How long? It should by this time come to normal, however RMA's decision to close indian accounts in bhutanese banks will have some impact (additional 1-3) months of crunch though the decision is timely and necessity. My estimates say it would continue for april month only or atleast to early may.
Many reasons for my estimate of that the crunch would continue to maximum of 1-2 months are:
Many reasons for my estimate of that the crunch would continue to maximum of 1-2 months are:
1. By that time, Indian Budget session would be completed and as requested, Indian MoF may sanctioned increase in over-draft facility.
2. By that time, our hydro power revenue should flow-in in the form of Rupee.
3. By that time, the Indian accounts would already be closed. Rupee need not go out unnecessarily.
I still think why did the crunch happen and why this year? Few of the discussions with my friends, the reasons of crunch (updates to my previous blog) are:
1. Our Import have drastically increased, increase in exports is negligible.
2. Construction of Major projects have began these years like PHPA I, PHPA II, MHPA, Thimphu Techpark etc...
3. Already constructed mega projects like THPA & Kurichu are still under repayment.
4. Over lending..., the financial institutions lended too much to spend though my view is it is negligible.
5. Increase in Pay... the 35% increase in pay and the 20% increase as lumbsum have increased the income of the people and thereby increased the spending power which increased in IMPORTS. I would suggest Bhutan not to have any pay increase for next 2-3 years.
6. Closure of "Bhutan Lottery", I think Bhutan Lottery was the highest revenue earner after hydro power and tourism. Closing of the lottery has stopped millions of rupee coming to Bhutan.
7. We have accelerated in our development too much, meaning the speed of development these years is very high, highest in our history.
8. Bhutanese don't save, we spend too much in vehicles, mobiles, equipments, cosmotics....
Few recommendations or measures (short term measures) are:
1. Cooperate with RMA's notifications.
Long term recommendations for RGoB or MoF should be:
1. RGoB should have consistent revenue from hydro power, every month or every quarters...
2. look to increase in Indian tourist inflow.
3. Increase in the foreign exchange reserve, the current exchange reserve is not enough for even one month (I think)
4. Continue the Bhutan Lottery...
5. RGoB should promote / invest in private sector so that private sector can export to India and earn. One big example is introduction of the thunder motors, if we can export, well and good.
6. It is time that we have Rupee exchanger merged with foreign exchange. We need not go to banks to change rupee.
more updates to come....
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