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p. 11 of 13 BACK | NEXT Map Executive Summary I. Overall Performance During Eighth Plan Period II. Improving Quality of Life for All: The Ninth Plan A. Introduction B. Strategies and Objectives of the Ninth Plan C. Medium-Term Prospects, Challenges, and Risks Appendix

Country Economic Review - Bhutan : II. Improving Quality of Life for All: The Ninth Plan

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B. Strategies and Objectives of the Ninth Plan

35. The Ninth Plan is due to begin on 1 July 2002 and to end on 30 June 2007. While the Ninth Plan document has yet to be finalized and published, the Government has announced its basic parameters together with its objectives and general strategies. The planned outlay is to be Nu70 billion (about $1.5 billion) which in nominal terms is close to double the amount of about Nu40 billion that will have been spent during the Eighth Plan period by the time it ends. Of the Nu70 billion for the Ninth Plan period, about Nu31 billion is expected from domestic revenue sources, about Nu35 billion from external sources (including Nu20 billion being negotiated with India), and the rest from domestic or external borrowing. Moreover, about Nu31 billion is planned as current expenditure, Nu35 billion as capital expenditure, and the remainder as debt servicing. Real GDP growth is targeted at 6-7 percent per year, the same as that achieved under the Eighth Plan.

1. Rural Infrastructure

36. One conclusion of TA3443-BHU (footnote 11) is the close link established between Bhutan's more vulnerable groups and the degree of physical isolation they endure. For a mountainous country, this may seem intuitively obvious, but the closeness of the correlation between the spatial distribution of relative poverty and the existence of transport connections (particularly feeder roads) is conspicuously apparent. While communications between the regions of Bhutan are rarely very easy, the particularly difficult and disadvantaged areas consist of about 100 blocks (geogs) (about half the total)¹ which accommodate no less than 25 percent of the population. These areas are spread over at least half the country, especially in the district (dzongkhag) of Gasa (where few people live); in large parts of the districts of Lhuentse, Samdrup Jongkhar, Pemagatshel, Mongar, Zhemgang, Trashigang, and Trongsa; and in smaller, mostly remote parts of all other districts with the exception of Bumthang.

37. Moreover, the severe difficulties caused by lack of access to transport facilities are compounded by similar lack of access to electricity in many areas. The most affected households in terms of access to power facilities are those in the rural areas. In terms of access to electricity, TA3443-BHU found that there are 123 blocks covering well over half the country in which virtually no households have any access to electricity at all, a further 15 blocks in which most households have access for less than three days per week, and only 86 blocks in which most households have access for more than three days a week (some of them continuously).

38. Virtually all the most disadvantaged areas are rural and, as part of the concern to improve the quality of rural life and to reduce rural poverty, one of the key strategic foci of the Ninth Plan is to be the development of rural infrastructure, especially rural access roads and rural electrification. This is apparently to be supported by the construction of two major roads to open up two particular areas of poverty concentration, namely, in the east and central south of Bhutan, where the most vulnerable blocks house over 30 percent of all households. Accordingly, the largest sector outlay of the Plan is to be for the Ministry of Communications with 15.2 percent of total Plan outlay (of which the Department of Roads is to receive 9.9 percent of total outlay), and the Ministry of Trade and Industry is to be allocated 12.4 percent of total Plan outlay (of which the Department of Power is to receive 9.1 percent of total outlay).

39. By expanding the rural road network, the Government hopes to reduce isolation, expand access to essential services, develop markets, moderate the fragmentation of the domestic market, widen personal choice and opportunities, promote the transfer of information and technology, and lessen vulnerability. This focus on reducing isolation is also to be supported by a gradual extension planned for the telecommunications network and the Internet. Second, by expanding rural electrification, aside from the personal convenience electricity provides, the Government hopes to raise rural productivity and stimulate the expansion of processing or other workshops, and off-farm employment opportunities in general. Importantly, it also hopes to reduce the use of fuelwood and kerosene for domestic heating and lighting, thereby lessening the incidence of associated respiratory infections, relieving some of the burden of housework and wood-gathering for women and girls, and facilitating home study for school pupils and others. Moreover, in parallel with the progress planned for the provision of rural infrastructure under the Ninth Plan, agricultural extension services are to be developed so as to allow those living in rural areas to optimize the potential benefits to be gained from infrastructure expansion. This is to be financed from the 8.6 percent allocated to agriculture, including those to districts and blocks under the Ninth Plan outlay.

2. Upgrading the Quality of Health and Education Facilities

40. A second strategic focus of the Ninth Plan is the strengthened emphasis to be placed on upgrading the quality of health and education facilities. This does not mean that efforts to extend the network of schools, clinics, etc. into currently deprived areas will be overlooked, but simply that a greater effort to improve the quality and relevance of health care and teaching will be made.

41. In terms of health facilities, for example, TA3443-BHU revealed that, while most households are more than three hours' travel from a hospital, over 50 percent of all blocks have a basic health unit and almost all others have a community health unit or outreach clinic. There are no facilities at all in only 13 blocks nationwide, 7 of which are in Paro District within reasonable reach of those in Ha and Thimphu districts. The need to expand the health network quantitatively, therefore, is seen as a lesser priority than improving the quality and sustainability of the health care being provided. Nevertheless, remoteness often militates against prompt referral and backup services, especially during emergency and life-threatening situations, and the general difficulties associated with travel in the Bhutanese countryside are magnified significantly for the sick or for those traveling with the sick or injured. In these overall health circumstances, the difficulties faced by many of those households in the more deprived areas aggravate their susceptibility to illness and missed work-days, and thus to the socioeconomic vulnerability that these can so often manifest.

42. Thus, as health facilities are taken to new areas and the rural road network expands, it is hoped that more people will be able to benefit from improved access to such facilities; and as the upgrading of existing facilities occurs, it is intended that the quality of health care provided by these units will be improved. Since many of those areas currently without easy access to health facilities, or without access to more than rudimentary health care facilities, are in the rural areas, the Government's health thrust during the Ninth Plan is part of its overall attempts to improve rural life and to reduce the nonmaterial causes of poverty evident in the rural areas. Accordingly, the Government plans to allocate 9.1 percent of the Ninth Plan's total outlay to health, including those to districts and blocks.

43. In terms of education facilities, the country's network is not as extensive as in the case of health facilities. TA3443-BHU revealed that, whatever the average national situation might be, there is significant regional disparity in educational access and outcome. Some 38 percent of households can be said to be around the national average, 41 percent to be less than the national average, and 21 percent to be above it. Those households that face educational circumstances worse than even that represented by the national average must be regarded as being especially disadvantaged. Moreover, this includes especially difficult circumstances for women and girls in many districts, notably in Gasa and Ha and in parts of Wangdue-phodrang, Zhemgang, Pemagatshel, and Tsirang. For the educationally deprived, economic advance on the one hand, or escape from poverty on the other, are inhibited and their vulnerability aggravated. Indeed, when the leaders of the country's 20 districts were asked during implementation of TA3443-BHU to rank the 10 priority needs for their own districts, seven placed educational improvement first, two placed it second, and two placed it third.

44. Thus, the Ninth Plan will still seek to expand facilities into areas that are generally deficient and to expand the enrolment of girls, particularly at the secondary and vocational levels. However, beyond the widened provision of educational facilities themselves, the Government's intention during the Ninth Plan is to place greater emphasis on preparing pupils for the real world. This will require more attention at the district level to technical and vocational education, particularly to studies aimed at introducing more scientific farming methods and at expanding the various artisan trades that are already in demand but that can be expected to be in greater demand as rural activity expands. Again, the intention is to raise rural income potential and, through it, to improve the quality of rural life and thus to provide a realistic alternative for the increasing number of young migrants currently being attracted to the towns.

45. Beyond this, the Ninth Plan seeks to address the acute general shortage of skills at all levels and in a wide array of fields that presently act as a major constraint to development. However, while the training needs implied by the extent of existing shortages have already begun to be addressed during the Eighth Plan (or earlier), the Government intends to expand on these initiatives during the Ninth Plan. For this, it is considering the preparation of a comprehensive strategic plan to guide its approach to long-term human resource needs and development in both the public and private sectors. The planned allocation to the education sector, including those to districts and blocks, as a whole is 15.3 percent of the total outlay.

3. Private Sector Development

46. The developmental role of a vibrant private sector has been increasingly recognized by the Government over recent years and has found expression in previous five-year plans as well as in government policy statements, including the recent creation of the Private Sector Development Committee. Aside from the developmental stimulus it provides, government moves in the general direction of private sector growth have also been part of its attempts to change general attitudes away from a dependence on the Government as the main provider, and thus to encourage greater self-reliance, both individually and nationally.

47. However, implicitly if not explicitly, government efforts to stimulate private sector activity appear more closely integrated into the overall thrust of the Ninth Plan than with previous plans. This is suggested, first, by the strategy to improve rural infrastructure and thus to stimulate the small-scale private initiatives of the rural people. Given that such a high proportion of the country's population is self-employed and rural, these initiatives could collectively become a potent force in private sector development generally if the stimulus is successful. Second, it is also suggested by the Government's intention to improve the quality of public services, notably to strengthen technical and vocational education at the district level; to expand agricultural extension activities; to raise labor productivity; and to continue to address the widespread shortage of business, commercial, and technical skills at higher levels. Indeed, the Government is planning to allocate half of the Ninth Plan's proposed outlay for training to the private sector, with the other half devoted to public sector training needs and improved governance. It is clear that unleashing private sector initiative is seen as a key element in the Government's poverty reduction strategy, and that government interventions are being used as facilitators for this.

48. As part of the Government's overall intention to create an enabling environment for the private sector, the Department of Industry is planning a number of initiatives for the Ninth Plan period. To address the acute shortage of appropriate land for industrial development, five industrial estates (including basic infrastructure) are to be developed at Pasakha in Chhukha, Chuwabari in Sarpang, Shankhazuli in Samdrup Jongkhar, Bongdyma in Mongar, and Tingtibi in Zhemgang. In parallel with this, service centers are being proposed for all townships, to be established as and when possible. In addition, the delayed industrial legislation is to be finalized; a foreign investment promotion division is to be established in the ministry; feasibility studies on 15 potential industrial projects are to be undertaken; district investment opportunity studies are to be carried out in all districts; the Industrial Master Plan is to be revised; and business development services, business advisory services, and a revolving fund and business incubator are to be started.

49. In addition, the creation of a dry port and export credit finance facilities during the Ninth Plan are being considered by the Department of Trade; the development of new trekking routes, the feasibility of adventure tourism, and the possible establishment of village tourism with direct community participation are being explored by the Department of Tourism; and the extension of private sector participation in the planning, design, construction, and operation and maintenance of the power system is being planned by the Department of Power, and ways to increase greater private involvement in hydropower are being considered. If implemented, these various initiatives should collectively provide significant support to private sector development.

4. Decentralization of Planning and Implementation

50. While the functions of the district development committees and the block development committees have been in the process of refinement and strengthening for over 20 years, it was only with the preparation of the Ninth Plan that a block-based planning model has been used. This has involved the transfer of added responsibility to the local administrations for their own planning and development, and it has allocated 21.4 percent of the anticipated total outlay of the Ninth Plan to the districts and 3.3 percent to the blocks. For these projects, the Government is to provide materials and, along with the district administrations, to provide supervision and TA, while the local communities will be expected to provide the labor. Moreover, these are in addition to the various centrally run programs that are planned for the local areas, such as rural roads, rural electrification, and agricultural extension.

51. In practice, it seems as though the greater involvement of the local administrations in the preparation of the Ninth Plan has worked reasonably well. Inevitably, their restricted technical capacity for planning has often tended to result in the preparation of local "wish lists" of small, largely unrelated projects, but this will improve as experience and training are obtained. What is more important is that the exercise has openly involved local communities more assiduously than in the past and, in allocating almost 25 percent of the Ninth Plan's total outlay to their own perceived needs (around $370 million), has demonstrated the Government's commitment to open government. It will also serve to reinforce the Government's wider attempts to inculcate an appreciation for heightened individual self-reliance and lesser dependence on the Government.

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