The finance minister pulled a surprise while presenting the budget to the parliament on Monday when he announced that Bhutan will stop its lottery business.
It was perhaps the most significant decision made by the government and announced in this session of the parliament.
The lottery business, which has the potential to earn much more revenue than all the 10,000MW of hydropower projects Bhutan is planning to build by 2020 combined together, was shot down in a sentence which was almost lost in the technicality of the budget presentation. The decision was not given any justification and the finance minister only summed up its impact saying Bhutan will lose Nu 220mn annually in revenue.
Nothing can be far from the truth.
In a series of investigative stories, this paper exposed how Bhutan had turned a blind eye to the economic potential of the lottery business and how an Indian lottery mafia don took over as Bhutan’s lottery agent in India. It has cost Bhutan hundreds of billions in potential revenue.
A special Royal Audit Authority (RAA) report says the annual turnover from the lottery business in 2007 was Nu 263.6bn. While reports from India suggest the figure should be much higher, even the RAA figure is about 38 times the annual turnover of the Tala Project of Nu 7bn. With the annual turnover of 1,020 Tala project at Nu 7bn, we can safely say that the annual turnover of the 10,000MW of hydropower projects we are planning to build by 2020 will be about Nu 70bn. This is four times lesser than the lottery turnover in 2007.
Despite the massive turnover in 2007, Bhutan earned a meager 0.278% of it as revenue in that year. It shows how miserably Bhutan failed to carry out the lottery business in India.
In light of its huge potential, the RAA has recommended Bhutan to continue its lottery business but suggests major streamlining.
Thus, the decision of the government to stop the lottery business is, to say the least, unfair. In the first instance, the government owes an explanation to the country on what went wrong. To do so, it should warrant an investigation by the Anti Corruption Commission for which the government has not given an indication.
The RAA has also recommended several investigations and the government is completely silent on it and the decision to stop the lottery business also sounds like an attempt to put a lid to the issue.
During the initial stages of Business Bhutan exposing the lottery scam in October last year, the prime minister said the lottery issue is “small” and was “blown out of proportion.” He also said most of the ministers were for closing down the business as it was not in consonance with the principles of gross national happiness (GNH).
It then sounded like an attempt to cover the issue under a morality cloak. The current decision is an extension of the same assertion.
It may be because the desire to be a morally perfect society is deeply engrained in all Bhutanese. It may be the Shangri-La tag attached to Bhutan which is teased further with our development philosophy of GNH. Even the government has fallen for it and often shows it with the desire to come up with ‘unique’ and idealistic decisions and legislations like the Tobacco Act.
In the lottery issue, it is time for the government to be more realistic. It cannot simply say it will stop the business on moral grounds. The stakes are too high for it.
In India, the 2G spectrum scam has been described as the biggest corruption case where the government allocated telecom licenses to nine companies for second generation (2G) mobile phone services. It is said the decision cost India Rs 370bn in potential revenue. In the aftermath of the case, the telecom minister had to resign and India is investigating the case to unearth all the details. This case is almost similar to the Bhutan lottery case but unlike India, Bhutan has failed even try to capitalize from the issue.
At a time when Bhutan is facing glaring economic challenges, we cannot afford to just stop the lottery business and move on just to save its face in India.
We are still an aid-dependent country and important donor agencies are on the verge of withdrawing support. We are still a young democracy and a least developed country. We are over dependent on hydropower which is primarily funded by India. We rely heavily on India for everything.
In such a dire scenario, is it right to say we will give up the biggest revenue generating potential for the country? If we decide to do so, the elected government then has the moral responsibility to provide the country with an equally rewarding alternative which doesn’t exist.
Moreover, all that is required is to clean up the business which may be difficult but is not impossible particularly now that we have the advantage of hindsight and have learnt all the flaws that abound the trade. The government can still start afresh and it should. It is an understatement to say that Bhutan will only lose Nu 220mn in annual revenue – it is not even the truth.