It was a case of Petroleum Ministry jumping the gun, says MEA

Bhutan, especially its 12 per cent poor, will heave a sigh of relief after India decided to restore the subsidy on cooking gas and kerosene a month after it was discontinued.

India announced cancellation of the subsidy early last month, a timing that senior officials admitted could not have been worse, as it happened in the middle of the two-round elections to Bhutan Parliament.

Now, the decision to resume subsidy was conveyed to Prime Minister Tshering Tobgay when he met Indian ambassador V.P. Haran in Thimphu on Monday, said official sources. Bhutan had already sent a formal request to the Ministry of External Affairs in this respect.

“There was no political consideration. There was no intention to prey on the poor in Bhutan,” said sources in the Ministry of External Affairs who claimed the Petroleum Ministry misinterpreted the Foreign Office’s request for review of subsidies and, because of a grave mismatch in export-import figures of both countries, dashed off a letter to Thimphu withdrawing the subsidy.

But the damage was done and with gas cylinder prices going up by Rs. 600 on an average, analysts said India had done the Druk Phuensum Tshogpa (DPT) and its then Prime Minister Jigmey Thinley in for breaking bread with China and seeking its support for a non-permanent seat on the United Nations Security Council (UNSC). It was also said, Bhutan, without taking India into confidence, held two rounds of talks with the Chinese — once in Thimphu and then a summit in Rio — in order to settle its border.

With the People’s Democratic Party (PDP) winning the elections, analysts claimed India was successful in making high cooking gas and kerosene prices a poll issue as it added to the charges of economic mismanagement by Mr. Thinley during his five years as the first democratically elected Prime Minister.

But highly placed sources sought to dispel that impression by drawing attention to the percentage of votes won by both parties in the two rounds of polling. In the first round, when the Bhutanese were benefiting from the subsidy, Mr. Thinley’s DPT garnered 44.5 per cent of the votes.

In the second round, after the subsidy cut had become a major poll issue, the DPT’s vote share registered a very marginal decline. On the other hand, the PDP’s vote share from the first to second round increased by 12 per cent. The sources claimed that this gain in votes was because the PDP had co-opted six candidates of parties that were eliminated in the first round.

The second reason why India would not have undercut Mr. Thinley’s electoral prospects was that the first round had shown that with 45 per cent of the votes, he was a leader with a solid support base. “With that kind of vote share, he could win the next elections. In between he will remain leader of the opposition. Who would want to break down fences with such a leader and his party?” the sources wanted to know.

The real reason, they said, was the Petroleum Ministry jumping the gun and cancelling the subsidy on a weekend when the Foreign Secretary and other senior officials were travelling.

But the sources in the MEA acknowledged that the road ahead will be bumpy. Hydro-electricity, the principal economic vehicle with Bhutan, is facing a financial squeeze and both sides are working out an alternative fund raising model for projects on the anvil. Besides, there are incipient murmurs of protest against displacement of people to make way for the second round of hydel projects that will be much bigger than the existing ones.