviewing have been less systematic. A clear country pro gramme needs to be drawn for bilateral aid along the methods followed for seeking UN and In dian assistance.

   Co-financing too is an important tool for external resource mobilization. Indeed some of the major investment projects are being imple mented under this arrangement. It is felt that the sound co-financing arrangement with proper co-ordination should be continued.

Chapter 6 FINANCIAL INSTITUTIONS

  Strategies   and Prorammes

  Financial sector at present consists of two banks - (Royal Monetary Authority, the country's central bank, the Bank of Bhutan, the onlye commercial bank) and three nonbanks financial institutions (Royal Insurance Corporation of Bhutan, the Unit Trust of Bhutan and Bhutan Development Finance Corporation ).

  Royal Monetary Authority

  The policy of replacing Rupees by Ngultrums will be followed in a gradual and measured approch. Royal Monetry Authority's attempts to de-link the Ngultrum from the Indian Rupee should be accompanied by measures to preserve total confidence in the Ngultrum. This endeavour has to be strongly backed by efforts to strengthen the country's economy, especially its export capacity to India and third countries.

  The country's convertible currency reservesneeds close monitoring so that the magnitude ofdebt selvicing does not get ovelwhelming. Theovernment must exercise the utmost prudencein hlcurrirl furtller external debt.

   Provisions have to be made to leave aside a portion of the convertible currency reselves for "necessary" imports and debt repayment. The importance of minimising the imports of non essential luxury consumer goods cannot be over emphasized.

   It is also vital to be vigilant to developments in Indian Rupee reserves. Reserves should be sufficient to finance at least six months of im ports from India. The promising stream of Rupee inflow from exports of electncity, ce ment and calcium carbide to India; would ease the servicing of loan. Reserve position from 1981 to 1988 are shown in Table 6.6.

   Dunng the Sixth Plan the Royal Monetary Authority will be equipped to act as lender of last resort to the banking system, whenever the need alises. So far, due to the Bank of Bhutan's suflcient liquidity, this has not yet been neces saly.

   Royal Monetaly Authonty will continue to monitor-the development of monetary aggre gates, prices, balance of payments, and other important economic variables. Monetary trends are shown in Table 6.1. The Authority will make policy recommendations to the Govemment, whenever it appears necessary.

 TABLE 6.1 Monetary Survey (a) Royal Monetary Authority and Bank of   Bhutan,

                         1983 to 1987

-------------------------------------------------------------------

  Item                             End of year

                         1983    1984     1985     1986    1987

-------------------------------------------------------------------

Foreign assets(net)     345.7   490.2    595.4    700.1  1,077.0

Rupee                   260.5    317.6   359.0    380.0     579.0 

Other                    85.2    172.6   236.5    320.1     498.0

Domestic credit         110.4     45.1   101.7     53.9    -208.9

Claims of govt. (net)    10.0   -54.0     19.7    -33.1   -304.7

Claims on govt. corpo-

rations                  57.3     41.3    26.6     19.7      13.5

Claims on private sector 43.1     57.8    55.4     67.3      82.3 Total liquidity-Board

money (M2)              324.6    367.0   464.0    498.8     552.5 Money supply-Narrow 

money (M1)              177.2    209.8   261.7    277.1     316.8 Currency outside banks   22.1    46.2     70.4     90.7    103.5

Demand deposits         155.1    163.6   191.3    186.3     213.3

Quasi-money             147.4    157.2   202.3    221.8     235.7

Other items (net)       131.5   168.3    233.1    255.2    315.6

-------------------------------------------------------------------

(a) Revised data, excluding rupees in circulation

Source: Royal Monetary Authority of Bhutan and Bank of Bhutan.

Bank of Bhutan

  The number of branches will be further in creased and more people have to be familiarised with the banking system by means of active marketing. The bank was constrained to lend for invesnent finance by lack of bankable projects and a lack of trained entrepreneurs.The Bank's lending practices need to be reconsidered to tum it into a better instrument of developnlent by providing loans to industry and agnculture. The interest rate structure of the bank of Bhutan is given in Table 6.2 and 6.3.

TABLE 6.2 Bank of Bhutan Interest Rates - Deposits 1982 to 1988

                               (per cent per annum)

----------------------------------------------------------------

                              Effective dates

----------------------------------------------------------------

 Type of deposit    October    May    June    June    January

                     1982       1983   1985    1987    1988

----------------------------------------------------------------

Savings               5.0        5.0    5.0    5.0     5.0

Fixed

3-6 months            5.5        5.5    6.5    6.5      6.5

6-9 months            6.0        6.0    8.0    8.0      8.0

9 months - 1 year     7.0       7.0     8.0    8.0     8.0

1-2 years             8.5        8.5    8.5    9.0      9.0

2-3 years             9.0        9.0    9.0   10.0     10.0

3-5 years             9.5       10.0   10.0   11.0     11.0

5 years and above    10.5      11.0    11.0   11.0    11.0

---------------------------------------------------------------

Source: Bank of Bhutan

TABLE 6.3 Interest Rates for Commercial Loans(a)

                               (percent per annum)

---------------------------------------------------------------

 Type of loan                             Interest rate(%)

---------------------------------------------------------------

Commercial                                    

 Export trade                                  12.0

 General trade                                 15.0

Transport

 Busses, lorries & trucks & cars               15.0

Agriculture (including livestock)

 Up to Nu. 20,000                              10.0

 Up to Nu. 100,000                             12.0

 Above Nu. 100,000                             13.0

Industrial

 Up to Nu. 1,000,000                           10.0

 Up to Nu. 5,000,000                          13.0

 Above Nu. 5,000,000                           14.0

Working Capital                                 15.0

Tourism                                         13.0

Housing(commercial & residential)               14.0

Miscellaneous(including personal loans)         15.0 -------------------------------------------------------------

(a) Rates applicable since July 1,1988. Rates apply to all             financial institutions. Source: Bank of Bhutan.

  Saving mobilistion have to be intensified in order to generate additional domestic re sources for development. This implies, in par ticular, that fixed deposits have to be promoted for that pulpose. Savings deposits are included in dem.lnd deposits, since in Bhutan their char actenstics are very similar.

   Vigorous promotional compaigns will be launched to encourage banking habits among the rural population. To the extent possible, local people should be involved in these com pigns, to mke the campaigns cost effective.

  Another possibility would be to introduce a scheme of trnsfelTing monthly wages and sala ries at employees (government, financial insti tutions, and corporations) directly to savings accounts of the employees with the Bank of Bhutan. This approach would increase the fmilianty of many people with the banking system and, therefore, might result in an in crease of fixed deposits. Monetary policy will be designed such that epositors can earn a positive real rate of interest on their deposits with financial institutions.

  Competitiveness of the banking system should be increased by creating conditions favourable to new entry. Bank's interest rate should be freed from prevaling restrictions. Ways of liberalising the financial sector are being studied.    Non-Bank Finncial Institutions

  The country's nonbank financial institutions, the RICB and the UTB, have at present, been heavily geared towards investment in housing and bank deposits. Financial statistics of NBFI are summansed in Table 6.4 and Table 6.5. I t re quires diversification to achieve a bettercover age of the economy. Since a large pan of the in stitutions' funds are trust funds, preference should also be given to "safer" investments.

   Funds could be invested, for example, in Bhutanese government secunties, which might have to be created in the future as an additional source of financing government debt.

TABLE 6.4 Royal Insurance Corporation of Bhutan - Financial Statistics, 1983 to 1987

                                                Nu in millions

-----------------------------------------------------------------

                   Assets

----------------------------------------------------------------                          Investments(a)

                                            Claims  Claims

                              Claims  Claims On      On

End of  Total  Re-   Total  on Govt  on   Deposit Non-mon

Year assets  serves  Invest- Enter-  Pri- Money   Finance Real

                     ments   prises  vate Banks  Instits Estate                                       sector

1983     140.1    2.6  137.5    25.1   41.3  52.4    6.1    12.61

1984     170.1    7.0  163.1    29.0   61.0  51.2    6.8    15.0

1985     219.1    3.4  215.7    17.9  102.2  71.8    6.8    17.1

1986     269.5    2.5  267.1    18.1  150.3  71.0    7.0    20.7

1987     354.5    0.8  353.8    14.9  233.2  75.2    7.0    23.4

                          Liabilities

               Insu

End            rance                                Other of              Re-    Life  GEPF    UTB  Capital Items Year   Total   serve  Fund  Fund(b) Fund(c) Accts  (Net)

1983     140.1    5.8    4.8   102.5   21.3  12.0    -6.2

1984     170.1    9.8    5.6   119.8   36.8  12.0   -13.9

1985     219.1    7.6    7.4   149.2   66.0  12.0   -23.1

1986     269.5    6.9    9.0   171.3   92.1  12.0   -21.8

1987     354.5    6.9    9.2   210.8  145.4  12.0   -29.7

-----------------------------------------------------------------

(a) Including Unit Trust of Bhutan funds. (b) Government Employees Provident Fund. (c) Unit Trust of Bhutan

Source: Royal Insurance Corporation of Bhutan.

TABLE 6.5 Unit Trust of Bhutan - Financial Statistics, 1980 to 1987

                                       (Nu. in millions)

----------------------------------------------------------------

     Assets                                  Liabilities

                       Investments                         Other

End Total Re-  Total (RICB) Di-  Total   Depo- Call Cap-  Items of       serves       (a)   rect         sits loans ital  (Net)

Year                                                 Accts

----------------------------------------------------------------1980   4.0 0.5   3.5   -     3.5    4.0   1.6  -    2.5   -0.1

1981   10.5 0.1  10.4   -    10.4   10.5   1.6  -    2.6    0.3

1982   16.3 1.2  15.0   -    15.0   16.3  12.8  -    3.1    0.3

1983   25.2  -   25.2  21.3   3.9   25.2 20.1   -    3.8   1.3

1984   40.9 0.1  40.8   36.8  4.0   40.9  33.8  -    4.4    2.7

1985   70.0 0.3  69.7   65.4  4.3   70.0  57.6  -    4.2    8.2

1986   100.3   - 100.3   91.4   8.9 100.3  86.8   -   5.4    8.1

1987   150.2 0.1 150.1  145.4   4.7 150.2 125.3  6.5   5.3  13.1

----------------------------------------------------------------(a) Royal Insurance Corporation of Bhutan Source: Unit Trust of Bhutan.

Bhutan Development Finance Corporation

   In order to provide investment capital to agriculture, industry and commercial sectors, BDFC was set up.

   The BDFC shall have the following main responsibilities: 

i)  promotion of entrepreneurial development; 

ii)            identification, formulation, and appraisal of proJects;      iii) provision of term loans for viableprojects; 

iv)supervision of the execution of loan projects, provision of        timely assistance, and regularrepayment after the                 gestation period; and 

v)  mobilisation of domestic and external resources for                industrial lending.

TABLE 6.6 Gross International Reserves, 1981/82 to 1987/88 (a)

---------------------------------------------------------------

Item       1981/  1982/   1983/   1984/  1985/  1986/  1987/

           82      83     84      85      86    87     88(a)

----------------------------------------------------------------

                             Rupee Reserves

                             (million rupees)

Rupee 

reserves    209.5  260.4  312.5   381.3   371.1  446.9   637.2

Royal Monetary Autho-

rity         -       -      6.2    12.0     8.1   10.7    14.2

Bank of

Bhutan      209.5  260.4  306.3   369.3   362.9  436.2   632.0

                       Convertible Currency Reserves

                          (million US dollars)

Convertible Currency

reserves      8.1    8.5   10.4    14.2    20.6   28.1    38.9

Royal Monetary Autho-

rity(c)        -      -     4.4     7.9    19.8   26.9    36.9

Royal Gov-

ernment(b)    3.3    2.8     -       -      -      -       -

Bank of

Bhutan        4.1   4.5     4.7     6.3    0.8     1.1     1.9

Royal Insurance Corporation of

Bhutan(d)     0.6   1.2     1.3      -     -        -      -

                         Total Reserves

                      (million US dollars)

Total        30.5  34.6    39.6     44.9  50.8    62.6    86.2

(a) As of end-March up to 1986/87 figure refers to position at May 1988. (b) Includes reserves tranche position in the International Monetary Fund from 1981/82. (c) The large change in 1985/86 in mainly a result of the takeover of the Bank of Bhutan's convertible foreign exchange by the

Royal Monetary Authority of Bhutan. (d) Small reserves from 1984/85

-----------------------------------------------------------------

Source: Royal Monetary Authority of Bhutan.

Chapter 7 Education

Objectives

  The Sixth Plan attaches overriding priority to gre;lter enrolment and more equitable eoverage of he educational serviees between dzongkhags, sexes and ;ge groups, partieularly at the primary sehool level. It preseribes a substantial quantita tive expnsion of primary edueation as well as the development of second.lry and higher edu ction. The N;ltional Edueation Poliey adopled in 1985 contains four main goals on which the strtegies of the Sixth Plan have been based. These are nmely:

Outlay

i)  meeting Bhutan's human resource needs; 

ii)            improvement of the relevanee of e(lucational eontent as well       as the processes of learningand teaehing; 

iii)          ineuleation of traditional and religious values; iv) and the promotion of adult edueation.

  The Sixth Plan programme design remedies previous inadequaeies by stating operational targets in quantifiable terrns so that mtnage ment tools of evaluation ean be effeetively applied for the sueeessful implementation of programme.

TABLE 7.1 Education Scctor outlay - Sixth Plan

                                          (Nu. in Million

--------------------------------------------------------------Sl  Programmes                Current     Capital    Total

No.

---------------------------------------------------------------

1. Primary Schools            183.316     47.439    230.755
2. Junior High Schools         89.100     17.695    106.795
3. High Schools                53.322     12.145     65.467
4. College                     16.768      5.000     21.768
5. Teachers Trg. Institute     17.765     9.600      27.365
6. Technical Institutes        21.920     10.000     31.920
7. Rigney School                5.723      0.850       6.573
8. Central Sanskrit Pathsala    0.000     1.000       1.000
9. Blind School                 1.023      2.000       3.023

   Sub - Total               388.937    105.729     494.666

1. Direction & Support                     
   1. Curriculum Development                  8.832       8.832
   2. Inspectorate                            0.650       0.650
   3. Board of Exa. & Certificate             1.028       1.028
   4. Social & Cultural Dev.                  0.500       0.500
   5. Agricultural Programme                 10.850      10.850
   6. School Health Programme                 0.712       0.712
   7. Technical Education Dev.                5.000       5.000
   8. Dzongkhag Development
   9. Printing & Publishing                   7.500       7.500
   10. Teachers in-service Trgs.               1.500       1.500
   11. Scholarship                 15.000                 15.000
   12. Establishment of the     Administrative Centre for     the University
   13. Establishment              128.522      0.000    128.522
   14. Extended Classrooms                     4.000       4.000
   15. World Feeding Programme               100.000     100.000

--------------------------------------------------------------

   Sub-Total:                143.522    140.572     284.094

--------------------------------------------------------------

   Grand-Total:              532.459    246.301     778.760

--------------------------------------------------------------

Programmes and Targets

The main programmes for the Sixth Plan may be presented broadly under seven heads. These are:

  i) Coverage and outreach  ii) Relevance of content iii) Process (teaching and learning)

 iv) Facilities (buildings, equipment and spatial                      requirements)   v) Technical and vocational education  vi) Special education services for the disabled

vii) Nonformal education including adult literacy promotion

  Coverage and Outreach

  Primary Education

  There were 148 primary schools with an enrolment of 40,688 at the beginning of the Sixth Plan as shown in Table 7.2. The enrolment size reflects a modest achievement towards the larger goal of Universal Primary Education and eradication of illiteracy. Table 7.3 presents the distribution of students across various schools and institutes. The Sixth Plan programmes seek to increase the primary school enrolment at an annual rate of 6 percent over the five year period, raise the quality of primary education, expand facilities and correct imbalances of and access to educational opportunities between dzongkhags and regions. Towards this end, 10 large primary schools, 2 urban primary schools and 1 industrial-project related primary school

TABLE:7.2 Number of schools and institutions(1987)

Institutes                          Number

a)  Primary schools                   148

b)  Junior high schools                21

c)  High schools                        9

d)  Institutes & college                7

c) Sanskrit Pathsala                   5 -----------------------------------------------Total                                192

are being set up. For optimum use of resource, 49 extended classrooms in selected catchment areas re being established.

Secondary Education (Junior and High schools)

   Secondary education will continue to be geared to meet manpower for direct employment, technical and vocational training.

   There are 21 junior high and 9 high schoo1s. They have a total enrolment of 15,553 out of which only 3040 are at the secondary stage (classes VII-X). To enhance the capacity and the effectiveness of the secondary level, all high schools, during the next 5 years, will phase out their primary sections. n addition, two of the juniior high schools will be upgraded to high schools and one new junior high school will be established.

Higher Education

  Sherubtse College and the National Institute of Education are the only seats of higher educa tion in the country. During the Sixth Plan, concerted effort will be made to expand the facilities within these institutions. The enror ment of both the College and the NIE shall be increased gradually during the course of 11 Sixth Plan.

  Honour courses will be introduced in some subjects in Sherubtse College. The issue of introducing a greater range of disciplines i

Sherutse College is also being studied. 1

Simtokha Rigney School shall start courses in +2 (pre-university).

Relvance of Content

   Having been structured on the Indian Sys tem, the education system in Bhutan needs to be reforrned to relate it to the values, environment and the history of Bhutanese people. Therefore, during the Sixth Plan, the curriculum in ttle schools will be re-oriented to:

(a)           provide to the students, besides the 3 R(s), a package of knowledge and skills that is linked totheir adult lives;

(b)          cultivate ethical values and patroitism amongst students and produce Bhutanee citi zens committed to Driglam Choesum and serv ice o the Kin and country;

(c)           foster amongst our chidren an under standing and appreciation for the salient fea tures of Bhutanese culture and ethos, and a sense of 'oneness' cutting across linguistic and re gional differences; and

(d)          imprt to the students a healthy attitude towards agncultural occupation and psycho loical acceptance of rural lives.

   Special emphasis will be given to rewritten textbooks promotion for each subject for pn mary as well as higher secondary levels. This will be accompanied by the writing and produc tion of teachers' guides for each subject and class.

Process (teaching and learning)

  The most critical component of the improve ment of the process of teaching-learning in tlle schools ale the teachers. The existing strength of teachers are reported in Table 7.4. Therefore the Sixtl- Plan lays great stress on developing teaching quality and competence. This shall m tinly be chieved thoull continue(l reearch and development in the the pheres of learning and teaching methodology an ractices. Teach ing and learning processes baed on the experi ences acquired throuh the New Approach to Primry E(ucation (NPE) pilot project will be disseminated.The erviceconditions of the teach ing force needs to be reviewed to attrct beter people to the profession.

Mechnisms, such as tests, interviews, promotions and inservices courses as well as screening will be initiated to build up a cadre of efficient and dedicated teach ing force.

  The output of pnmary teachers from Paro T.T.C will be increased from 10 in 1987 to 70 by 1992, and at Samchi from 36 in 1987 to 70 in 1992. TheoutlowofDzongkhalnguageteach ers from

Simtokha Rigney School will be in cresed from 2() in 1987 to :() by 1992. Further, a new 'I'.T.C shall be established dunng this period at Kanglung.

   Evaluation system up to class X will be localised to give the system flexibility and diversirlcation of cumculum. The Bhutan Board of Examinations will co-ordinate this task. The Bonrd shall serve as the central authority for certification and standrdization of all vocational courses in the country. The Department of Education shall work out an optimum teacher student ratio at variou levels of the system. This should result in an efficient deployment of

TABLE 7.3 Total No. of Students by Type of Schools & Institutions -1987

------------------------------------------------------------

Schools and Institutes           Boys      Girls    Total

------------------------------------------------------------

a) Primary schools               26539     14149   40688

b) Junior high schools            6884      4392   11276

c) High schools                   2760      1517    4277

d) College                         369        52     421

e) National Institutes of Edn.      67        56     123

f)   Teacher Training Centre          16         8      24

g) Royal Bhutan Polytechnic        172         3     175

h) Royal Technical Institute       313                313

i)   Simtokha Rigney School          442                442

j)   Blind school                     23         7      30

k) Sanskrit Pathsallas             258        89     347-----------------------------------------------------------

Total                            37843     20273   58116 ----------------------------------------------------------existing tachers in the schools and minimize he requirement of additional teachers.

Facilities (buildings, equipment, etc.)

   Particular emphasis will be given to the im provement of physical facilities in the schools in terms of classroooms, staff quarters, furniture, dining rooms, hostels, gardens, water supply, sanitation facilities, electricity where possible, play-fields, sports and office equipment. Ade quae teaching and learning resources in tem1s of library-books, teaching aids and science equipment will be provided.

   Norms and standards for all educational fa eilities will be evolved. A proposedconstruction cell within the Department of Education will cntrol the design nd uality of conseruction, and monitor all maintenance and repair activi ties. Parental and community support will be rnobilized for construction and maintenance of school buildings on the principle of shared re sponsiblility and collaboration between the parents and the government.

   Health and hygiene standards will be devised and implemened through the educational tlealth support programme. The health and developmentofechindividualchildshallbemo oled and mintained.

   TheGoverrlmellt will delerlllille the Illlns ol' gradually replacing the Wld' fcc dh ro ramlllc in the schools bearin in mind lllc possihlc im plications of growin dcpelldellcy an(i the na tional goal of self relianc.

   Technical and Vocational Education

   To meet emergent work opportul)iies for craftsmen and technicians both in public an(l private sectors, technical education h;l! I be con solidated both in terms of institution building and the curriculum.

   A diploma course in Mechanical Engineer ing andothercourses as may be required shall be introduced in the Royal Bhutan Polytechnic. All the obsolete equipment in the institute will be replaced with new ones and the institute's total student-capacity will be expanded.

   The Royal Technical Institute (RTI) will compress its total course years of 4 to 3 to enable it to turn out more graduates each year. The course in the RTI will be reviewed and revised in the light of changing demand.

   During the Sixth Plan, a rade school will be established to cater to the lower level of skilled personnel in the country thus reducing the dependenceon the expatriate workers. This school shall conduct courses ir. carpentry, masonry an(l plumbing and shall ake trainees who have dropped out from Class VI.

   Special Education Services for the Blind

   Zangley Muenselling Blind school, which has a current enrolment of 30 students, is the only institute that subserves the special educational needs of the blind. There is need to focus more on the education of the disabled and handi capped and efforts will be made to open suitable facilities.

Nonformal Education & Adult Literacy Promotion

   The formal Education system reaches out to only a fraction of he population and does not cater to the majority who wish to have a functional literacy. It is government's policy to provide educational and literary services for the benefit of these diverse groups -paricularly to those who have not had access to prlmary education and to those who have dropped out from schools at very early ages.

TABLE 7.4 Total staff strength of Education Department (1987)

--------------------------------------------------------------

1. No of saff at Headquarters  National Non-naional   Total    and other education offices  110        54         164

No. of teaching staff (in schools and institutions)

-------------------------------------------------------------Institutes                       National  N/National  Total

--------------------------------------------------------------

a)  Primary schools                 854       544        1398

b)  Junior high schools             186       225         411

c)  High schools                    100       129         229

d)  College                           5        24          29

e)  National Institutes 

   of Education                     11        12          23

f)   Teacher Training Centre          20         3          23

g)  Royal Bhutan Polytechnic         14        14          28

h)  Royal Technical Institute        14        10          24

i)   Simtokha Rigney School           25         7          32

j)   Blind school                      9         2          11

k)  Sanskrit pathsalas               13         0         13--------------------------------------------------------------

   Total                          1251       970        2221

-------------------------------------------------------------Source: Department of Education

Chapter 8 Human Resource Development

   Human Resource Development (HRD) has ben one of the major activities of the Royal Government of Bhutan ever since the First Plan began in 1961. Prior to 1961 Bhutan had very ininificant number of tech al and profes sion.ll personnels. About 99% of the civil service was manned by expatriates in the early 1960's. By the beginning of the Sixth Plan only bollt 20% of the total strength of civil servants was non-national. However the shortage of technically qualified manpower still plagues the socio-economic development programme.

   Human Resource Development has been dopted a one of the nine priority objectives of the Sixth Five Year Plan. To realize this objective, the Royal Government has taken an integrated approach to human resourcess development during the Sixth Plan and consider it the main instrument for enhancing the technical and managing capabilities of the civil service for accelerated implemtation of socio-economic development programmes.

Objectives and Programrnes

The specific objectives of HRD are enumerated as under:

i)    To provide a pool of trained manpower. 

ii)   To develop a system for selection and placement of fellows.iii) To strengthen internal capacity of the Royal Civil Service       Commission (RCSC) in training policy, career development,          proformance assessment, development and utilization of

     skilled manpower resource, perio :iically update the HRD           Master Plan and assist in developing modalities for                  co-ordina tion of external assistance in HRD. iv)  To strengthen and upgrade in-s0untry training capacity and      conduct training course in key areas of management.

   An HRD Master Plan contains about 5726 individual training and fellowships (excluding general education upto higher secondary school) for the period 1987- 1992 at an estimated cost of US $ 28 million. Table 8.1 gives a schemewise break-up of personnels to be trained according to HRD Master Plan for the Sixth Plan.

TABLE 8.l Sectorwise  HRD Programme - Sixth Plan

-------------------------------------------------------------Scheme                            Sectorwise slots for training

-------------------------------------------------------------Public Administration                         184

General Development                           259

Judiciary                                      35

Finance                                       488

Trade & Industry                              121

Natural Resources                             122

Energy & Technology                            84

Agriculture                                  1226

Animal Husbandry                              863

Forestry                                      485

Transport & Communication                     432

Mass Communication                             78

Public Works & NUDC                           443

Population, Data Processing & Statistics      424

Education & Culture                           218

Health                                        264

-------------------------------------------------------------

Total                                        5726

-------------------------------------------------------------

Source: Royal Civil Service Commission

Chapter 9 HEALTH

   In the Third Plan (1971-1976), the Royal Government institued the Basic Health Units for delivering the primary health care to remote habitations in the country. iince then, the coun try has assidiously followed this concept of integrated health care. But a major shift have occured since 1979 from the purely curative to prcventive and promotive aspects of health serv ices, from urban to the rural population and from mass compaigns to a system of integrated health services. Emphasis has been put on eliminating disparities and augmenting health-services for the unclerprivileged and in the under-served areas of the country.

   Bhutan's health infrastructure comprises of a network which starts with Basic Health Units(BHUs),

Peripheral Health Post (Dispen saries) and progresses to district, regional and national referral hospitals. Within the frame work of this system, the Iealth Department runs three training institutions: (i) Health School at Thimphu, which provides courses in mid-level manpower training and diploma course in gen eral nursing, (ii) National Institute for Family Health at Gaylegphug, which provides reorien tation courses to all types of health workers and to other related Departmental staff, & (iii) an Indigenous Training Centre where indigenous physicians and pharrnacists are trained.

Objectives and Strategies

   The thrust of the health development efforts .n the Sixth Plan is to strengthen and expand health infrastructure so that effective coverage can be provided. It is expected that by the end of the Sixth Plan, a country-wide network of effec tive primary health care infrastrcture with ade quate referral support will be in operation which will deliver essential health care to the entire population. Table 9.1 gives basic health indicators.

TABLE 9.1 Selected Health Statistics

------------------------------------------------------------Health Facilities in 1987                     Nos.

-------------------------------------------------------------

Number of Hospital                             27

Number of Hospital beds                       922

Populalion per hospital bed                  1500

Hospital bed per 10,000 population              7

Number of Basic Heallh Unit                    68

Number of Dispensary                           46

Number oflndigenous Hospital                    1

Number of lndigenous Dispensary                 5

Number of Training Institutes                   3

Nurnber of Malaria Centres                     12

-------------------------------------------------------------

                                                     Year

------------------------------------------------------------Nutrition

Malnourished chidren                            8      1987

Third degree malnourished children              1      1987

Anaemia amongst AN and PN mothers(%)            0.5    1986

Primary Health Care in 1987

Population covered by Health care(%)           65

Population access to safe water(%)             26.0(Rural)

                                              50.0(Urban)

Population served with adequate 

sanitary facilities                            ....(Rural)

                                               60.0(Urban)

Women attended by trained personnel

                                 Pregency(%)   7

                                Childbirth(%)  16

------------------------------------------------------------Source: Annual Health Bulletin 1987

   The following goals have been highlighted for the Sixth Plan:

i)  To increase number of beds from 922 to 1130 and the number of BHUs from 68 to 90.

ii)            To staff and equip fully the sub-divisional,district,regional and national referral hospitals in the country, by improving logistic support, essential drug supply and equipment including cold-chain maintenance for EPI. iii) To activise community particiption and involvement in health progrmmes through production and distribution of educational informations, and by training 200 VVHWs each year, i.e. to a total of 1000 during the Sixth Plan. iv) To strengthen capabilities for assessing health sitution and trends including projecions by building up epidemioloical and statistical support.

v) To promote proper nutrition and orl health. vi) To evolve approches aimed at protecting and promoting health of specific population groups at greater risk particularly women of child bearing age, children and elderly. vii) To reduce incidences of mental and neurological disorders. viii) To ensure regular supply of essential drugs and vaccines. ix) To promote indigenous medical practices, in the light of modern science, in order to take maximum advantage of useful and effective praclices and discourage harmful ones. 

x) To provide health education about sanitation, safe drinking water and monitor the quality of drinking water.

TABLE 9.2 Health Sector outlays - Sixth Plan (1987 - 1992)

                                            In Nu. (Million)

-------------------------------------------------------------Programmes                      Current    Capital    Total

--------------------------------------------------------------

1. Institutional Health           170.305   21.000   191.305

   Service (Hospitals)

1. Basic Health Peripheral         71.281   37.140   108.421

   Rural Health Services

1. Indigeneous Medicare             8.625     --       8.625

   Services(Hospital

   Dispensaries)

1. Disease Control & Prevention & Promotive Health Care Services

-   Malaria Eradication             16.115     .250    16.365

-   Immunization                     5.415     .300     5.715

-   T.b. & Leprosy Control          5.250     .025      5.275

-   Family Health Welfare            7.580     .150     7.730

-   Others                            .900      --       .900

-   Health Education &               1.025      --      1.025

   Information Services

5. Social Health-Welfare

   Services

-  (Treat. National Outside        10.650     .070    10.720

   Bhutan & Setting up ALC) 

1. Health Manpower                 15.170    1.520    16.690

   Development

1. Drug Supply Management           5.300     .050     5.350

   Services

1. General Health Services/

   Magnt.& supplement Serv.        18.605    2.410    21.015

-------------------------------------------------------------        Total                     336.221   62.915   339.136 --------------------------------------------------------------

Programmes and Targets

Immunization and Family Health Services

   Immunization services are being undertaken to achieve universal coverage by tlle year 1990. Table 9.3 indicates the absalute number of children who have received immunization. Children and women make upto 63% of the total population and form the largest "at risk" group. MCH services are given in Table 9.8. Family health care programmes will aim to reduce morbidity and mortality in children resulting from tuberculosis, diphtheria, pertussis, tetanus, poliomyelitis, and measles from 11 to 1.1 per 1000 live births; to reduce malnutrition in children under 5 by about 50%; and to reduce maternal mortality and morbidity by 50 percent by the end of Plan period.

Table 9.3 Immunization Activities, 1981 To 1987

                     (Children immunized)

---------------------------------------------------------------------

Immunization    1981   1982    1983    1984   1985    1986    1987

---------------------------------------------------------------------

BCG            26,923   17,044 20,508  20,321  17,379 28,469  28,158

DPT1            9,380    7,689 11,782  13,188  14,078 21,556  25,456

DTP3            5,378    4,237  7,403   7,462  10,139 14,846  21,358

OPV1           11,666    7,587 10,899  13,226  13,331 20,927  25,355

OPV3            4,644    4,186  6,135   7,223  10,190 14,179  21,281

Measles         8,998    8,728  9,440  12,738  12,487 17,076  21,514

TT1              --       --     --     2,295   5,327  4,912   8,365 TT2              --       --     --       986   1,454  2,395   4,948

----------------------------------------------------------------------Source: Department of Health

    Rabies

   Under rabies control programme, the depatment's role is limited to the provision of vaccincs and post-exposure treatment. As the vaccines are reluired to be kept under coldchain the department has decided to merge the vaccination programme with the EPI. There are no vertical rabies control centres or staff. It is integrated into the general health service system.

Acute Respiratory Tract Infections

   Acute Respiratory Infections has become the largest cause of morbidity and mortality, especially among children under 5 during the last two years. The statistics for 1985 and 1986 show that the majority of cases treated by the health facilities in the country are due to ARI followed next by diarrhoea and dysentry (Table 9.6 refers). Special nation programme is necessary to coltrol ARI. The programme will be integrated into the work of the health units in the country. Malaria

   Intensive erforts will be made to reduce the annual parasite incidence from 40 to 20 per 1000 and the slide positivity rate from 22 to 11 per 1000 by 1992. Table 9.4 presents the data on malaria eradication programme.

Table 9.4 Malaria Eradication Programme, 1985 To 1987

-------------------------------------------------------

                          1985       1986     1987

------------------------------------------------------Population in malaria

area                      148,000    158,000  161,000

Blood film examined        62,421     82,446   69,029

Blood slide positive       15,999     16,523   13,134

-------------------------------------------------------

Source: Department of Health

Leprosy

   The programme targets are to reduce tlle present case load by 50 percent by 1992 to eliminate child case by 1992;to reduce slide poitivity rate to 3% of total slide examille(l; to reduce case detection rate to .25 per 1000 people examined; to reduce leprosy prevalence to less thn 1 perlOOOandtoreducedeformitiesinnew cases to less than 5 percent.

   For Leprosy Control Programme, it is expected that Helvetas will continue to supply Rifampicin annually to the tune of 50,000 Swiss Frs. The Leprosy Mission will support its four centres in the country and the Norwegian Santhal Mission will support its Riserboo Hospital and sub-centres. No additional capital invest ment is envisaged for the programme. All the inputs for executing field programme will be recurring expenditure.

Table 9.5 Leprosy Control Programme 1985 to 1987

-------------------------------------------------------

                          1985      1986      1987

------------------------------------------------------Patients at beginning

of the year               2,478     2,233     1,674 New cases detected         113         7         88

Relapse cases                 5         9          6

Deaths                       47        33         33

Released from control(a)    215      546        534

Lost to control(b)          101        60         18 Patients at the end of 

the year                 2,233     1,574      1,183 -----------------------------------------------------(a) Patients successfully treated.

(b) Patients unsuccessfully treated. Source: Department of Health

Sexually Transmitted Diseases

   The target is to reduce STD in the population by 50 percent by the end of Sixth Plan.

   Tuberculosis Control Programme

   A National Tuberculosis Control Programme has been initiated in 1974 to control tuberculosis which still poses a serious threat to a sizeable portion of the population. Concerted efforts will be made to control the disease by involving the entire health infrastructure in this programme. There has been a substantial decline in the inci dence of tuberculosis in the Kingdom over the last 12 years due mainly to the endeavours made to provide BCG vaccination to all children be low the age of five, intensify and treat infectious cases and to provide vigorous health eduction to raise the level of awareness among those people. Greater efforts are being made to stengthen this programme by providing quali fied manpower and equipment.

Parasite Control

   The main aims are to reduce the parasite infestation rate through community based para site control activities; to train all levels of helth related personnel in parasite control; parasite examination techniques and otller related sub jects, such as maternal and child health, nutri tion and environmental sanitationb and the u.se of parasite control activity as an entry point for health education, nutrition and family health activites.

   Diarrhoeal Diseases

   The programme is geared towards reducing the morbidity and mortality caused by diarrhoeal diseases and their associated ill effects, particu larly malnutrition in infants and young children by 50 percent; making self-reliant in the preven tion and treatment of diseases through he.llth education; and reducing mortality of children under 5 caused by acute diarrhoeal diseases from 40 percent to 20 percent by he provision of ORS and Health Education by the end of Sixth Plan.

   Nutrition Programme

   A nationwide nutrition survey carried out in 1988 by the nutrition cell of the Ministry of Social Services and the Depanment of Health Services has revealed that more than half the children surveyed are stunted in their growth and as many as 38.4% are underweight. The survey has also revealed that about 60% of pregnant women and 35% of the school children suffer from anaemia due to lack of iron and vitamin B.

    Anothcr common mulnutrition problem in Bhutan is the lodine Deficiency Disorders. This is due to the fact that the sea foods, the main source of iodine, are very difficult to be found in the Himalayas.

    The importance given to the nutrition in Bhutan can be highlighted by the fact that a National Nutrition Resolution was passed by the National Assembly of Bhutan, the highest Iegislative body, during its 67th session. The Royal Government along with International Organizations are making concerted efforts to eradicate malnutrition by setting up iodization plants and MCH clinics with growth monitoring of infants and increasing and improving the agriculture livestocks in the country.

    Essential Drugs

   An adequate supply of safe and effective drugs at reasonable cost o all health facilities will be made available by 1991. Besides other activities, National Drug Formulary will be published.

Primary Eye Care and Prevention of Blindness Proramme

   The main strategy to prevent and control blindness is to improve accessibility to eye care services and provision of Vitamin A capsules in endemic regions.

   Public Health Laboratory

   A public health laboratory will be set up in Thimphu during the Sixth Plan period. In later years, this laboratory will be strenthened to examine and advice on environmental pollution. The laboratory will be set up for he following immediate purposes.

i) Food Analysis: to detect adulteration and food stuffs; to analyse food supplied to lnstitutions for harmful micro-organ isms and examine whether it is fit for human consumption; and tests on quality maintenance of edible oils and foods. ii) Drugs Analysis: to analyse the rls being imported into the country on its quality and potency.

iii) Water Analysis: to test the quality of water for both dissolved elements and microbiological investigations for its safety.

Cardiovascular Diseases, Mental Health & Cancer Control

    During this plan period, surveys will be undertaken to assess the case-loads in the country, to identify the epidemiological parameters and to establish specific measures to combat these conditions and to establish control programmes.

Oral Health

    A study on the status of oral health in the country carried out by a WHO STC revealed that though there was no situation requiring immediate and urgent action. However it indicated the possibility of increased dental problems, oral cancers and other related conditions would manifest on a larger scale if a structure activity was not initiated.

    For this purpose the Department of Health is to develop a plan of action which stresses the following: increase in the capability of health staff; strengthening four Dental Units in the country; and ensuring the availability of both skills and tools at District Hospitals as also in the Basic Health Units.

    Treatment of Nationals Outside Bhutan

   The department of health services has referred cases outside the country-mainly to Calcutta, Vellore and Delhi - for specialised diagnoses and treatment not available within the country. The expenditure will be decreased as and when the three referral hospitals are buill and fully staffed and equipped. There are also proposals or establishment of Nephrology Unit at Thimphu, and complete ENT Unit by streg!hening the ENT units in Thimphu and Gaylegphug, as well as a cardiovascular Unit at Thimphu General Hospital.

TABLE 9.6 Patients Treated in Basic Health Units and Dispensaries by Disease, 1985 To 1987(a)

-------------------------------------------------------

                   Number                 Percentage

    Disease     1985    1986    1987   1985   1986    1987

------------------------------------------------------Diarrhoea/

Dysentery       52,668  61,876  65,687   18.2  17.5   15.6 Respiratory 

tract infection 48,118   58,572 70,427   16.6   16.5  16.7 Worms           33,651   41,415 46,441   11.6  11.7   11.0

Skin infection  34,145  39,834  53,940   11.8  11.2   12.8

Malaria/P.U.O   30,204  30,035  33,425   10.4   8.5    7.9

Conjunctivitis  12,516  17,169  17,544    4.3   4.8    4.2

Otitis media     7,793   7,348  10,760    2.7   2.1    2.6 Nutritional

deficiency      20,744  23,962  32,714    7.2   6.8    7.8 Peptic ulcer 

syndrome        10,852  14,419  14,933    3.7    4.1   3.6 Disease of 

teeth & gum     5,330    6,944   8,743   1.8    2.0    2.1 Urinary tract infection and

nephritis       5,061    6,302   4,679   1.7    1.8    1.1 Injuries         2,699  19,260  19,869    0.9   5.4    4.7 Sexually trans-

mitted diseases  2,059   2,665   1,710    0.7   0.8    0.4 Other childhood

diseases        1,263    3,791   3,483   0.4    1.1    0.8 Disease of female genital 

tract              958    1,189  1,499    0.3    0.3   0.4

Complication of pregnancy and childbirth

peuperum           n.a      551    702    n.a    0.2   0.2 Others          21,532   18,977 34,082    7.4    5.4   8.1

All Diseases   289,623 354,309 420,638  100.0  100.0 100.0

-------------------------------------------------------

(a) Data were based on more complete coverage and this may affect comparisions over time Source: Department of Health.

Table 9.7 Health Personnel by Category and Sex, 1986 and 1987

------------------------------------------------------                           1986                  1987

                    ----------------------------------

Category       Males  Females  Persons  Males Females  Persons

-----------------------------------------------------Specialist

doctors          19        3      22      14      6      21 Doctors         107        5     112     110      7     117

Staff nurses      5      51       56      18    50       68

Junior nurses    -       80       80       1    24       25 Assistant 

nurses           -       116     116       2   184      186

Laboratory

technicians      33       3       36      31     5       36 Physiotheraists  n.a     n.a     n.a       5     -        5 Dental techni-

cians             4        -       4       8      1       9 Dental hygienists 4       -        4       5     -        5

Pharmacy techni-

cians            63        -      63      13      2      15 O.T technicians   4        -       4       4      -        4

X-Ray techni-

cians             8        -       8      12      -      12

Health assis-

tants            84        1      85      90      1      91

Basic Health

Workers          85        -      85      91      -      91

Compounders      n.a     n.a     n.a      45     -       45

Health Super-

visors           n.a      n.a    n.a      19      -      19

All Health

Personnels      416     259      675     469   280      749

-------------------------------------------------------

Source: Department of Health

 TABLE 9.8 Maternal And Child Health Services, 1981 To 1987

-------------------------------------------------------

             1981    1982   1983    1984    1985   1986    1987

------------------------------------------------------                    Maternal Health Services

Attendance(a)    

Antenatal    3,807  4,360   5,106   7,841 13,548  18,532  26,662

Postnatal    4,806  4,903   9,834  13,148 18,080  22,803  37,476 Total 

attendance   8,613  9,263  14,940  20,982 31,628  41,335  64,138

Deliveries attended

Home(b)        683    721     658     822    497     800   2,170

Hospital/Basic

Health Unit    213    310     498   1,460  1,817   3,007   2,491

Total deli-

veries         896  1,031   1,147   2,282  2,314   3,807   4,661

                    Child Health Services

Attendance

First Visit  4,608  6,321   8,524  11,967 17,734  23,996  33,240 Repeat 

visit       36,668 36,543  36,084  65,526 93,275  90,754 163,161

Total atten

-dance      41,296 42,864  44,608  77,493 111,009 114,750 196,401

Malnourished children(c)

All malnou-

rished      11,344 11,020  10,610  12,934 12,456   9,030  15,502 Third 

degree       1,092  1,087   1,116   1,114  1,250     953   2,020 -------------------------------------------------------

(a)  Refers to total attendance, not a count of individuals.

(b)Home deliveries are those attended by health staff. Many women attending health units for antenatal carehave deliveries at home without attendance by health staff and are not included in the delivery figures. (c) Children attending health units are classified according to three degrees of malnourishment. Third degree malnourishment refers to the most severe cases.

Source: Departments of Health

Chapter 10 PUBLIC WORKS

   Public Works Department in the Sixth Plan would execute programmes similar in all as pects to the Fifth

Plan except that the 'building' i.e. hospitals, schools construction will not be part of PWD. Rural Housing, Rural Water Supply Schemes and the construction and main tenance of roads will form major programmes of the department.

Outlay

   The Sixth Plan sectoral outlay for the Public Works Department has been kept at Nu.887.16 million which comprises 9.3% of the overall outlay of the Royal Government. The outlay is broken up into current and capital costs which arerespectivelyNu.119.6millionandNu.767.6 million for the sector. The schemewise breakup of outlay is given below.

 Table 10.1 Public Works Department - Sixth Plan Outlay

-------------------------------------------------------Programme               Total Recurring   Capital External

                                                    Aid

-------------------------------------------------------

I. Rural Water Supply(RWS)

1. Rural Water Supply

   Rehabilitation         3.00      -    1.48       1.52

1. RWS Schemes(600/500

   nos.)                 51.24      -   21.43      29.81

1. Human Resources

   Development            4.32      -    0.40       3.92 II. Rural Housing Im-

   provement Programme   52.50     -    51.42       1.08

III. Building & Service    Centre Const. & main-

   tenance of buildings   1.00      -    1.00        IV. Roads Construction

   of roads              235.06     -  235.06        -

1. Mtnce & Resurfacing

   of roads              133.99     -  133.99        -

1. Purchase of mtnce

   equiptment Mechani-

   sation of Road         20.00     -   20.00        -

1. Purchase of equipment 130.00     -    60.00     70.00 4. Workshop & Trg. 

   Centre                 15.00     -   15.00        -

5. Kurichu Project Road   64.00    -    64.00        V. Bridges

1. Suspension Bridges

   (100 nos/80 nos)       27.98    -     6.20      21.78

2. Modular Bridges

   (25 nos/18 nos)         3.00     -    1.90       1.10

1. Mule Tracks            2.60     -    2.60        -
2. Human Resources Dev. 23.90     -      -       23.90

VIII.Establishment &

   Over Heads

1. Central & dzongkhag    88.90 119.57    -          -

                          17.34     -                 -

------------------------------------------------------

   Total                 887.160 119.57 614.48     153.11

------------------------------------------------------

Note:

a)Maintenance of roads under Dantak other than Simtokha-Tashigang and Tongsa-Sarbang roads wereincluded,

b)External assistances have been shown on the basis of tentative funding commitments in the pipe line. Forthe rest requirement of funds are shown under the Local Heads.

c)The fund required for IFAD roads were not included here but taken in Agriculture Department allocation.

Roads and Bridges

Objectives, Strategies and Programmes

   The total length of roads completed by PWD and DANTAK, by 1987, was about 2273 kms as shown in Table 10.2 and 10.3. The country has a motor road density of 0.049 kms, for every square kilometer of territory. In order to increase the capability of the PWD, in constructing road, two measures to be adopted are:

i)an advanced mechanisation of road construction and 

ii)            to engage private road construction companies in road construction programmes. In the Sixth Plan, PWD would be strengthened to have the capacity to carry out 265 kms of formation cutting,362 kms of base course and 297 kms of bitu minous sealing.

   A related activity to road construction is the construction of bridges which are usually high way bridges and suspension bridges (pedestrian crossing). Highway bridges construction by PWD has been restricted to only Bailey bridges and reinforced concrete bridges.

   Two of the more important tasks are development of maintenance manual and mechanised maintenance system. Mechanisation, so far in PWD, has been limited to formation cutting of roads works. Sub-base, base course cutting and bituminous sealing have not been mechanised except for use of road rollers and trucks. The ap propriateness and effectiveness of the equipments, whilst introducing mechanisation to the physical condition in Bhutan would be closely examined.

   The scope for development of private con tractors have also been kept in view. The private contractors will directly get the works awarded by the Road and Bridges Division and the exe cution will be done by contractors under the supervision and control of the Division. The pri vate contractors will, however, have to compete with the construction units in terms of manage ment efficiency.

   The Road Works will be executed by the Division with the help of seven specialised construction units. Four units would be for formation cutting and two units for base course construction and one unit for surface sealing.

   A central workshop which provides repair and maintenance services to construction units would function under a project manager. There is also proposal for setting up a central workshop which would provide repair and maintenance service to construction units. It will function under a project manager. The department would arrange trainings for personnels of the Central Workshop and construction units on payment. The Department will also supply equipments to the Central Workshop on payment.

TABLE 10.2 Road Network in Bhutan by Type, June 1988

                        Distance (km)

-------------------------------------------------------

Type of road      National     District   Feeder  All

                  Highways     Roads      Roads   Roads

-------------------------------------------------------

Black topped      1,385        217         123   1,725

Non-black topped    70        248         230      548

Total             1,455        465         353   2,273

-------------------------------------------------------

Source: Public Works Department

Table 103 Road Network In Bhutan by Dzongkhag, June 1988

                        Distance (km)

-------------------------------------------------------

Dzongkhag       National  District    Feeder     All

                Highways   Road       Road      Roads

-------------------------------------------------------

Chukha           132         39          17       188

Ha                15         11          16       42

Paro             104         51          16       171

Samchi            -          82          13        95

Thimphu          102         -           19       121

Chirang           64         30          24       118

Daga              22         57         -         79

Punakha           -          12          56        68

Wangdiphodrang   106        -           41       147

Bumthang         122         -           24       146

Geylegphug       106         -           38       144

Shemgang         142         -           -        142

Tongsa           163         -           -        163

Lhuntshi          -          47          10        57

Mongar           177         20          18       215

Pemagatsel        -          23          16        39

Samdrup Jongkhar 59         48           5       112 Tashigang        141         45          41      227

BHUTAN         1,455        465         353    2,273

------------------------------------------------------

Source: Department of Public Works

   Rural Housing

   The main objective of the programme is the improvement of quality of rural housing with a view to thwart rural-urban migration, create conditions that would narrow down the differ ences in urban and rural living standard, and ameliorate the condition of villagers.

Approaches

   This programme during the Sixth Plan will be divided into two phases, viz. (i) construction of 18 prototype houses and (ii) Improved Rural Housing Project. The construction of 18 proto type houses have the following basic objectives:

a)  Training of local site supervisors, master builders and artisans in planning and construction of improvedrural housing.

b)  Extension of knowledge concerning the improvements in environmental sanitation in rural areas.

c)  Develop technical information and guideline packages for execution of the main Improved Rural HousingProject.

   After completion of the prototype construction the actual improved Rural Housing Project will be executed. It is expected that during the Sixth Plan period about 15000 houses will be provided with improved facilities.

   The Improved Rural Housing Project will have the following government provisions:

a)  Government subsidy on the items not available locally. 

b)  Training of the rural carpenters and craftsmen and construction of the Rural Housing by certifiedcarpenters and craftsmen. 

c)  Technical advices by the properly qualified people. 

d)  Upgradation and standardisation on the quality and of materials inputs. 

e)  Certification and record keeping of the completed houses by the Dzongkhag. 

f)   Educating the people on use, maintenance and the benefit due to the Improved Rural Housing Programme.    Rural Water Suply

Objectives and Programmes

   The main objective of the programmes are to improve Public Health in the country by reducing the incidence of water borne diseases through the provision of adequate water and sanitation facilities to all by the year 2000. The immediate concern is to provide 40% of the Rural population with water supply facilities and upgrade/rehabilitate an estimated 307 Rural Water Supply Schemes. Emphasis will be put on community responsibi1ity for operation and maintenance of facilities.

   Rural Water Supply Schemes will be executed by PWD with regard to design, materials procurement and supply, monitoring, evaluation and training. Other activities in Rural Water Supply Schemes will be carried out by dzongkhag administration or concerned departments.

Chapter 11 URBAN DEVELOPMENT

   Institutionally, physical planning and implementation upto the end of 1983 was administered through the Central Town Planning Committee (CTPC) supported technically by a small Town Planning Department.

CTPC was upgraded and renamed on 1st April 1984 as National Urban Development Corporation (NUDC). This agency is fully responsible for the planning and execution of all urban development works and maintenance of basic services in urban centres.

Ohjectives and Fulctions

The objectives and functions of the NUDC are:

i) To prepare urban development plans and enact rules and architectural regulations for building. To provide basic infrastructure in the urban centres e.g. roads, drainage, embankment schemes and water supply systems and solid waste collection and disposal for major urban centres. ii) To mobilise resources to fund urban development activities and recurrent maintenance costs by imposition of urban taxes, consumer charges and registration fees. iv) To acquire and reserve suitable land for immediateand future under development and optimize the utilization of land. 

v) To promote beautification through parks and planting of trees and shrubs.

Outlay Programmes

In order to achieve the objectives, the following programmes are being adopted: 

i)              Provision of drinking water supply schemes in six major urban centres, viz. Thimphu, Paro, Phuntsholing,Gaylegphug, Samdrupjongkhar and Tashigang. 

ii)            Provision of sanitation schemes in major urban centres. The remaining town will be provided with publictoilets and other sanitary facilities. iii) Provision of solid waste collection and disposal facilities. iv) Construction of permanent bridges at Thimphu. 

v)  Construction of storm water drains. 

vi)           Landscaping and beautification of Thimphu and a few other major towns. vii) Construction of development for labourers in Thimphu. viii) Construction and development of weekly markets in towns. ix) Development of sites and services in three major towns. 

x)  Construction of electrical crematorium at Thimphu and allied services. 

xi)           River embankment schemes and soil conservation works. xii) Installation of fire hydrants in the bigger towns where such facilities are not available. xiii) Procurement of heavy tools and equipment for maintenance and development works of the urban centres. xiv) Acquisition of private land falling within municipal areas for development of towns.

  Outlay

  TABLE 11.1 NUDC Outlay - Sixth Plan

                                           (In Million Nu.)

------------------------------------------------------Programme                   Total      Capital      Current

------------------------------------------------------Establishment                58.670                58.670

Drinking Water              103.610    103.610     -Supply Schemes

Sanitation Schemes           60.000     60.000     --

Solid Waste Collection        1.500      1.500     --

& Disposal

Construction of bridge       5.000      5.000      -Construction of storm         4.000      4.000     -water Drains

Landscaping and               1.000      1.000     --

Beautification

Construction of Tenements    1.000      1.000      -Construction and Deve-        1.500      1.500     -lopment of weekly market

Development of sites          1.930      1.930     -and services

Construction of               2.000      2.000     --

crematorium

River Training and            4.000      4.000     --

Soil Conservation

Installation of Fire          1.000      1.000     --

Hydrants

Heavy tools & equipment       2.000      2.000     --

Construction of Prototype     0.500     0.500      --

Houses

Acquisition of land           1.000      1.000     --

------------------------------------------------------ Total                      248.710    190.040    58.670

-------------------------------------------------------

CHAPTER 12 AGRICULTURE

  Objectives and Strategies

  Agricultural development in the Sixth Plan will have the following overall objectives. The first objective is to incrase self sufficiency in Outl staple foods. The secondobjective is toincrease the per capita income of the rural population. The third objective is to increase productivity per unit of farm labour and agricultural land.

  Area-based agriculture development and provision of services and incentives to support agricultural development are the t major strategies towards achieving these goals.

   Outlay

   The total outlay for the agriculture (including irrigation) sector in the Sixth Plan is Nu. 880.499 million, of which Nu. 288.132 million, is for current expenditure and Nu. 592.367 million for capital expenditure.

TABLE 12.1 Agricultural Sector Outlay - Sixth Plan

                                            (Nu. in million)

-------------------------------------------------------

Sl.  Programme                 Current    Capital  Total

No.

------------------------------------------------------1. Area Development Project

   Punakha-Wangdi Valley       17.254     39.775    57.029    Project

   Chirang Hill Valley Project 15.140     33.860    49.000

   Tashigang-Mongar Project    13.491    49.509     63.000

   Paro Valley Dev. Projact    22.750    47.250     70.000

   Gaylegphug ADP               4.788     14.072    18.860

   Taklai Irrigation Project    3.179     5.510      8.689

   Paro Flood Protection Proj.  0.665      0.000     0.665

1. General Agriculture Deve-   47.385     65.908   113.293    lopment Project
2. Research                    21.052     19.784    40.836
3. Manpower Dev. & Trg.        13.746      6.254    20.000
4. Farm Mechanization          41.253     91.380   132.633
5. Product & Supply of Im   proved Seeds & Plants       22.287    115.713   138.000 7. Plant Protection Services   8.495     21.505     30.000
   1. Potato Dev. Programme        8.895     18.605    27.500
   2. Assessing Land & Water Dev.  5.511     17.035    22.546
   3. Post Harvest Support Serv.  1.400      1.278     2.678
   4. Crop Forecasting & Agri-

    culture Data Collection     3.723     1.014      4.737

1. National Horticulture Dev.

    Project                     5.800      9.200    15.000

1. Input Procurement and

   Distribution                          5.000      5.000

1. Direction &Planning        31.318     29.715    61.033

------------------------------------------------------    Total                     288.132    592.367   880.499

-------------------------------------------------------

Programmes 

Area Based Development

   Area-based development will be the primary strategy for agricultural development in the Sixth Plan. Intensive and comprehensive agricultural infrastructure development is to be concentrated in a limited number of areas selected for their proven potentials and homogeneity of agro climatic conditions. It should enable develop ment efforts to be well integrated, coordinated and organised in studied response to specific local conditions.

   The five major projects for intensive agricul tural development are:

  i) Paro Valley Development Project  ii) Gaylegphug Development Project 

iii) Punakha - Wangdi Valley Development Project  iv) Tashigang-MongarArea Development Project   v) Chirang Hill Irrigation Development Project

   While each project will pay attention to the specific agro-climatic and socio-economic condition of the area, it is intended to cover in its design following general components:

i)   Extension of more productive cropping systems including promotion of crop varieties, improvedcultivationpractices andintensive cropping patterns; 

ii)  Support for collection, marketing, processing and storage of crop surpluses; 

iii)           Mechanization of farming practices to alleviate farm labour constraints and to increase productivity of labour; iv) Efficient supply of quality farm inputs; 

v) Effective provision of credit facilities, both short-term and medium-term, at low interest rates; vi) Construction/rehabilitation of irrigation infrastructure; vii) Construction of farm/feeder roads; and viii) Project monitoring and evaluation. 

Similar services will be provided in areas not covered under the area based agriculture devel opment projects. They will have access to general agricultural development services. These services will be provided through a network of extension centres located at the gewog level and within the Development Service Centres con templated to be developed at important loca tions during the Sixth Plan.

Manpower Development and Training

   The present staff strength which totals 697 will be augmented with additional recruitment, both to gradually repl expatriates and to meet projected needs. By the end of the Sixth Plan, the total staff strength will be 1,()75.

   Although employees will be sent outside the country for acquiring higher skills and speciali sation during the Sixth Plan, bulk of the manpower requirements of the Department will be trained at National Agricultural Training Institute Wangdiphodrang. At this Institute, diploma and certificate courses in agriculture will be imparted along with a number o service trainings. Development of satellite in service training centres in selected locations like Paro, Bhur, and Kanglung be carried out. At these locations, farmers' training will also be organised.

   Research

   Bhutan's varied and generally difficult agroecological conditions require that high priority be given to adequate adap research.

   The Centre for Agriculture Research Devel opment (CARD) at Wangdiphodrang will be opened during the later half of Fifth Plan. A collaborative Project for 'Improving Rice-Based Farming systems' presently being implemented with techn assistance from the International Rice Research Institute (IRRI) is making rapid progress. Besides, implementation of a pro to promote appropriate fertilizer use was begun in 1986.

   During the Sixth Plan, it is proposed to strengthen CARD's activities at Wangdi phodrang and to develop satellite regio re search stations in different parts of the country.

Emphasis will be given to training and recruit ing appropriate research staff. While research work on rice and rice-base farming systems is progressing well, little attention has been given to the other major staple crop maize. Prelimi na discussions are underway for the implem entation of a collaborative programme during the Sixth Plan to improve maize an wheat production with technical assistance from the International Maize and Wheat Research Centre.

   The Potato Development Programme will continue to conduct adaptive research work on potatoes in collaboration with t International Potato Centre (CIP) and Helvetas. Adaptive research work on oranges, apples and oil seeds will be launched.

Production and Supply of Improved Seeds and Plants

   National Agricultural Seeds and Plants Supply Programme (NASEPP) will be strength ened. Growing of seeds for meetin internal requirement and exports, whereverfeasible, will be carried out.

   Emphasis will be placed on increasing pro duction of cereal seeds of imprnved varieties. Production of improved oil seed and vegetable seeds will be undertaken. The programme will be organised and implemented through the net work of region farms producing foundation seeds, and multiplied through registered seed growers.

   Nurseries to produce seedlings of major horticultural crops like apples and oranges will be set up. Tissue culture activit initiated during the Fifth Plan period will be intensified with additional stress on multiplication of the virus-free mater under controlled conditions.

   Farm Mechanition Support

   A major constraint in increasing cropping intensity is the shortage of farm labour and with the migration of the ru population to the urban areas, farm labour constraint is likely to become more acute in the near future. Mechanization farming practices will be accelerated to alleviate farm labour constraints and to increase produc tivity of labour.

   Strengthening of the mechanization pro gramme will include testing and supply of suit able farm machinery, developm of tradi tional farm implements to increase their effi ciency, establishment of regional workshops to provide maintenance a repair facilities, train ing of mechanics, operators and farmers, and ensuring regular supplies of spares parts.

Irrigation and Land Development Engineering Services

   Assistance will continue to be provided to remove infrastructural constraints to farm com munities, particularly in are with substantial potential for higher yield of rice.

   In the irrigation sector, there has been persis tent problems of maintaining the channels. Joint endeavors of the beneficiar will be necessary for channel management and the beneficiaries will be made fully responsible for maintenance and tim repairs of the channels. Better water management systems will be developed and promoted to maximise effective use available irrigation.

   Under-utilization of existing irrigation in frastructure is another problem that will be thor oughly investigated. Total ar covered by irri gation is shown in Table 12.1 Rehabilitation works and construction of distributaries of ex isting channels w be given priority in the Sixth Plan. Assistance for construction of new irrigation infrastructure will be provided only af carrying out detailed geo-technical feasi bility and economic appraisal studies.

Assessment of Land and Water Resources

   There is growing awareness that there is need for a comprehensive survey of prevailing soil conditions. During the Si Plan, soil analysis laboratory will be established to carry out a comprehensive ground survey to establish and map the exist soil conditions.

   To ensure appropriate land use, an agro ecological survey to identify potential land use is proposed. The need to ident additional areas of suitable arable land is particularly important. Therefore, the agro-ecological sur vey will be accompan by an arable land identification survey. Specifically, aerial pho tography (at 1:20,000) will be required for the agro-ecologi zone and arable surveys.

   The irrigation projects in many parts of the country usually involves lumpy investments in the construction of long irriga channels over difficuIt and unstable terrain. In the foothills and sub-tropical plains in particular, where precipitation during monsoon is very high, channel often collapses and falls into disuse. In order to alleviate this problem, it is hoped that a sur will be conducted during the Sixth Plan to determine the economic viability of tapping ground water as an alternative sou of irrigation.

TABLE 12.2 Irrigation Schemes completed by 1987/88

---------------------------------------------------

                    New construction           Renovation

                No. of  Length of Command   No. of  Length Command

                schemes channel    area    schemes  of cha- area

                        (km)      (hectare)         nnel(km) (hectare)

-----------------------------------------------------

Chhukha            1   0.5         42.5       -       -        Ha                 1    2.1        60.7       1       1.0    11.9

Paro               1    4.3        56.7       2      10.4   170.4

Samchi             2    2.8       143.3       4       9.3   707.9

Thimphu            1   1.0         21.1       1      1.2     12.1

Chirang            1   2.0         60.7      12     21.5    228.4

Daga               1    4.5       141.7       2       5.9    78.7

Punakha            1   8.6        209.3b      3     13.5    175.3

Wangdiphodrang     3  20.6        338.1       1      1.6    143.1

Bumthang           -    -            -        -       -        -

Geylegphug         1  37.7      1,457.5       3      7.3    161.9

Shemgang           1   3.6         72.9       -       -        Tongsa             1    7.6       263.2       1       4.1    16.2

Lhuntshi           -    -            -        3     15.9    397.9

Mongar             3  10.0        139.3       1      2.2     47.8

Pemagatsel         1   6.2         41.3       -       -        -

Samdrupjongkhar   6   16.8        728.7       3      3.4    155.9 Tashigang          2   7.1        512.1       3      7.0    253.0

BHUTAN            27 135.4      4,289.1      40    104.3  2,560.6 -----------------------------------------------------

(a) Refers to the 15 month period 1 April 1987 to 30 June 1988. Source: Department of Agriculture.

Plant Protection Services

   The Royal Government of Bhutan and European Economic Community (EEC) have been making a collaborative effor develop plant protection services. Under this venture, the establishment of pathology and entomology laboratories, survey pests and pathogens, and establishment of reference collection, will be continued in the Sixth Plan.

   Agriculture Credit

   The promotion of improved inputs and tech nology needs to be backed-up by the provision of adequate credit facilities concessional terms to farrners. The Rural Credit Programme

was implemented until recently by the Royal Monetary Authority (RMA) with assistance from the United National Capit Development fund (UNCDF). This activity was transferred to Bhutan Development Finance Corporation (BDFC) and w be strengthened and continued in the Sixth Plan. The cash credit from the BDFC will be fully tied up with the agricultur inputs supply during the Sixth Plan.

    Short term credit at 6% to 8% interest per annum will be provided to farmers for the purchase of seasonal inpu (fertilizer, seeds, etc.) and medium term credit at 10% interest per annum for farm development works, and pur chase o agricultural machineries.

    A total disbursement of Nu. 25.00 million of short term credit funds and Nu. 30.00 million of medium term cred funds is projected during the Sixth Plan.

    Farmers' credit requirements upto Nu. 20,000/- will be met by the Rural Credit Programme, while cred requirements of more than Nu. 10,000/- will be met by individual borrowings from the Bank of Bhutan's agricultur loan scheme (10% interest rate).

    Credit will be available for the purchase of threshing, hulling and milling machines. Funds will also be provided throug Department of Agriculture for setting up grain stores and mills at strategic places.

    Subsidies

    Subsidies will continue to be provided to induce and sustain agricultural development and to equalise input co throughout the country. The subsidies are presently provided for trans portation of all agricultural inputs including far implements and machinery, upto Dzongkhag headquarters or the nearest road head. Cost subsidies applied to pla protection chemicals, construction of irrigation infrastruc ture, compost sheds, and land development will also be continued Regional Agricultural Development Centres

   Planning and implementation of the central programmes will be organised on a regional basis to provide effective suppo services with the limited available qualified and experienced technical manpower. Three regional agriculture developme centres are being contemplated. They are:

Simtokha - to cover the Western Region 

Bhur - to cover the Central Region 

Kanglung - to cover the Eastern Region

   These will be established and strengthened in a phased manner over the Sixth Plan period. Over the Sixth Plan period, ea Regional Agriculture Development Centre is planned to be strengthened and staffed with an extension ist, an agronomist, plant pathologist, and ento mologist, an irrigation engineer, an monitoring officer, a store officer and the minimum require technical and administrative support staff.

TABLE 12.3: Crop Area and Production of each crop, 1981 and 1984

                Crop Area                    Crop Production

              ('000 hectares)                 ('000 tonnes)

                               Target                  Target

               1981    1984   1987        1981   1984  1987

               ----    ----   ----        ----   ----  ----

Cereals

Paddy          28.0    30.6   37.0        57.4   65.0  84.5

Wheat/Barley   12.0   14.4    16.6        13.3  16.0   22.5

Maize         56.8    58.5    52.5       80.7   87.3   85.1 Buck wheat/    15.5   20.6    15.0        12.3  16.8   12.7 millet         

Total        112.3   124.1   121.1      163.7  185.1  204.8

Other Crops

Pulses          4.0     3.0    5.3         2.4    2.6   3.8

Mustard         2.9    5.0     5.5         1.9   3.5    3.9

Potato          3.7     4.2    5.1        24.9   32.6  50.0

Chillies/       3.1    1.7     3.6        12.2   5.3   15.1

Vegetables

Oranges         6.2    7.8     8.0        25.6  38.7   53.1

Apples          1.5     1.6    1.9         3.3    3.5   8.8

Cardamom        5.9    8.8     6.6         2.8   3.0    4.1 --------       ----   ----    ----       -----  ----  -----

Note:Figures are based on estimates made by dzongkhag, gewog and village officials.  Target 1987 refers to targets for th Fifth Plan.

Source:Survey undertaken by Department of Agriculture in 1981 and 1984.

Chapter 13 SURVEY

Outlay

   The total budgetary allocation for the Survey in the Sixth Plan is Nu. 54.282 million of which Nu. 48.943 million is for maintenance and Nu.5.339 million for development.

   Programmes

   Cadastral Survey

   Cadastral surveys were started in Bhutan in 1980. 'rhe department will complete surveys in Samchi, Gaylegphug, Chhukha, Bumthang, Samdrupjongkhar, Thimphu, Pemagatshel and Tongsa dzongkhags.

   In addition, the surveys using photogram metric means will be done in Wangdi Phodrang and Punakha dzongkhags.

  Topographical Surveys

   Bhutan has approximately 670 km long bor der with India and 570 km with China. Border with India has been jointly demarcated except a small stretch in the western and eastern sectors. Regarding the Sino-Bhutanese boundary the department will continue to investigate and study the old documents and maps.

Updating of 1:50,000 scale Topographical Maps

   The Survey of Bhutan may revise about 15 to 20 sheets of l :50,000 scale topographical maps to pick up new information

   Geodetic Control

    High precision network of control is the basic requirement on which subsequent topogra phical control of lower order is based. A high precision geodetic control for the entire country will be carried out in collaboration with Survey of India in a phased manner.

Photogrammetric Surveys

  Photogrammetric plotting of pilot jobs both forcadastral andproject surveys will be taken up during the Sixth Plan.

   Cartography

   A cartographic unit will be established to give a proper shape to the surveyed sections before these are sent for printing. 'rhe unit will also carry out fair drawing of 1:2,50,000 and smaller scale maps of Bhutan. In addition, the cadastral maps will be fair drawn.

   Reproduction and Printing

   Printing press and allied reproduction equip ment will be installed. Printing of maps will be done for the first time in Bhutan.

   Land Records

   Thram preparatioon of the cadastral surveys will be carried out in Samchi, Gaylegphug, Chirang, Chhukha, Bumthang, Samdrupjongkhar and 'rhimphu dzongkhags. Computerisatiion of land records will be started on pilot project basis.

   Manpower Development

   Stress for the development of manpower and resources during the Sixth Plan period to cope up with its increased activity both in cadastral and topographical surveys. With this aim the department has been recruiting l 0- l 2 surveyors each year for in-house training in cadastral sur vey techniques. Similarly the augmenting of manpower in other fields such as geodesy, photogrammentry, cartography and map repro duction and printing etc. will be achieved by recruitingqualifiedcandidatesandtrainingthem abroad.

60 Sixth Plan

  Land Use Survey and Planning Project

    One of the major constraints in developing planned programme is the complete lack of any systematic survey of the land resource base. In the absence of such aresource informadon base, national planning authorities are unable to char acterize the current land use situation, to moni tor the dynamics of land use change, or to predict and model the impact of large scale develop ment projects on the resource base. The difficul ties created by this situation are cross-sectoral having implications for forestry, agriculture, water management and pasture development to name a few.

   In view of this, a Natural Resource Suney Section needs to be set up to carry out systematic land use survey and mapping work for the entire country. The goal is to make the resource survey section service-oriented catering to the needs of various departments which can not develop elaborate survey and mapping capabilities within their organisations. The resource survey will facilitate a coordinated national approach to land resource evaluation and monitoring within the principal resource management departments of the Royal Government namely, Department of Forestry, Department of Agriculture, Animal Husbandry Department and the Planning Commission.

Chapter 14 LIVESTOCK

Objectves

   The following have been chosen as important objectives for the livestock sector for the Sixth Plan:

i) Genetic improvement of livestock through distribution of exotic breeds and artificial insemination. ii) Diffusion of appropriate technology in the field of animal feed and fodder from centrally run develop ment oriented farms and projects. iii) Expansion and consolidation of the infrastructure in livestock sector at all levels. iv) Provision of animal health facilities for both mobile rangeland and non-migratory livestock. v) Income generation for the ntral people through livestock rearing.

Outlay

   An outlay of Nu.331 million is earmarked for the Animal Husbandry sector during the Sixth Plan. The amountreflects an increaseof213.5% over the Fifth Plan outlay. The recurring cost amounts to Nu. 183.02 million and capital cost amounts to Nu.161.105 million. Out of the total outlay, Nu. 114.775 (34%) million is allocated to the central schemes to be implemented by the central Directorate and Nu. 51.042 (15%) mil lion for the dzongkhag schemes which are to be implemented by dzongkhag administrations.

    TABLE 14.1 Livestock Sector Outlay - Sixth Plan

                                           (Nu. in million)

    Programmes                Total    Recurring  Capital

   ----------               -----    ---------   -------

1. Highland Livestock Deve-   83.300    26.074    57.226    lopment Project
2. Highland Altitute Area     39.300    23.306    15.994

   Development Project  

1. Integrated Fish Culture    11.482     6.392     5.090

   Production Development 

   Project

1. Artilcial Insemination      7.500      -        7.500

   Programme

1. Cold Water Fisheries        1.000      -        1.000
2. Cold Chain Development      0.700      -        0.700
3. Rinderpest Eradication      6.288      -        6.288

   Programme

1. Human Resource Dev.        15.613      -       15.613

   Programme

1. Existing Central Schemes  114.775    85.704    29.071 10.Dzongkhag General Lives-  51.042    41.544      9.498   tock Devt. Proglamme

  ------------------------ -------   -------    -------

   Total                     331.000   183.020   147.980    ------------------------ -------  --------   -------

 Programmes and Approaches

Highland Livestock Development Project

   The project is being implemented in two separate areas in the country. The first area comprises of 14 selectedlivestock blocks in five districts: Tashigang, Lhuntshi, Mongar, Pe magatshel and Samdrupjongkhar in the Eastern part of the country. The other project area is in Western Bhutan comprising of 11 selected live stock blocks within the two dzongkhags of Samchi and Chukha.

   The main thrusts of the programme are: pas ture development and nutrition, breeding and improved husbandry, animal health, milk col lection and processing, meat processing and marketing and organization of cooperatives. The livelihood and income of small farmers will be improved while the present process of environ mentaldegradationcausedbyover-stockingwill be reversed.

   In the Western part of the country, intensive milkshed area development is pursued with the main objectives of:

i) increased milk production aimed at the urban markets of Phuntsholing and Thimphu ii) establishment of efficient and cost effective milk supply and distribution system and iii) utilising WFP supplies to advance dairy development in the area.

High Altitude Area Development Project

   The High Altitude Area Development Proj ect covers the north central part of the country. It extends over the whole of Bumthang consist ing of 4 gewogs, 2 northern gewogs of Tongsa and 4 gewogs of Wangdiphodrang with a total number approximating 2,552 households. Since the area lies at an altitude of 2000 to 5000 metres above sea level with temperature ranging from 25 degree centigrade to minus 4 degree centi grade, there is limited scope for food crop culti vation other than subsistency crop such as buck wheat, wheat, barley, potato, mustard, radish and turnips. The area is much more suitable for livestock farming.

   The present project aims to exploit the live stock potential of the project area so as to in crease overall livestock production through the increase in productivity of individual animals and achieve self sufficiency in dairy products. This is to be achieved through the reduction of unproductive stock and increase in number of improved productive breeds through artificial insemination andnatural bull services, improvement of pasture and fodder resources, animal health coverage, better livestock management practices and provision of all essential inputs including technical expertise and institutional credit. Attention is being given to prevent seasonal rnigration of cattle, restoration and maintenance of ecological balance of the project area.

Artificial Insemination Programme

   The major thrust on livestock improvement in Bhutan is mainly centered around cattle de velopment to increase milk production. The local Siri breed of cattle is very poor milk producer. The alternative for expeditious development of cattle is to adopt cross breeding with high yield exotic breeds. The Jersey and Brown Swiss breeds have been chosen for the purpose.

   The topography and other agro-climatic condition of the country is such that natural service by imported bulls is very limited. Given that progress is very slow and service efficiency low, the adoption of the technique of artificial insemination would offer better results in terrns of the inseminations carried out and calves born.

   Presently, the main difficulty in carrying out artificial insemination with a significant meas ure of success is the non-availability of liquid nitrogen which is inescapably needed for the storage and transport of semen containing straws. In order to overcome this difficulty, a liquid nitrogen plant is proposed to be set up at Wangchutaba where a Central Semen Collec tion Centre will be established for the produc tion of semen in frozen state from high merited breeding bulls

   Besides, a disc top computer with printer will be in stal led for collection and processing of data and to follow up on the work of post insemina tion, productivity co-efficient, dangerof serious in-breeding andmating schedules. Further, under the same project, it is planned to carry out 77,300 artificial inseminations in various dzongkhags as shown in Table 14.2.

Livestock 

TABLE 14.2 Dzongkhag wise artificial insemination programme

                                                     Total

Dzongkhag         Year   Year   Year  Year   Year   ----                   1st    2nd   3rd    4th    5th

---------         ----   ----   ----  ----   ----   -----

Bumthang          960   1,380  1,860 2,220  2,580   9,000

Chirang            -      -      -     -      -       Dagana              -      -     -      -      -      -

Gaylegphug      1,000   1,500  2,000 2,000  2,000   8,500

Haa                -      -      -     -      -       -

Lhuntshi          100     150    150   150    150     750

Mongar            300     450    450   450    450   2,100

                  300     600   600    600    600  2,700

Paro            1,000   1,000  1,500 1,500  1,500   6,500

Pemagatshel     1,000   1,500  2,000 2,000  2,000   8,500

Punakha           400     800  1,200 1,300  1,300   5,000

Samchi             50     250    550   900  1,200   2,950

Samdrupjongkhar   600     600    600   600    600   3,000

Shemgang           -      -      -     -      -       -

Tashigang         600     600    600   600    600   3,000

Thimphu           500     750  1,000 1,000  1,000   4,250

Tongsa            500     750  1,000 1,000  1,000   4,250

Wangdiphodrang    500   1,000  1,000 1,500  1,500   5,500

                  500     750  1,000 1,000  1,000   4,250

Chukha            800   1,100 1,450  1,750  1,950  7,050

--------------  ------  -----  -----  ----- -----   ----                                                    77,300                                                     ------

Rinderpest Eradication Programme

   Although there has been no report of any out break of these diseases in Bhutan since 1971, it is endemic in the neighbouring countries. It has, therefore, been planned to undertake a co-ordi nated campaign against rinderpest on a regional basis in South Asia (Bangladesh, Bhutan, India, Nepal and Pakis an).

   Unless the disease is lotally eradicated in he region, there will always be a possibility for, he country to face a fresh out-break. This will have a ruinous effect on livestock production dealing with cattle, yaks, mithuns and buffaloes. The implementation of the project will be under taken in three phases. It will require, at least, 6 years to successfully eradicate rinderpest from the region.

Human Resource Development Programme

   The Department is extremely short of profes sionally qualified and experienced staff. To mitigate the constraint of middle level technical personnel, the Royal Veterinary Institute has been set up at Serbithang. The institute conducts two years Diploma courses for Veterinary In spectors, in-service training for field workers and farmers and one year pasture assistants course. Specialised training course in various aspects of animal science will be provided out side the country. An outlay of Nu. 15.613 million has been allocated for human resource development during the Sixth Plan.

Existing Central Schemes

   The existing Central Pjects to be taken up during the Sixth Plan period are shown below. These are all development oriented schemes designed to supply various kinds of develop ment inputs for the farmers to enable them to carry forward theirefforts in adopting improved technology towards achieving economic live stock production.

   Centrally Operated Support

   Programme and Institutions

1. Directorate of Animal Husbandry, Thimphu
2. Animal Husbandry Central Stores, Phuntsholing
3. Royal Veterinary Diagnostic Laboratory, Serbithang
4. Vaccine Production Centre, Serbithang
5. Royal Veterinary Institute, Serbithang
6. Regional Veterinary Laboratory, Deothang
7. Veterinary Hospital, Thimphu
8. National Fodder Seed Production Centre, Bumthang
9. Temperate Fodder Research Centre, Serbithang
10. Sub-Tropical Fodder Research Centre, Samchi
11. National Jersey Breeding Centre, Samchi
12. National Haflinger Horse and Brown Swiss Cross breeding      Centre, Bumthang
13. Regional Livestock Breeding Centre, Lingmethang
14. Regional Mithun Breeding Farm, Arong 
15. Regional Mithun Breeding Farm, Chukha 
16. National Sheep Development Project, Bumthang
17. National Pig Breeding Centre, Paro
18. Central Pig and Poultry Breeding Farm, Sarbhang
19. Regional Poultry Breeding Centre, Paro
20. Pheasant rearing Centre, Taba
21. National Warm Water Fish Culture Centre, Gaylegphug
22. Cold Water Fish Research Centre, Haa 
23. National Horse Breeding Programme, Bumthang
24. Inoculant Production Centre, Serbithang 
25. Control of Predatory Animals, Thimphu 
26. National Rabies Control Programme, Serbithang
27. Feed Mixing Plant, Phuntsholing
28. Milk Processing Plant, Phuntsholing29. National A.I. Programme, Wangchutaba.

Dzongkhag General Livestock Development Programme

  This programme will cover the remaining 156 gewogs of the counhy which have not been included underintensive livestock development programme. The activities proposed under this programme are listed in Tab]e 14.3. In addition to these activities, assistance for pasture deve} opment will be provided to enthusiastic entre preneurs who will come forward to take up r ganised dairy farming.

TABLE 14.3 Sixth Plan Targets for Dongkhag Livestock Dvelopment Programme

     Item                                 Unit     Target

--------------------                       ------    -------

1. Artificial Insemination                  Nos.     31,200
2. Distribution of Jersey bulls              "          107 3. Distribution of Jersey cross and          "          103   Brown Swiss cross bulls.
3. Distribution of Mithun Bulls              "          288
4. Distribution Or Nublangs                  "          146
5. Distribution of Haflinger Stallions       "           22 7. Distribution of Haflingcr Cross/          "           97   Stud Stallions.
6. Distribution of Donkey Stallions          "           50
7. Distribution of Yak Bulls                 "           69

10.Distribution of Rams                      "          357

11.Supply of Piglets                         "        9,925

12.Supply of Poultry birds                   "       57,538

13.Ditribution of Buffalo Bulls              "            6

14.Supply of fish fingerlings                "        1,700

15.Sterilization of undesirable male stock   "      95,450

16. Pasture Development                    acres        890

17.Propagation of fodder tree seedlings     Nos.  7,49,620

18.Urea Treatment of Straw                house/holds 8,215

19.Fodder Conservation                       "          950

20.Vaccination                              Nos.  11,02,550

21.Deworming                                 "     7,63,000

22.Construction/Reconstruction of            "           20 ---------------------------------        -----    -------

FISHERIES

Integrated Fish Culture Production Development Project

  This is a turn-key project on the development of pisciculture in Bhutan by promoting warm water fish production integrated with duckery and piggery. The idea is to integrate either piggery or ducker with fih production as auxilliary occupation. The two will act as complementary agents to te main work i.e. fish farming.

  The project will be implemented in selected areas of four southern districts :- Gaylegphug, Samdrup Jongkhar, Chirang and Samchi. 42 hectares in Gaylegphug and 71 hectares in Samdrup Jonglhar will be brought under wam water fish culture. In addition 97 hectares will be developed under the expansion programme in Chirang, 9amchi and few other gewogs of Gaylegphug.

   About 500-600 farms are intended to be inidated in pond fish faming. They will benefit financially from the incomc of such fisheries. The consumers of the country will benefit by raising their nutritional status. The project will take up extension wodcon improved methods of ffsh farming to help ke pivate entrepreneurs.

   Cold Water Fidleries

  All previous efforts have been fordeveloping sport fisheries. However, ecploration of foreign exchange earning, cultivating and harvesting inland fish have been under serious considera tion for some years. The possibility of commer cial trout culture will bcfully investigated for its technical and economic viability under local conditions.

  A team of specialists will calTyout the fol lowing feasibility study:  provide the informa tionnecessaryforstratgy4evelopment,toassess the bio-physical and dimac conditions, to map and collect relevant 8nd nificant data infor madon; and to boadly lodc into cultural and insdtudonal accepability of the project.

TABLE 14.4 Livestock Numbers by Dzongkhag, 1987

Dzongkhag 

Cattle   Yaks   Buffaloes  Sheep Goats  Pigs  Horse  Poultry

------   ----   ---------  ----- -----  ----  ----- ----- Ha

    8.0   4.0       -      0.1      -   1.9    1.1     4.5

Paro

   24.5   2.7       -      0.3      -  11.3    1.5    11.4

Samchi

   42.5    -       1.7     4.5    15.3  2.1    0.2    26.9

Thimphu

   14.8   8.6       -      1.9     0.6  4.5    1.3     7.4

Chirang

   27.1    -       1.4     3.3     9.0  2.7    1.2    23.0

Daga

   11.4    -       0.2     0.6     3.6  2.5    0.6    12.7

Gasa

    1.0   2.8       -       -       -   0.2    0.4     0.6

Punakha   

    9.5    -        -       -       -   3.7    0.8     5.4

Wangdiphodrang

   18.2  11.2       -      2.1      -   4.1    2.5     6.1

Bumthang

    9.4   3.6       -      7.1      -    -     1.3     2.7

Geylegphug

   37.4    -       1.8     2.1     2.0  4.6    0.8    45.5

Shemgang

   17.3    -        -       -      0.2  2.9    1.6     5.7

Tongsa

   10.8    -        -      4.0      -   0.8    0.6     3.8

Lhuntshi

   15.8   0.3       -      0.5      -   3.1    1.1     7.7

Mongar

   31.1    -        -      0.1      -   6.6    1.6    15.3

Pemagatshel

    7.1    -        -       -       -   2.1    1.1    4.2

Samdrupjongkhar

   20.0    -       0.1     0.3     2.1  3.5    1.6    15.4

Tashigang

   50.7   6.9       -      9.4     8.1 13.7    6.7    19.7 -------   ---   -------   -----   ---- ----   ----   -----y 357.0  40.1       5.2   36.4    40.9 70.3   26.0   218.0

------- ----     ------   -----  ----  ----   ----  ------

Source: Department of Animal Husbandry

Chapter 15 FOOD CORPORATION OF BHUTAN

Programmes

Maintenance of Buffer Stock

   FCB has to maintain and operate food secu rity stocks. Over the Plan period, WFP assis tance will increase the food security stocks whose storage facilities are expected to be constructed with UNCDF assistance. The FCB is expected to play an increasingly important role in the supply and distribution of foodgrains through out the Kingdom. Table 15.1 summarises the extent of food distribution from 1981/82 to 1987/88.

TABLE 15.1 Food Corporation of Bhutan, Imports and Distribution, 1981/82 To 1987/88

Commodity                                  (tonns)

 1981/82  1982/83 1983/84  1984/85  1985/86 1986/87  1987/88                    IMPORTS

Rice

  2,345    5,843  6,033    5,388   7,211    11,282   16,750

Wheat

    873    2,725  2,123    2,599    2,450    3,350    5,767

Sugar

  1,276    1,381  1,800    1,824    2,749    3,574    4,039

Salt

  3,475    2,755  2,326    3,598    5,689    3,516    5,035

Oil    -        -       240     306      557       874   1,280

                    SALES

Rice

  2,127      561  4,537    4,863    6,956   11,761   16,700

Wheat

    661    2,701  2,230    2,280    2,534    3,346    5,595

Sugar

  1,085    1,289  1,575    1,996    2,579    3,731    4,078 Salt

    429      278    179      617    3,603    3,513    5,050

Oil

    -        -      214      213      472      516    1,082

-------   -----   -----    -----   -----     -----    -----

Source: Food Corporation of Bhutan

Privatization

   The Corporation has already handed over 18 depots to the private persons to undertake the food distribution system. Presently the Corpo ration has 23 retail cum bulk godowns, which will be gradually handed over to the private parties. The Corporation will restrict gradually to act as the importer, storer and bulk distributor of the various FCB retailers.

   Cash Crop Marketing Development

   The Corporation will help educate the grow ers on the need to sort, grade and pack their products properly. This is aimed at establishing a well reputed exporter of quality produ¢ts to external markets and thereby increase the per capita income of the producers. The commodi ties handled by FCB over the years are given in Table 5. 14.

   The bulk of the cash crop are grown in Western Part of the country. The Corporation has set up a permanent auction yard in Samchi fororange. The operation of the auction yards in this and other centres have proved beneficial to the growers in marketing their products at competitive prices. The corporation will set up similar auction yards at Gavlegphug and Samdrupjongkhar by the end of the Sixth Plan.

   At the auction yards the Corporation besides rendering free storage facilities and conducting auctions also provides weighing facilities and collects payments from buyers on behalf of the growers. To further strengthen the cash crop marketing system, the Corporation has created an additional market outlet in Siliguri.

   World Food Programme

   The FCB will continue to act as the manag ing agent to WFP operation.Presently WFP commodities are being received for the follow ing proects:

 TABLE: 15.2 Agricultural Produce Handled by Food Corporation of Bhutan, 1982/83 To 1987/88

Commodity                                  

  1982/83   1983/84 1984/85  1985/86  1986/87  1987/88(a)

-------- -------  ------- ------- ------- -------  ---                   Quantity (tonnes)

Potatoes

  3,795.8   6,178.9 7,571.9  8,987.8  8,021.0  10,060.3

Apples

    452.5     671.9   889.6    648.0 1,295.0      965.6 Oranges       

    549.4     588.6   690.0    769.0    946.3   2,455.6

                  Value(Nu. millions)

Potatoes

      5.2      10.5    11.5     15.0     19.2      21.2

Apples

      1.4       2.4     3.5      2.8      4.4       4.8

Oranges

      1.6       1.3     1.8      2.2      2.9       7.1

-------      ------    -----    -----   -----     -----

(a) 1987/88 refers to the 15 month period April 1987 to June 1988. The remaining years refers to the twelve month period April to March.

Source: Food Corporation of Bhutan

i) Health Department: All Hospitals and all Ba;sic Health Units ii) Education Department: 153 Schools iii) P.W.D.: RoadlBridge construction labour force iv) AgricultureDepartment: Settlements in Mongar,Samchi,          Chirang and Dagana. v) Irrigation Department: Taklai Project. vi) Forest Department: Logging and Plantation labour force.

   The commodities supplied are rice, soya fortified bulgar wheat, wheat soya blend, wheat, dried skimmed milk, dried fish, edible oil, io dised salt, tea leaves and pulses.

   The goods are being delivered at site by FCB to all beneficiaries of the programme. For this purpose there are 18 godowns with storage capacity of 4500 MT. WFP has already fi nanced the construction of 7 out of 10 godowns. These construction programmes have been drawn up taking into account the present and future needs of godowns for storing and distributing WFP commodities.

  Distribution of Iodised Salt

   Under this programme the Corporation is responsible for ensuring that only iodised salt is consumed in the country. The programme has been drawn up to curb and eradicate iodine deficiency disorders. To achieve the objective of this programme, the Corporation will con tinue importing the country's total requirement of common salt, iodise it and distribute the iodised salt throughout the country through commission agents and the Corporation's de pots. Operation of Cold Store

   FCB will continue the operation of the 100 MTcapacityAustralianaidedcoldstoreatPhunt sholing.

   Maximum effort will be made to sell out the space to the users to make the cold store eco nomically viable. FCB has recently conducted an apple storage experiment which has proved successful.

   Local Procurement of Foodgrain

   The procurement of locally produced cereal will be carried out at a competitive rate worked out by the Agricultural Pricing Policy Commit tee, which is going to be formed shortly.

   The growers will be encouraged to grow more cereals if the price so offered is competi tive with the market price. However, the Royal Government will have to bear the losses in curred out of such operation.

Chapter 16 FORESTRY

Objectives

   The National Forest Policy directs that while harvesting of mature and over mature trees is necessary, it should not be done at the cost of impairing the protective role of the forests. The policy stipulates that in no case the existing forest cover should fall below 60 percent of the totaJ, land area and the prescribed forest cover be maintained by scientific management, protec tion and afforestation of blank and degraded areas.

  Conservation of and augmentation of forest resources form the principal objective f the sector during the Sixth Plan period. A sustain TABLE 16.1Forestry data, 1987

able management of existing forest and wildlife resources based on a reliable forestry inventory is an essential requirement for Bhutan. Sixth Plan will adopt scientifically sound forest man agement and utilization policy to meet the demand for forest products to provide raw materials to forest based industries and to pro mote export of finished goods in preference to raw material.

  Preservation of ecological system, particu larly the varied flora and fauna, will be given equal importance. Table 16.1 provides some basic data about the forestry.

TABLE 16.1 Forestry data, 1987

Sl.No.  Item                        Units         Qty

-----   ---------------             -----         ----

1)  Total Forested Area                sq. kms.   28,399

2)  Total Tree Cover                    "        25,733.65

3)  Total Growing Stock            million cubic     528.9

4)  Annual Cut From Operable Area        "            15

5)  Per Capita Forest                 hectares         2.5

6)  Per Capita Timber Consumption  million cubic     0.047

7)  Per Capita Fuelwood            million cubic       2.2

8)  Surplus Exported Timber              "         50,000

9)  Degraded forest BIanks Areas      hectares   1,60,000

10)Contribution to GDP in current       %            15.2

--------------------------------       ------      ------

  Source: Department of Forestry

Strategies and Approaches

   In keeping with the above policy objectives the following strategies are being adopted:

i)       survey and demarcation of some 6-136 sq. kms. of forest land and preparation of catchment-wise management plan main taining the present area of forested land; 

ii)      avoiding possible forest damage caused by illicit and indiscriminate felling, encroachment and forestfire;

iii)     regulation and containment of tsheri cultivation and limit diversion of forest land to non-forestry purposes; 

iv)     forestry education and extension methodology; v) strengthening forest research base; 

vi) counter measures to check denudation and erosion in river valley catchment; and vii) solicit people's involvement in imple menting the programmes.

Oulay

   The overall total budget outlay for forestry sector dunng the Sixth Plan is estimated at Nu. 418.206 million. 66.7 per cent of this overall total outlay is allocated for capital expenditu and 33.3 per cent to meet current expenditure. The government internal resources provide 42.5 per cent of the total budget 2equirement of the departments.

TABLE 16.2 Forestry Sector Outlay - Sixth Plan

Programme                       Total       Capital     Current

---------                       -----       -------     -------

A. Regular Programme

1: Forest Support Services 

   a.Forest Demarcation         6.050       6.050         -

  b.Management Plan           4.000       4.000         -

   c.Forest Research            2.000       2.000         -

d.Wildlife Preservation         4.500       4.500         2. Afforestation               16.000      16.000         3. Construction of Road         5.000       5.000        4. Const. of Building          0.505       0.505         -

1. Vehicle                      0.600       0.600         -
2. Establishment              127.061         -        127.061

-----------------             -------       ------     -------

Sub Total                     165.716      38.655      127.061

-----------------             -------      -------     -------

B. Investment

1. BHU/85/016                  28.102      20.884        7.218
2. HRD                          6.532       6.532          -
3. Helvetas (IFDP)             21.200      21.200          4. Helvetas (FTI)              62.300      60.800       1.500
4. Forestry I                  16.960      15.600        1.360
5. Forestry II                112.710     111.280        1.430
6. BCP/BHU/003/NOR              2.710       2.210        0.500
7. TCP/BHU/6652                 1.976       1.781        0.195

-----------------             -------     -------       ------

Sub Total                     252.490     240.287       12.203

-----------------             -------     -------       ------

Total                         418.206     278.942      139.264

-----------------             -------     -------      -------

Programmes and Targets

Forestry 

  Achievements by the end of Fifth Plan and targets for Sixth Plan of the selected programmes are given in Table 16.3. The relate to survey and demarcadon, forest management coverage, afforrestation and seedlings distribution.

TABLE 16.3 Selected physical targets - Forestry Sector

Sl.No. Programme            Unit       Baseline Sixth Plan 

                                                   Targets

------ ---------            ----      -------- -----------

i)   Survey & demarcation    sq.km        20,100        6136 ii)  Forest management        "            4,934        1000      coverage

iii)  Afforestation-planting  hectares    11,200        1500

iv)  Afforestation mainte-    "                         4400     nance

v)   Social-forestry and     Nos.                  1,000,000     Seedling distribution

vi)  Road construction       Km.                         25----------------------     ----------     ------     ------

Forestry Research

   There has been no comprehensive forest research carried out so far in this country and the entire forest operations are based on the re earch findings of other countries. Applied research on practical aspectofforestry will be initiated during the Sixth Plan period through a separate Research Division which has been established. Its functions are concerned with the following:

i)    Identification, demarcation and establishing four                 research stations; 

ii)   Setting up 100 sample plots for field experiments; iii) Timber testing of 25 important species; iv)  Seed stand identification; 

v)   Forest protection works; vi) Forestry journal; and vii) Misc. Forestry research activities.

 Afforestation

  Though the country has over 60% of the total wea under forest, they are not distributed evenly throughout the country. There are many dis tricts and localities with severe dificiency of forest cover. The situation in such districts and localities could deteriorate if remedial measures are not taken. During the Sixth Plan a reason able level of plantation programmes will be continued to cover up such areas and to compen sate loss in forest areas to other land use.

Forest Demarcation

   A prerequisite for management and control for conservation is forest survey and demarca tion. Forest demarcation activities will be con tinued during the Sixth Plan to achieve the objective of demarcationing the entire country.

   Wildlife Preservation

  Wildlifeisarichheritageofthiscountry. The preservation of the genetic diversity of fauna and flora of Bhutan and their habitat will be given priority. The existing twelve protected areas comprising national parks, wildlifc re serves, sanctuaries and rcserve forest will be maintained. Social Forestry and Seedling Distribution

   An important element in the forest conserva tion strategy is the people's participation. Under this scheme, people have been exposed andedu cated as to the role of trees and forest and the need for their conservation. This programme will be continued during the Sixth Plan.

   Forest Management & Conservation

   The project aims at providing support to forest management and conservation activities, nature conservation, watershed management, social forestry, forest road construction, train ing and equipments. The project is being imple mented in a few demonstration areas of Gida Gome Watershed, Gedu and Phuntsholing; rep resenting typical forest problems. An essential element of this project is to provide an up-to date aerial photography of the watershed area.

Integrated Forestry Development Programme (IFDP)

   The project is being implemented to develop and improve scientific forest utilization on a sustained yield basis through an integrated approach. It is a pilot programme. The Project has selected four catchment areas of approxi mately 1000 hectares of commercial forest in Domkhar, Hurchi, Phrumtrang and Dhur. The cable crane units are fully integrated with for estry unit to form an important part of the opening up system essential to forest utilization on a sustained yield basis. The road construc tion units as part of the project component provides assistance in mechanized forest road construction. This project is going to provide useful data and experience on silvicultural and management of coniferous high altitude forest.

   The second phase will be taken to support silvicultural research activities and for extend ing valid experience to other areas in Bhutan.

   Forestry Master Plan

   The Master Plan for Forestry Development Project would focus on the preparation of a long term (20 years) plan for development of the forest resources covering a wide range of for estry activities. It will also assist in strengthen ing of in-house expertise in project planning, formulation and preparation, monitoring and evaluation and donor co-ordination functions of the department and enable implementation of the Master Pian for Forestry Development pro posal within the frame work of annual plans on a continuous basis.

Forestry II

  The proposed project covers an area of about 11,000 hectares of bark beetle epidemic infested forest in the region of Paro, Haa and Thimphu dzongkhags in Western Bhutan. Project activities involve plantation establish ment and procurement of logging equipments, establishment of forest nurseries and construc tion of forest road. The project is being implemented by Bhutan Logging Corporation for a period of 5 years. A number of start up activities have been carried out since 1987, funded in part under the ongoing Forestry I project.Theprojectwouldalso utilize exper tise services provided under UNDP/FAO project Forest Management and Conservation. This arrangement would ensurecoordinated effort made in the forestry sector development withoutovertaxing the scarce local forestry staff and resources.

  Human Resource Development

   As one of the largest organization of the Royal Government, the forest department has had to undertake a substantial training pro gramme. Bulk of its needs are Forest Guards who have been trained in the Taba Forestry School. Lamegompa Logging Training Center in Bumthang also provides training to forestry personnel in operation and maintenance of the logging equipment.

   During the Sixth Plan a fullfledged National Resources Training Institute at Wang diphodrang will be established. This Training Institute is expected to meet most of the training requirement for middle and junior level forestry staffs. However, training requirement in more specialized field in forest inventory, entomol ogy, afforestation and wildlife management will be provided abroad.

Chapter 17 TRANSPORT

  Objectives

   The objectives of the Fifth Plan, which are enumerated below, will continue to be relevant:

i) to augment the rolling stock capacity for both passenger and goods transportation in order to meet the increasing

demand arising out of future develop mental activities; ii) to ensure cost effectiveness of the transportation system; and iii) to develop diversified transportation systems.

Outlay and Programmes

Road Transport

   The major routes of the western and eastern sectors are now run by private operators. One commercial operator will be licensed for each route. The BGTS is required to supervise opera tion schedules, control fare structures and facili ties. Route privatisation has reduced the work load of BGTS. However, the BGTS has lost its most economically viable routes. This has lead to a decline in its financial performance. Never theless BGTS has maintained the mini bus services between Thimphu/Phuntsholing and has increased the daily frequency from 2 buses to 4 buses. The number of passengers carried by BGTS is given by Table 17.1

TABLE : 17.1 Bhutan Government Transport Services, Passengers carried, 1987/88

-------------------------------------------------    Year                         Passengers                                   carried

                                   (000)

--------------------------------------------------

1982/83                          1,045

1983/84                          1,149

1984/85                          1,264

1985/86                          1,239

1986/87                         1,142

1987/88                          1,228

-------------------------------------------------

Source: Bhutan Government Transport Service

  The BGTS will have to be expanded according to the expansion of the roads networks, though a drastic expansion during the Sixth Plan is unlikely. Basing of commercially viable routes to private operators will continue to be practised with a view to eventually handing over passenger transportation to the private sector.

  A total sum of Nu. 5 million will be made available as capital grant to BGTS for the first two years of the Sixth Plan, to enable it to carry out its programme of improving existing BGTS facilities and to provide basic facilities for its

operation. The Royal Government will also continue to provide assistance to the commercial units by

identifying and negotiating softterm loans for the BGTS for its fleet renewal programme and providing training for its personnel.

  Workshops

  The three Government Auto Workshops were based out to private operators during the Fifth Plan. The same arrangement will be continued for the Sixth Plan.

  Civil Aviation

  A total allocation of Nu. 48.775 million has been made for Civil Aviation development during the

Sixth Plan. A major portion of the Passcngers outlay was earmarked for the improvement of carried Paro Airport to accomodate a bigger plane - BAe 146 (80 seater) which arrived at the end of October 1988.

  Renovation of Paro Airport

  In view of the importance of Paro airstrip as the onlyfunctional Airport in Bhutan and the decision to acquire a bigger plane, it has become necessary to improve Paro Airport. The government of rndia has agreed to take up the project on a turnkey basis. The improvement of Pro airport will basically consist of 2 main activities:

i) Strengthening and extension of runway for 80 seater aircraft; ii) Construction of hanger for Druk Air fleet at Paro; and

Communication and Navigation Aids Installations

   Non Directortal Beacn (NDB) a sophisti cated navigational aid, was installed at 2 strate gic places, to provide directorial guidance to air craft ror their safety.

   Beides the above activities, training related to civil aviation is to be a high priority for the Department of Civil Aviation during the Sixth Plan.

Druk Air Corporation

   The Druk Air has 2 Dornier aircrafts operat ing between Paro/Calcutta and Paro/ Dhaka. In addition, the Druk Air has BAE 146, 80 seater jet flying out to Delhi, Kathmandu and Bang kok. Table 17.2 gives some infonnation on Druk Air operation.

   The Sixth Plan budget allocation for the Druk Air Corporation is Nu. 391 million including the cost of the BAE 146 in the order of Nu. 377 million.

TABLE 17.2 CIVIL AVIATION - DRUK AIR FLIGHT SRRVICES, 1983 TO 1987

                         1983    1984   1985   1986    1987                          ----    ----   ----   ----    ----

Distance flown ('000 km)   64    125     125    205    n.a.

Passengers carried      2,854  4,480   5,928  7,776  8,700

Passenger-kilometers    1,612  2,531   3,349  4,381    n.a.

---------------         -----  -----   -----  -----   -----

Source: Druk Air Corporation

TABLE 17.3 Number of Registered Vehicles by type and Region(a), May 1988

Vehicle type  Western   Central   Southern Eastern   Total

-----------   -------   -------   -------- -------   ----Light           2,547      407     1,283      330     4,567

Heavy            158       64        506       99      827

Public trucks     97       42        260       40      439

Taxi             115       19         31       4       169

Diplomatic        44       -          -        -         44

Royal             29       -          -        -         29

All Vehicles   2,990      532      2,080     473     6,075

-----------    -----      ---      -----     ---     -----

(a) Vehicles registered in the southern region are assigned the same number plates as those registered in the western region.

Source: Department of Revenue and Customs.

Chapter 18 TELECOMMUNICATION

   The introduction of such electronic system as microwave, ultra high frequency (UHF), satel lite, multi-access radio relay system (MARR) during the Sixth Plan will have a revolutionary impact on the telecommunication system in Bhutan. A preliminary draft on Telecomrnuni cation Master Plan was prepared in 1985. Con sidering the rapid pace of innovation in the technology of telecommunication, preliminary draft was reviewed and it was proposed to formulate a new telecom development plan. To undertake this work, the Royal Government has signed an agreement with the UNDPIITU to provide a comprehensive study of the national and international telecommunication services.

   Outlay

   A total outlay of Nu. 133.842 million has been allocated to Telecommunlcation sector. Out of this amount, Nu. 28.842 is for current expenditure and Nu. 105 million for capital expenditure.

  Programmes

   During the Sixth Plan, it is planned to inter connect not only the important cities but also to inter-connect the gewogs to the distrlct head quarters. There are malnly two types of work switching works and transmlssion works. Switching works have already begun.

   The completion of switching projects will result in commissioning of 13 electronic ex changes out of which 8 will be replacements for existing electromechanical exchanges and 5 at new places. The 6 Gega Hertz (GHZ) broad band microwave digital link when completed will connect Western, Central, and Eastern regions of the country which will be alsocapable of T.V. transmissioninthelongrun. The7GHZ nam)wbanddigltal spurroutesbetweenThimphu - Thadana, Yatula, Tongsa, Kanglung - Tashi gang will inter-connect the three zonal centres, (Thimphu, Tongsa, Tashigang) which will en able the switching of calls between the three regions. Takti - Phuntsholing narrow band analogue microwave system will provide arte rial route in Western region as a backbone of transmission facilities. It will also enable to commission Subscribers Trunk Dialling (STD) services between Thimphu and Phuntsholing as well as making it possible to have International Subscribers Dialling (ISD) from these towns to India. The completion of various UHF system will connect district headquarters and other im portant towns in the northern region directly to 6 GHZ East-West microwave link. 7 MARR system will connect gewog centers to their re spective district headquarters, which in turn will be connected to the main network. The estab lishment of the satellite earth station at Thimphu will be linked to INTELSAT and it will facilitate direct international communication.

   The programmes will be continued in suc ceeding Plans until Bhutan has an wide network of telecommunication services.

   Manpower Input

   The requirement of technical maintenance staff have been estimated at 550. The existing strength is 327; so 223 additional workers in various categories will be required during the Sixth Plan.

   To provide training to newly recruited staff and refresher courses for the existing staff, and make them conversant with modern equipments, a provision of Nu. 3 million has been made in the Sixth Plan. However, the installation of internal switching equipment and transmission cquip ment will be carried out with the help of foreign personnel.

Chapter 19  POSTS, TELEGRAPHS, AND CIVIL WIRELESS

  Objectives

The main objectives of the Sixth Plan are i) to develop and expand postal services and create an efficient network of posts and telegraphs services; ii) to improve the quality of existing man power; iv) topopularise andpublicise thecountry's historical, cultural and traditional heri tage by printing stamps on interna tional and local themes; and iv) established a designing and photogra phy cell.

   Outlay

   The total combined outlay for Post, Tele graph and Civil Wireless is Nu. 68.072 million of which Nu.

65.114 million and Nu. 2.958 are for current and capital expenditures respectively.

  Programmes

   The construction of Thimphu General Post Office was started in the Fifth Plan and was completed in 1989. The Divisional Telegraphs Of fice has alreadybeen set up in the new General Post Office building.

TABLE 19.1 Number of Trunk Line,

------------------------------------------------

Place                         Distance(Kms)

------------------------------------------------

Thimphu-Chimakothi                  65

Thimphu-Phuntsholing(a)            130

Thimphu-Wangdiphodrang              45

Thimphu-Punakha                     60

Thimphu-Paro                        54

Wangdiphodrang-Punakha              15

Paro-Phuntsholing                  124

Paro-Ha                             18

Samdrupjongkhar-Tashigang          130

Gelegphug-Tongsa                   200

Gelegphug-Sarbhang                  23

Phuntsholing-Chimakothi             65

Samchi-Banarhat(India)              14

------------------------------------------------

(a) Microwave

Source: Department of Telecommunication

   Postal equipments like electrically operated punching machines, weighing machines, photo copying machines, philatelic displaying cabi nets, computers etc. will be purchased. Further more, 11 Land-cruisers will be purchased to motorise the main postal conveyances during the Sixth Plan. The existing tape-model tele printer machines was replaced by page-model machines.

   Under wireless, the wooden and bamboo poles used for anenna will be replaced by either iron tubular poles or fabricated tower mast to avoid expenditures incurred every year.

   Hydromet

   26 units of fire fighting equipments were purchased directly by the Central Water Com mission (CWC) Jalpaiguri Division and sup plied to the Bhutan Hydromet Division for in stallation at 13 hydromet stations. A wireless set of 15 watts will be provided by the CWC Au thority for installation at Thimphu for transmis sion and reception of Hydromet data. There is also a provision of construction of a new hy dromet station at Shingkhar Lauri during the fiscal year 1988-89.

TABLE 19.2 Number of Telephone

       Trunk Calls

                                By Type (a)

                                ('000)

                                Number

Type of calls                   of calls

--------------------------------------------------Domestic calls                   84.9

International calls              

India                            15.1

Other                             3.1

Total                            18.2

All calls                      103.2

---------------------------------------------------

(a) Estimated annual number of calls based on calls sent during December 1986 to March 1987 Source: Department of Telecommunication.

TABLE 19.3 Number of Post Offfices and Other Communication Facilities, 1980 and 1987.

                                1980     1987

General Post Offices              2        2

Post Offices                     52       54

Branch Post Offices              27       29

Telegraph Offices                 8        8

Wire Stations (a)                28       37

Hydromet Stations                 5       13

---------------------------------------------------

(a) Includes two stations installed at New Delhi and Dhaka embassies. Source: Department of Post, Telegraph and Wireless.

TABLE 19.4 Number and Amounts of Money order by Type, 1980 and 1987

Type                             1980         1987

------------------              ------      ---------

Internal money order

Number ('000)                     54.0        n.a.

Amount booked ('000 Nu)        4,735.0      9,476.8

Amount paid ('000 Nu)          3,933.5      8,497.9 Foreign money order(a)

Number ('000)                     37.8        n.a.

Amount booked ('000 Nu)        1,412.7      5,461.2

Amount paid ('000 Nu)             17.3        169.2

----------------------------------------------------

(a) Amount booked refers to money transferred out of Bhutan.  Amount paid refers to amount transferred into Bhutan.

Source: Department of Post, Telegraph and Civil Wireless.

TABLE 19.5 Number of Items of Mail Sent by Type of Item and Destination, 1987

                     ('000)

Type of Mail  Letters

        Ordi-  Regis-  Total Aero- Post- Matter Parcels Total         nary   tered         gramme cards        

                                     Printed

        ----   -----   ---- -----   -----  ---- -----  -----

Domestic 2,924  172   3,096    -    40     41    32    3,210

Neigh-

bouring 2,599   140   2,754   -     47     23    4     2,826

Overseas  233    40     264   44    21     14    1       344

-----    -----   ---  -----    ---   ---  ----   ---    -----

Total 

Mail    5,746   366   6,112   44   109     79   37     6,380

-----   -----   ---   -----   --   ---    ---   --     -----

Source: Department of Post, Telegraph and Civil Wireless

TABLE 19.6 Number of Telegraphs Sent by Type, 1980 to l987

                        ('000)

Type       1980   1981   1982  1983   1984   1985  1986   1987

----       ----   ----   ----  ----   ----   ----  ----   ----

Domestic   78.8   85.6   85.9  86.4   87.3   88.2  85.4  104.6

Overseas    35.2   42.6  42.2   43.1   44.1  45.3   43.0   56.6 Service     13.3  14.4   15.1   15.9  17.2   18.7   15.0  45.9 messages    

Transit    39.6   42.1   45.6  50.1   55.2   60.8  63.8   83.3

-------     ----   ----  ----   ----   ----  ----   ----   ---All types 166.9  184.6  188.9 195.6  195.6  203.0 207.2 290.3

-----      ----   ----   ----  ----   ----   ----  ----   ----

Source: Department of Post, Telegraph and Civil Wireless.

Chapter 20 Information anf Broadcasting

  Outlay

  Table presents the outlay for Information Broadcasting and DSCD, disaggregated into current and capital expenditures.

                  Current    Capital     Total

Information       18.406      3.963      22.369

Broadcasting       8.176     53.435      61.611

DSCD               9.128      2.774      11.902

  Programmes

 Information

   The Information Division has plans to go for a daily Kuensel in English after it obtains ade quately trained and experienced personnel in newspaper publication. The division will also subscribe to various agencies for supply of news items which will be printed in the Kuensels publications and hopes to remove the drawback regarding delay in distribution, by using com missioned agents, BGTS and mail van services. Editorial equipment and other facilities to launch a daily newspaper will be upgraded.

   An audio-visual (AV) unit which will have one video film crew, a camera system, two sound recording systems and two sets of lighting equipments will be established. The unit will have to cover national media events andproduce video progammes of national and international interests.

  Broadcasting

   The Bhutan Broadcasting Service (BBS) intends toprovide arange of programmes which will inform, entertain and educate, catering in a balanced way for the varied interest of different

Chapter 20

INFORMATION AND BROADCASTING

sections of the community. It aims to maintain acceptable standards of objecdvity, accuracy, taste and decency and the highest attainable professional performance in both technical and programme output.

  It is envisaged that the BBS, with the estab lishment of the National Broadcasting Station, will be fully equipped with music, drama, talks, play back studies, office buildings and a seper ate transmission centre. Similarly, the output in broadcasting hours will increase tomore than 60 hours weekly by the end of the Sixth Plan. Radio Development Programme has been already ini tiated with the assistance of DANICOM and UNESCO. The project is aimed at creating professional skills, organisational structure and innovate new programme formats and produc tion and planning routines which can ensure full operation of broadcasting services.

  DSCD

   The Development Support Communication Division (DSCD) continues to provide its serv ices to the technical departments and other inter national agencies with greater professional competence and efficiency. The DSCD pro poses to undertake such activities as develop ment of suitable development suppart commu nication (DSC) capabilities, skills at Dzongkhag level; DSC media materials development tech nique at Training Centres and Institutions; development of DSC centre; and increase in staff strength and training in the field of audio visual technique, technical maintenance and programming etc. During 1989-90, the division proposes to conduct DSC training on monitor ing and evaluation and feed back system at district level and training on operation and maintenance of DSC equipments, whereby at least one participant from all 18 Dzongkhags willl be trained.

           Chapter 21        TRADE AND INDUSTRIES

TRADE

  An increase in the country's export has emerged as a priority area because of an anticipated growth in production and an absence of internal market. Moreover, imports are on the increase every year which calls for the exports to cover the cost of imports.

  Objectives

  Deriving from theise facts, the objectives of Trade and Commerce is enumerated below:

i)To develop basic infrastructure required facilitate the growth of trade and commerce.

ii)      To expand Regional Trade particularly with other SAARC member countries.iii) To enhance marketing of indigenous products. iv) To improve Trade Information System.

v) To enhance foreign exchange earning to meet national 'hard' currency requirements, necessary for imports and investments.

Programmes

   The following major programmes will be undertaken in the Sixth Plan:

i)     Promoting trade with third countries 

ii)   Computerization of Trade Information System and trade licencing 

iii)  Manpower Development Programme 

iv)  Strengthening of Trade Promotion Divi sion and Trade     Information Centre v) Protection and safety of consumers

   Promoting Trade with Third Countries

   Bhutan's trade with India is already quite well established. Table 10 provides values of

  TABLE 21.1 Trade and Industry Sector Outlay - Sixth Plan

Programme                                  Total Outlay

---------------                            --------------

Current Expenditure                              35.334

Capital Expenditures     

Dungsum Cement Project                          848.500

Bhutan Carbide & Chemical Ltd.                  160.651

Bhutan Board Product Ltd.                       148.788 Gedu Wood Manufacturing Corporation             15.700 including Logging Roads           

Dev. of Shumar Gypsum Mines                       4.000

Dev. of Handicrafts, Handloom at Khaling          7.500

Polythene Factory                                 1.000

Pottery Workshop                                   .300

Dev. of existing & New Industrial Estates        34.530 Handloom Dev. Project (Weaving component          4.500 of IFAD II)

Purchase of Vehicles                               .540

Furniture/Office Equipments                        .463

Professional Services                            14.000

Agrobased industries                               .299

---------------------                        -------------

Total                                         1240.771

---------------------                        ------------Grand Total                                   1276.105

---------------------                        ------------

trade between Bhutan and India. Top priority will be given to develop and diversify trade with other neighbouring co Bang ladesh and Nepal.

   The potential for trade between Bhutan and Bangladesh is very good in view of the geo graphical promixity, comple the two economies and the friendly relations that exists between the two countries. The basic foundations at the Gove al ready been laid down in the form of trade and transit agreements with Bangladesh.

   In order to achieve the objective of attaining a good trading relation with Bangladesh the following activities will be c

i) To identify the markets in Bangladesh for Bhutanese products and provide all rele vant information to Bhutanese        exporters; ii) To assis Bhutanese exporters to market their products in Bangladesh; and

iii) To examine all other possibilities for expansion of trade and commerce        between two countries.

   Similarly, efforts will be made to establish a good trade relation with Nepal. Though most goods produced and trad Nepal are similar, the possibility of trading with Nepal in some specific products will be explored.

  Furthermore, attempts to explore the possi bilities of promoting and developing trade with other SAARC member co other countries,with a view to diversify and expand Bhutan's trade, will be made.

Computerization for Trade Information System and Trade Licensing

   A Trade Information Centre has been estab lished during the Fifth Plan. Its functions in volve collecting trade statisti disseminating general trade information for the information users. In the Sixth Plan the Centre will be strengthened so t more efficiently and can provide information not only to government agencies but also to private trad ers and organizati

   Manpower Development Programme

   There will be provision for trainings for 18 persons with courses varying in duration from 3 months to 2 years. Some will be inservices whilst others will be done abroad.

  Strengthening of Trade Promotion

   Division and Trade Information Centre

   In order to promote the country's trading activities with other countries, a Trade Promo tion Division and a Trade Information Centre was created in the Fifth Plan. The following will be the main activities of these organizations during the Sixth Plan.

i) Organizing exhibitions and trade fairs to promote inter-regional trade within Bhutan, ii) Participating in international trade fairs, 

iii)  Helping exporters and importers in docu mentation procedures, 

iv)  Promoting trade among Dzongkhags through services such as providing trade information on price,consumers, commodities and production centres/region; and 

v)   Contacting international importers and exporters for exportable surpus and import requiremenl.

   In addition to the above functions, impor tance will also be given to the following in order to make the support services more effective and catalytic for development of trade.

i) Prepanng and publishing promotional materials like Trade Directories, and brochures for internal and international trade promotion. ii) Doing market-research for intra-Bhutan and inter-regional trade. iii) Establishment of showrooms for Bhutanese Products within the country. 

iv) Doing marketing research for major exportable commodities, v) Identification of producs for value addition and export.

           Protection and Safety of Consumers

   The Government will also undertake certain measures designed to tackle the following problems:

i)Business mal-practices, 

ii)      Sale and use of properly supervised drugs and medicines, iii) Unsafeelectrical, wiring, appliances and associated products, iv) Unhealthy food additives, 

v) Sale of unhygenic and unhealthy food items.

 INDUSTRIES

  Objectives

  The following will be the objectives of Indus trial Sector for the Sixth Plan:

i)To increase the GDP through industrial development.

ii)      To balance trade internally and externally. iii) To substitute imports through domestic production.  iv) To earn hard currency by exporting manufactured and processed goods to the international markets.  Industrial Policy and Strategies

 Industrial ownership

 It is the avowed policy of the government that the benefits of industrialization should accrue to the largest number of Bhutanese people. This can be attained through wide distribution of trade and industrial ownership. Public issue of shares in industrial and commercial projects will be vigorously encouraged.

 Location

 Each industry should be set up in a location considered ideal for the purpose. Investment should foster a balanced industrial growth of all the three industrial zones of the Kingdom. This objective must be borne in mind and brought to bear on the industrial licensing policy. Industries based exclusively and solely on fiscal subsidies vis-a-vis India will be discouraged.

 Product Standard

 Industrial production must cater to the international market in addition to domestic requirements. The quality and price of various industrial products should pass quality test for international markets.

 Import Tariffs

  Restrictions may be imposed on certain items of imports and exports, if such restrictions are considered necessary to protect nascent indus tries. This would be used as the last resort. Government permission will be necessary to import raw materials, particularly against payment of "hard" currency.

Competition

Although the private sector will be given full encouragement, the Government will legally restrict monopolies and restrictive trade practices.

Training

   The Government shall devise schemes and programmes to encourage management educa tion and training to provide a sound managerial base for bolstering industrial development. Training of persons for manning lower level positions as well as development of skilled labour shall be important responsibilities of the Government.

Privatization

   In view of the absence of adequate and quali fied entrepreneurs, a few revenue earning indus tries will be set up in the government sector. These industries may be handed over to the private sector when the Government is confi dent of the management capability of the private sector.

  Technologies for Industries

  The technology to be utlised will be pin pointed and carefully selected keeping in mind Bhutan's acute shortage of skilled manpower, and limited foreign exchange reserves. Tech nologies from countries nearest to Bhutan should be accorded priority.

  Foreign Collaboration

  Transfer of technology and know-how should be through import of plant, machinery and employment of foreign experts and technicians on a case by case basis. The Government will favour technical collaborations with foreign companies in preference to financial collabora tions. Payment of reasonable royalties in case of technology transfers may also be permitted.

  Foreign equity participation will be perrnitted but the Government will review each submis sion on individual ment and will allow foreign equity participation only in respect of agro based industries and export based industries.

  Incentives and Assistance

  The government, to enhance industrialiation process in the country, shall give incentives and assistance to entrepreneurs but only aftercareful and detailed assessment of the industry. The incentives shall comprise of income tax conces sions, concessions of customs duty, excise duty concession and sales tax concessions. rl he as sistance will include, assistance in obtaining short medium and long term finances for ap proved industries, assistance in acquiring tech nology and raw material, assistance in man power development and assistance in marketing of processed goods.  Priority Industries

  Agro-based Industries

   Agro-based Industries shall be in the high priority category. he Government will petrmit the inport of viable technology, technical ex perlise and plnt and equipment for establishing ecl indutries, wherever justified. Other in centies ',h,tll also be provided to such indus tries.

Export-oriented lndustries

  The Royal Government will view favourably those indutries that export their entire production, even if a major portion of their raw materials are imported. Induction of latest technolo gies, know-how and machinaries will be permitted. Such industries will, however, be required to submit comprehensive and time-bound training programmes for utilizing domestic man- power and reducing the import of foreign labour.

 Mineral-based Industries

  High priority will be accorded to industries based on the utilization of available mineral resources in the country. Importance will be laid on dolomite, followed by limestone,coal and on those resources that can be exported to third countries. Those that have maximum pootential to earn "hard" currency will be given preferential treatment and they will receive requisite Government help and assistance.

Major Programmes

  With the completion of the Fifth Pl;m, the climate for industrialization espechl!y in terms of infrastructural facilities have considerably improved. The government has givcq industrial sector prominence and a wholly condent atti tude towards development of inlustries in the country within the plan period.

  The Government wiEl undernlk£ the follow ing programmes/projects in Ihe ixth Plan, to attain its objectives:

  Dungsum Cement Pnecl

   The plan to establi,h a cement plant to pro ducelS00 tons/ day of cement at Nanglam was conceived during the Pifh Plan. Negotiation with the Governrnent of ndia and Denmark were carried out to fin eis e the project by a Inix of loan and grant. lle project was initially ex pected to be commisiioned by 1990. However the project status has to be entirely reviewed on account of severe difficulties in implementing the project.

   Calcium Carbide Plant

   The Calciurn Carbide Project was started during the Fifth Plan and was commissioned in early 1989. The Governrnent wsll contribute Nu. 160.651 million in the Sixth Plan towards the completion of the project. The Plan will use chemical grade limestones ;at Purbia Khola Marichang, Kalshor and Hauri Khola.

Bhutan Board Prouc1 Ltd.

  Bhutan Board Products Ltd was opened as a joint venture at Tala, near Gedu at the beginning of the Sixth Plan. The cost of the project has over shot by about 115% from, Nu 106.97 million to Nu. 230 million recently due to exchange rate fluctuation and upgrading of the plant from 60 cubic production capacity to 80 cubic per day. The Government outlay for the project in the Sixth Plan is Nu. 148.788 million. Critical issues to be solved during the Sixth Plan regarding the project are raw material availabil ity, implementation schedule to be met, infras tructural layout and arranging export markets in India, Nepal and Bangladesh.

Muti-purpose Agro-sedIndustries

  Where almost 90% of the people earn their liveiihood through agriculture, importance must be laid on the development of agro-based indus tries within the country. This will increase value added agriculture produce as well as increase rulal earnings. In the face of such advantages, the government will establish a multi-purpose agro-industry at Thimphu.

Shumar Gypsum Mines

  The Shumar Gypsum Mines at Khotakpa was inaugurated in April, 1983 and mining activities commenced in early 1984. Due to low market demand for new gypsum, the mining activity was taken over by the Penden Cement Author ity, the main consumer in early 1986 from the Shumar Project Management. Recent market development has shown great potential for gypsum and related products. In consequence, the go ernment has given greater importance to the development of the Slnlm.lr Gypsum Mines. An allocation of Nu. 4 million has been made for the clevelopment of the mines in the Sixth Plan.

 Pre-investmnt studies

   The Government will undertake pre-invest ment studies of various industries in the Sixth Plan as additiollal projects in pipeline for gov ernment as well as private sector industrialist to select industrial ventures.

TABLE 21.2 Number of Licensed manufacturing Firms By Industry And Employment, 1986

Industry                                 Employment size

                     Less than   10-19   20-49 50-99  100    Total

                         10                            & over

----------           --------    -----   -----  ---   ----   -----

Food processing/

milling                 237         4      2      3      3    249 Textile & clothing       3         1       -     1      -       5

Wood & paper products    27       14       9      2     3      55

Chemical products         8         1      1      1      1     12

Mineral products          2         1      -      1      2      6

Other                     8         -      4      -      1     13

Total manufacturing     285       21      16     8     10     340

-------------           ---       ---    ---     ---   ----  -----

Source: Department of Trade and Industries.

TABLE 21.3 Number of Licensed Firms in Manufacturing and Mining Industries by Sector, 1986

Industry                        Public   Private    Total

------------------              ------    -------   -----

Mining                            4          5         9

Manufacturing          

Food processing/milling           4        245       249

Textile & clothing                -          5         5

Wood & paper products             2         53        55

Chemical products                 1         11        12

Mineral products                  2          4         6

Other                             1         12        13

Total manufacturing              10        330       340

Total                            14        335       349

-----------------              ------    -----    ------

           Chapter 22

           GEOLOGY AND MINES

  Objectives

  The Department of Geology and Mines, established in 1981 is the sole authority in Bhutan for undertaking all geological and mining activities in the Kingdom such asgeological mapping, mineral exploration, engineering goelogy, mine identification, planning and design.

  It will control and regulate all mining activities in the country with particular care to prevent environment damage and mineral losses during extraction. It will evaluate the mineral deposits for profitable mining.

Outlay

  To carry out its activities in the Sixth Plan, The department of Geology ang Mines has been allocated a budget of Nu. 35.282 million.

Programmes

To achieve the above objectives, the department of Geology and Mines shall undertake the following programmes during the Sixth PLan.

   Manpower

   The Department of Geology , Mines has already developed a core team of trained personnels. With the anticipated increase in the work load of the Geology and Mines, the trained manpower needs to be further strengthened.

   To meet the demand for additional skilled manpower, recruitment and training will be undertaken during ihe Sixth Plan as one of the

major activities of the Department and Mines. Trainings will take the form of on the job training, short term courses and specialization courses.

Laboratories

  The need for the organisation to have its own laboratories was greatly felt during the Fifth Plan. However due to fnancial constraint no laboratories could be establisbed. The e.stah lishment of a chemical and beneficiation labor,l tory, a petrological laboratory, a photogeologi cal laboratory and an engineering geology divi sion will be undertaken during the Sixth Plan.

   With the establishment of these specialise(l latx)ratories and division, complicated an(l spe cilise(l studies can he undertaken in the country.

   Library and Geological Musuem

   The proposed library would stock books and periodicals relating to geology, mines an drillin. The museum would house samples of all types of geological formations, minerals and their grades, fossils, comparative studies ot mineral wealth of oher countries. The place would be utilized for reference and information on the natural wealth of the country, as well as keeping abreast of the latest technological development.

   Others

   The Department of Geology and Mines will also conduct the following programmes during the Sixth Plan.

TABLE: 22.1 Selected Targets for Geology and Mines - Sixth Plan

Scheme                                       Unit       Target ------------------------                      ----      -------

i)   Regional reconnaissance & Geological     mapping (1:50,000 scale)                sq.km.       1000 ii)  Detailed geological mapping                "            10 iii) Topographical surveying (small scale).     "            15 iv)  Detailed exploration by drilling,      trenching, pitting & exploratory      metric mining                            tonnes       4000

v)    Systematic/detailed sampling             Nos.         6000

vi)   Benefication studies                      -           1 project

vii)Engineering geological studies of      glacial lakes, town settlement, road

     & dam constructions etc.                 -           As and when

                                                          required viii)Topographical surveying (small scale)     -          15 sq.km.

-----------------------                       -----        --------

Chapter 23

POWER

   By June 1988, the department was servicing 15,169 consumers spread over 23 urban areas and 130 villages.

   In Table 23.1, electricity supply data is reported. The total installed capacity is 355.005 MW. Between

1987 and 1988, local generation totalled 1470.5 MU while a further4.3 MU units was imported from the Indian grids. Account ing for 18.7 system losses, the total sales to consumers was 71.4 m. units resulting in per capital consumption of 53 units for the country.

   The total number of employees in the depart ment is presently 452 of which 194 are techni cal, 86 non-technical and 172 are semi-skilled workers.

TABLE: 23.1 Electricity Supply, 15 Months Ending June 1988

                               Hydro      Diesel    Total

                               ------    --------  -------

Installed capacity(MW)

Department of Power             5.960      4.849    10.809

Chukha Hydel Project          336.000      1.696   337.696

Others(a)                        -         6.500      6.500

Total installed capacity      341.960     13.045   355.005

Electricity generation(MU)

Department of Power               5.4        0.3        5.7

Chukha Hydel Project          1,470.5        -     1,470.5

Others                            -          0.2        0.2

Total electricity generation  1,475.9       0.5    1,476.4

Auxilliary consumption(MU)      ...          5.9        5.9

Imports(MU)                     ...          ...        4.3

Exports                         ...          ...   1,386.7

Net energy requirement (MU)     ...          ...       87.8

Net sale(MU)                    ...          ...       71.4

Energy losses(MU)               ...          ...       16.5

Percentage Losses(%)            ...          ...       18.7

-------------------------      ------       -----    ------(a) Includes self-generating and non-utilities.

Source: Department of Power

  Approaches and Strategies

   The main emphasis during the Sixth Plan will be on regional balance. One medium hydro station have been proposed at Gyeposhing, Mongar in the east. Four dzongkhag headquar ters, where the grid extension are not likely to come in the immediate future, are to be supplied with small mini hydro stations.

   A substantial investment will be made during this plan period under the rural electrification scheme. It is proposed to cover at least 10,000 rural households through grid extension, and establishment of micro hydro schemes, and installation of photo-voltic power. At the same time investments in the urban areas tocaterto in crease utilization has also been proposed. Fur thermore, concerted efforts will be made in the investigations and studies for major hydro-elec tric schemes in larger river basins.

Outlay

TABLE 23.2 Power Sector Outlay - Sixth Plan

Sl.  Schemes             87-88   88-89 89-90   90-91    91-92  Total No.

---   -------            -----   ------ -----   ----    ----- ------

1.  Generation            9.000  164.00 247.000 110.000  70.000  600.000 2. High voltage trans-   3.000   0.000  17.000  70.000  49.000 139.000     mission lines

1. Subtransmission      69.825 47.207   32.806  27.820 13.844  183.502     distribution
2. Rural electrifi-     29.373 41.025   32.260  45.394 40.190  188.242     cation
3. Hydrological inves-  11.450 12.200   13.400  11.400  9.900   58.350     tigation
4. Central establish-   23.259 17.024   14.975  11.499 12.049   78.806     ment

-----------------        ------ ------   ------   ------ -----   ------

    Total               137.907  281.46  357.44  276.113 194.983  1247.9 ----------------        -------   -----  ------   -----    ----- ------

Programmes

Power Generation

   Attention will be focussed primarily in the eastern region where considerable amount of industrial and mining activities are projected in the next few years. A medium hydro project with an installed capacity of 45 MW has been proposed at Gyeposhing near Mongar on the Kurichu. This project whose implementation schedule has been closely matched with the Dungsam Cement Plant will also meet the power demands of the gypsum mines and coal wash ery. In addition the completion of the associated transmission lines will obviate the need for power import from the Indian grid in the entire eastern region except for the small demand at Daifam. Instead the project is expected to gen erate substantial revenue through export of energy to India via Nanglam.

   In addition to the above three major genera tion schemes four mini hydro schemes 1 MW each have been proposed at Radi, Damphu, Shemgang and Dagana.

   These schemes will provide supply of power to the dzongkhag headquaters where grid exten sion is presently viable. The Radi scheme will augment the Tashigang network where the load is expected to increase, in view af the extension of distribution networks being planned.

   Provided there are donor agencies the instal lation of micro hydro units will continue during the Sixth Plan. These shall continue to serve mostly rural needs and will operate in remote and isolated regions.

   While providing additional generating facili ties it is also considered essential to ensure that existing stations operate at maximum efficiency. Proposals have therefore been made for the complete refurbishing and recommissioning of the existing power stations. Once recommis sioned, routine preventive maintenance shall ensure that they never reach their present condi tion.

   If all the proposals are put into effect the total hydro generation will rise from the present 3.45 MW to a total of 99.35 MW, excluding Chukha Hydel Project, at the end of the plan.

   Transmission Lines and Substations

   The national grid that will be established in future will follow the main national East-West Highway connecting the various generating stations. The difficult terrain including the southern beltcompels this choice of route. Each regional grid must be designed to take this eventuality into account. It will be necessary to construct each grid going north to south with at least one portion available next to the lateral highway. In the case of the western region each criteria have already been met with the main line running from Thimphu to Phuntsholing.

   During the plan period, the main trunk line of eastern regional grid is to be completed. High voltage substations along the route of this grid have been proposed to meet the energy requirements in various places.

   The eastern grid, will comprise a 132KV line 60kn long between the project at Kurichu and the main load

Centre at NangIam. With a stepdown substation  at the later place a 66KVline will connect Deothang via Pemagatshel. Tge completion schedule of the main line has been selected to coincide with the commissioning of the generating plant at Kurichu. The 132KV line which will be utilized to export surplus power from Kurichu.

TABLE: 23.3 Electricity Transmission and Distribution -June 1988

---------------------------------------------Transmission line (km)     

220KV                             75.0  66KV                            216.9

 33KV                              5.0

 11KV                            460.1

6.6KV                             21.2

Low tension lines                408.3

Main substations (No)             17 Aggregate capacity of         18,835.0 transformers(KVA)

Distribution substations(No)     160

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Source: Department of Power

  Subtransmission and Distribution

   All activities below 33,000 volts excluding those new schemes that are oriented towards the rural areas, are part of this programme. This scheme, therefore, encompasses all existing consumer centres and all dzongkhag headquarters.

   The electrification works undertaken in the past were generally carried out in a haphazard way in the absence of town and city maps. The redemarcation of areas and construction of new roads has resulted in continuous need for shifting and re-alignment of power lines, upgradation of substations, errection of new lines and substations etc. In view of such problems and the efforts of the National Urban Development Corporation (NUDC) to create a final city plan and also in anticipation of substantial increase in power demands at Thimphu and Paro on receipt of Chukha power it was poposed to undertake a major modification of these system.

  Based in the report consultants the scheme is presenty being executed and will continue until end of the plan period. Further inputs are likely beyond this period. A similar scheme for the Phuntsholing system will be undertaken.

  Rural Electrificaton

   The achievement in the sphere of rural electrification has been so far disappointing. Only a total of 130 villages have so far been eletrified. It has led to the need far increased subsidy

on maintenance. There is provosion in the Sixth Plan to support this programme in view of the reiterations of the government's commitment to make rural life more congenial and attractive.

   Within the plan period, it is proposed to connect 9375 consumers to the existing  and new grids by the extension of 949km of 11KV lines and 984 km of low voltage distribution Iines. The balance 625 connections are proposed to be provided by the micro hydro projects under the generation scheme. The total financial implecation for the five years for line expansion is NU. 200.625 million. The figure per household thus works out to a very high Nu. 21,362. However, it may be noted that the same lines and substations will cater to additional consumers since only half the prospective consumers have been taken into account in the initial years.

   In order to minimize the possibility of these new consumers adding to the operation and maintenance costs without contributing correspondingly to the revenue,, attempts will be made to encourage the use of energy for productive purposes. Tariff incentives for daytime use and financial, help for capital invesents are likely approaches that would increase revenue potential from the rural sectors.

   Hydological Investigation

   During the Sixth Plan all the routine activities related by hydrological data collection will be consolidated and intensified. While this seme have been operated since the inception of the department, the outputs have been most disap pointing. Lack of suitable manpower, and direction are more to blame than financial constraints. Although there still exists a shortage of appropriately qualified personnel it is possible to obtain more relevant and useful data. Steps have already been taken for re-sitting the recording stations which with additional and improved instrumentation will provide useful data.

   Systematic studies of four important basins viz. Wangchu, Phochu Mochu, Dangmechu and Mangdechu will be undertaken during this plan period. Since hydrological studies have long time horizons these studies shall form the start ing points for long term observations. Basic data for long range planning of these basins will however be provided by the survey and investi gation group within the Sixth Plan.

   In addition to all the above activities the regular collection and compilation of hydro logical data will be continued. It shall be a quali tatively and quantitatively improved with the establishment of additional manned and un mannedrecording stations, upgradationof skills of field personnel, and frequent checks of gaug ingsites.

   Central Establishments

   Due to the increase in the volume and areas of operational activities the expansion of the oper ating infrastructure is inevitable. The present shonage of essential facilities such as office space, furniture, equipment and transportation in both the maintenance and development sec tors will be mitigated.

   In view of the above, buildings covering a total floor area of 5000 sq m have been proposed. This includes both residential and non residential buildings spread over seventeen dzongkhags. The estimated cost on this account is Nu. 48.3 million.

   In the transportation sector there is an acute shortage of vehicles which hinders efficient service. The total number of new vehicles that need to be purchased therefore works out to be 28.

   The total investment in the central establishments including purchase of vehicles and con struction of buildings represents only 3.91% of the total outlay while the establishment portion only consitutes 1.49%.

   Operation and Maintenance

   This scheme involves activities related to the maintenance of distribution systems, genera tion, purchase and distribution of electricity and collection of revenue.

   Policy directives now clearly state that the role of energy, at least, in the context of internal consumption shall be in the form of a catalyst stimulating economic growth. Electricity is seen, at the present time, not as a revenue earner but as an essential commodity that will improve the living conditions of the common man af fordable by him so that he can consider further usage to enable economic growth. Concern has been shown at the alarming rate of deforestation and repeated emphasis has been laid on the need for a tariffing policy that will encourage change over from fuelwood to electricty for cooking and home heating.