Rural life insurance increase out of the pack

Rural life insurance increase out of the pack

One of the common pledges made by the Peoples Democratic Party (PDP) and Bhutan Tendrel Party (BTP) was to increase rural life insurance from Nu 30,000 to Nu 150,000. While there are indications that this may remain a pledge as the government has not included any increase in this component in the budgets of 2023-2024 and 2024-2025, the minister of finance, Lyonpo Lekey Dorji, told the paper that the 13th Five Year Plan is already under deliberation in the 1st Session of the Third Parliament for implementation from July, 2024, and the Government’s pledge to increase life insurance from Nu.30,000 to Nu.150,000 is still a work in progress.

The issue came up during question hour on June 21st 2024, when the BTP member from Kengkhar-Weringla constituency, Dorji Wangmo, questioned the finance minister on the subject. The MP submitted that despite the pledges made the finance minister was quoted by a local paper saying that “due to the COVID-19 pandemic, the economy has been deeply affected, and so the plan of increasing the rural life insurance from Nu 30,000 to Nu 150,000 won’t be implemented right now”.

Further, as per the Budget Report for FY 2023-2024, the provision for rural life insurance subsidy is kept at Nu.67.730 million and Nu.69.083 million for FY 2024-2025. The MP said that based on the budget, it does not seem that there are any immediate plans to increase life insurance.

“Nu 30,000 is not sufficient for funeral and other rituals required. There are people who have taken loans after the demise of a family member and who are still unable to clear the loans,” she said.
“We made the pledges after the Covid 19 pandemic fully knowing the economic scenario of the country. People lose faith and trust in politicians and democracy because of incidents like this, where pledges are made and not fulfilled,” she said, adding that as promised during the campaign, the government should act on it at the earliest so that people are provided with some relief. The MP asked when the government is planning to fulfill its pledge and what its plans are.

In reply, the finance minister said he also understood the gravity of the situation and the problems people faced. However, increasing the insurance to Nu 150000/ would amount to the government paying Nu 600 million annually. The minister further added that this is not something that cannot be done. However, if the increase is made, the government will need to do it at the cost of other activities.

Currently, the premium is Nu 195. From this, people pay Nu 87 and the government pays the rest.
The finance minister also said that there is a need to review the policy, too. Everyone above the age of 8 is entitled to this subsidy and the name of the policy is rural life insurance. In this context, the minister said that a review is required.

Meanwhile, in a written answer to the paper, the minister said that as Bhutan’s economy recovers from the aftermath of the pandemic, the foremost priority is to strengthen the fundamentals of our economy. “On the fiscal front, the internal resource mobilization needs to be enhanced while ensuring prudent public investments. Our public debt, which is already record high. The Government also needs to work closely with the central bank (RMA) to ensure that the monetary and fiscal policies work in tandem to achieve the objectives of the 13th FYP and our long-term National Objectives.”

Lyonpo also said that the 13th FYP is already under deliberation in the 1st Session of the Third Parliament for implementation from July, 2024, and the Government’s pledge to increase life insurance from Nu.30,000 to Nu.150,000 is still a work in progress. “The Ministry of Finance is working on how best to implement this rural life insurance but we can only operationalize this when our financial situation improves in future,” Lyonpo wrote.

Meanwhile, the value of Nu.100 in 2018 was approximately Nu.73. So 30,000 today is worth about 21,900 if an average annual inflation rate of 5.38%. In other words, despite inflation and the increase in practically every goods, services and others, the rural life insurance has remained almost the same.

By Sangay Rabten, Thimphu