The withdrawal of subsidy and excise duty refund on gas and kerosene to Bhutan by India could influence the election results in Bhutan, which is going to polls on Saturday.
India admitted that “timing could have been better”, but added that it would ensure that future resolution is a more commercially feasible model. Official sources said that Bhutan had been assured that it would be ensured that its people do not suffer any hardships from the withdrawal.
New Delhi pointed out that Bhutan was facing an “unprecedented and extraordinary situation” since June 30, when the 10th Five Year Plan had expired and it had not presented a new budget, as an interim government was in place. Official sources said that the Indian Oil, instead of first going through the Union Ministry of External Affairs, wrote unilaterally to the Bhutanese Government informing them about the end of the special privileges.
Sources noted that once the new government is in place, India would “engage with them in discussion and find a solution”.
“We will certainly not like to take any action which will cause any hardship to the people of that country. But we would need to go into some careful accounting just how much is exactly being used,” they said.
Apparently, the quantity of subsidised LPG had increased by 50 per cent in last four to five years, which was much higher than the expected growth due to measured economic activity.
It was asserted that the withdrawal was not linked to any alleged displeasure by New Delhi with Jigme Thinley, former prime minister and head of ruling political party Druk Phuensum Tshogpa, who had met the Chinese premier last year. But, they admit that the timing of the withdrawal has led to the heightened anxiety in Bhutan, with the opposition party claiming that this was a demonstration of DPT’s inept handling of ties with India. Meanwhile, former ambassador to Bhutan Pavan K Varma described it as ‘ill-timed and unwise’. “We should have waited till a new government took charge there and negotiated with them,” Varma said.