Last word

So it seems the Economic Stimulus Plan (ESP) is the touted savior for the Bhutanese economy currently wrangling with the remains of the Rupee problem, liquidity crunch and restrictions in operation brought about by the said problems.

Well it is true, to certain extent that is, if the musings of some thinkers, planners and policy makers are to be taken into account. From what has been said it will come to pass that the generous ESP money of Nu 5bn will solve the liquidity crunch but it will not address the Rupee problem in its entirety.
This is being said because the first installment of the GoI grant money for the ESP was received in Rupees hence it is supposed to ease the problem to a degree. This particular statement receives credibility because when banks start giving loans; it will result in additional pressure on the demand for Rupee, hence exacerbating the Rupee problem while only temporarily solving the liquidity crunch.

The embattled market which already has a huge demand for the Indian currency will spin into motion a buying spree of machinery, automobiles and construction materials etc. furthering demand on the Rupee.
The two market activities of housing and import of cars are highlighted in this as market activities that will drain the economy yet again of available Rupee currency. The many constructions of houses will involve import of construction materials, buying of machinery etc. which involves great expenditure of Rupees. While the importing of cars would involve huge loans being taken by buyers which directly translate into Rupee outflows.

And while on the topic people are not oblivious of the green tax which has been put in place, dubiously hinting that consumers can start consuming if they are able to shell out the taxes existent ban on import of cars while. However the import ban on vehicles remains in place negating the purpose of green tax.
It was understood that the tax was supposed to act as a deterrent to reduce consumption but imports would be allowed. Car imports are still banned, therefore the green tax has no relevance.
At this point it is established that the stimulus plan will ease prevailing situations in the economy serving a short-term relief but supplementing and more effective measure are being prescribed to haul in the actions that will ensure a more permanent state of calm.

Savings, figure big and bold among the suggested measures to follow a path that lays emphasis on import substitution and export-oriented activities. It is also been said that restrictions currently in place are good as temporary measures to limit consumption but would prove costly if pursued for a longer period.
However, decision makers at executive levels say government would certainly lift the restrictions but would choose to do it wisely in a phased manner since the immediate lifting of restrictions is not advisable in prevailing unstable market conditions.

The government would eventually aim to promote investments but in areas that generate good returns, reduce consumption and promote savings. Experts also suggest that there should be reform on the restrictions because people will after a period of time try and find ways and means to surpass such restrictions leading to more and more illegal activities. In such cases the revenue generated will not reach the government as a result of manipulations, tax-evasion, etc.

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