The National Assembly members are calling for greater fiscal autonomy for local governments to respond faster to local needs. According to them, strengthening district-level financial committees is essential to improve efficiency and responsiveness in public service delivery. They also pointed out that the current framework governing budget management at the local level lacks clarity and limits effective decision-making.
Several MPs said the district finance committees are better placed to understand local challenges and should be entrusted with stronger budgetary powers.
Today, each gewog receives its budget allocation based on the Resource Allocation Framework, which ensures objective and equitable distribution of resources. The allocation forms part of the overall outlay for each Five-Year Plan and is disbursed annually as part of the Annual Capital Block Grant.
“The district finance committee comprises the Dzongdag and the Dzongkhag Tshogdu Thrizin. They are fully aware of the district’s challenges and priorities. If budgetary functions are delegated to the district finance committee, it would reduce the need to route even small activities to the ministry level, thereby improving public service delivery,” said Tashi Tenzin, MP, Radhi_Sakteng, Trashigang, National Assembly.
“The issue mainly arises because the division of responsibilities is not clearly defined, which is very important. If the government addresses this, many of these problems could be resolved. Secondly, the government should further empower districts, which oversee local governments,” said Rinchen Wangdi, MP, Bartsham_Shongphu, Trashigang, National Assembly.
Another MP stressed that decentralisation must be accompanied by adequate human resources.
“When we talk about decentralisation of budgetary functions, we must also consider allocating experienced human resources to local governments. While a framework is being developed for budgetary functions, the Royal Civil Service Commission also need to look into how to incentivise those working in local governments, whether through salary structures or grades. These two aspects must go hand in hand,” said Naiten Wangchuk, MP, Monggar, National Assembly.
MPs also raised concerns about funding limitations faced by local governments, particularly under the Performance-Based Grants framework. They said essential services such as schools and Basic Health Units often struggle to secure adequate resources because of restrictions on small-scale development spending. The Performance-Based Grants Framework allows gewogs to implement multiple small-scale development activities within an annual ceiling of three hundred thousand ngultrum.
Responding to the concerns, Finance Minister Lekey Dorji said local governments already enjoy substantial fiscal autonomy under the current Resource Allocation Framework. Through the Annual Capital Block Grant system, local governments are allowed to prioritise and reallocate funds within approved ceilings, provided they comply with financial rules and annual grant guidelines. The ministry maintains that the framework is designed to balance local flexibility with accountability.
Finance Minister Lekey Dorji said, “The budget is allocated in line with the resource allocation formula. The central government does not intervene in how the budget is used. It is solely decided by the gewogs and chiwogs on how to plan and implement the budget as decided through the gewog tshogdu. The ministry’s role is limited to ensuring adherence to the annual grant guidelines.”
However, the finance ministry acknowledged a practical tension. Gewogs in remote, hard-to-reach areas have raised concerns that strict adherence to the Annual Grant Guidelines limits their ability to carry out small but critical development activities in a timely manner. Recognising ground realities, the ministry said it will consider requests that exceed the prescribed ceiling on a case-by-case basis. These will be assessed on the criticality and justification of the proposed activities, and their alignment with national priorities and fiscal prudence. Minister Lekey Dorji also said that the ministry will review the Annual Grant Guidelines for local governments and presented during the next parliament session.
Tashi Dekar
Edited by Sonam Wangdi
