Usage of block grants by LGs questioned

It is reported that the grants are mostly used in agriculture and livestock sectors

Are the block grants allotted to Local Governments (LGs) used judiciously?

The question has emerged with some gewogs having built huge buildings and structures and spending huge portions of the grants in the construction and renovation of Lhakhangs, and not giving importance to farm roads maintenance and other economic activities, though there is a guideline on block grants.

For example, Drakteng gewog in Trongsa has built a huge building as its gewog office.

Gup Kinzang Dorji of Drakteng gewog said that the three-storied building will be used for one-stop service delivery for the public.

The Gup said that all the offices will be operating from one building, even the bank, so that the people don’t have to move around. All services will be delivered from one roof.

The Gup said that the gewog prioritizes the block grants based on the needs of the people.

“The budget is mostly allocated for farm road construction and maintenance, and Lhakhang renovation,” the Gup said, adding that the grant this year is mostly allocated for farm road construction and maintenance. 

Meanwhile, the LGs have been given flexibility in the planning, budgeting, and release of budgets in the 12th Five Year Plan and 50% of the national budget is provided to LGs as block grants.

The Ministry of Finance (MoF) allocates budget to LGs based on the resource allocation formula set by the Gross National Happiness Commission (GNHC).

An official from the MoF said that the total budget is allocated based on the priorities of the 12th FYP.

The GNHC allocates a budget for the implementation of priority activities based on the Resource Allocation Formula (RAF). The RAF and grants system is a framework for sharing and allocation of capital resources in the form of five years and annual grants to Dzongkhags, Gewogs and Thromdes to fund their expenditure, responsibilities and functions.

The Chief of the Local Development Division under the GNHC, Tandin Wangmo said that RAF-based grants provide resource predictability in terms of resource availability from the central government and flexibility to LGs in terms of priority setting discretion.

She said that as a result, it enhances ownership, transparency, and accountability as it encourages greater people’s participation in development and decision-making that directly affect their lives. This has a direct bearing on improved planning, budgeting, and spending and contributing to local and national objectives. It simultaneously promotes citizens’ engagement, participatory discussions, and democratic decision-making in local development and resource utilization. This is also in keeping with the constitutional provisions and that of the LG Act to provide adequate financial resources in the form of annual grants. 

The Annual Performance Agreement (APA), she added, is one of the mechanisms to monitor the priority activities being implemented by the LGs. The APA targets are linked to the national objectives and budgets are tagged for each activity to be implemented for the achievement of the targets. 

Tandin Wangmo said that monitoring is also carried out through the Mid-Term Review (MTR) of the plan as well as regular or scheduled monitoring carried out by the LGs, sectors, and relevant central agencies. 

She said that while the detailed assessment on the impact of block grant utilizations is currently being carried out by MoF and GNHC jointly, the rapid assessment carried out at the mid-term review of the plan indicates that the LGs have mostly invested in agriculture and livestock sector, and culture followed by the education and health sectors. 

However, the detailed assessment on the impact of block grant utilization will be completed by December and detailed recommendations will be provided after the assessment.

She mentioned that the findings of the rapid assessment indicate that the RAF could explore provisions that would motivate and incentivize LGs to invest in productive sectors in fulfillment of the plan objectives. In addition, LGs could also do better in terms of prioritizing their activities within their grants and collaborating with other stakeholders both at the center and among the LGs themselves.

Meanwhile, the RAF was introduced in the 10th Plan for Dzongkhags and Gewogs and for the four Thromdes only in the 12th Plan. 

During the current plan, block grants were enhanced wherein all gewogs were provided with it at the beginning of the plan period.  For the Dzongkhags, it was fully rolled out only from FY 2020-21. 

Officials from MoF said that the check and balance are determined by the regular monitoring by the relevant agencies and audits carried by the Royal Audit Authority.

Dechen Dolkar from Thimphu