The Minister for Finance presented the Action Taken Report (ATR) on the recommendation concerning the decentralization of certain budgetary functions to Local Governments for small developmental activities in Gewogs. The recommendation was adopted during the Third Session of the Fourth Parliament.

The Minister informed the House that Gewogs already have substantial fiscal autonomy under the existing Resource Allocation Framework (RAF), which provides objective and equitable budget allocations as part of the 13th Five Year Plan. The allocations are disbursed annually through the Annual Capital Block Grant, enabling Gewogs to plan and implement local development activities within a predictable and transparent funding framework. The Minister further stated that Gewogs have the authority and flexibility to utilize and reallocate funds within their approved budget ceilings, provided such adjustments are in line with Annual Work Plans and comply with relevant financial rules, budget policies, and guidelines.

The Minister also informed the House that the delegation of budget authority to Gewogs is governed by the Annual Grant Guidelines 2024, which define the roles, responsibilities, and scope of authority of Local Governments in planning, budgeting, and implementation. While acknowledging concerns raised by some remote Gewogs regarding limitations imposed by the Guidelines on undertaking small but critical development activities, the Minister explained that the existing ceiling under the Performance-Based Grants framework is intended to promote the prioritization of high-impact interventions and prevent the fragmentation of resources.

However, recognizing the practical challenges faced by certain Gewogs, the Minister submitted that the Ministry of Finance will consider requests beyond the prescribed ceiling on a case-by-case basis, taking into account the criticality and justification of the proposed activities, their alignment with national priorities, and fiscal prudence. Where warranted, the Ministry will facilitate approvals to support effective and responsive local development initiatives.

The House endorsed the submission made by the Minister for Finance. However, Members expressed concerns that certain provisions of the Annual Grant Guidelines may limit the timely implementation of small but essential development activities, particularly in remote areas. The House therefore requested the Ministry to review the Guidelines, clearly define the roles, responsibilities, and budgetary allocations of Gewogs and Dzongkhags through the Division of Responsibilities Framework, strengthen local decision-making authority, address human resource constraints at the local level, and consider greater flexibility in cases where critical development activities cannot be implemented within the existing framework. In response, the Ministry informed the House that the concerns raised by Members would be reviewed and addressed, and that the findings and proposed measures would be presented in a review report during the Winter Session.