Of this, Rs 900 crore (Rs 9 billion) will go to Bhutan in two tranches, while Rs 470 crore (Rs 4.7 billion) has been earmarked for the Maldives, Home Minister P Chidambaram said after a cabinet meeting presided over by Prime Minister Manmohan Singh.

“Bhutan will get an assistance package of Rs.600 crore (Rs 6 billion) and a standby facility of Rs.300 crore (Rs.3 billion). This is over and above the Rs.4,587 crore (Rs 45.87 billion) already committed to Bhutan,” the minister said.

“The Rs 600 crore (Rs 6 billion) is exclusively for the government of India’s project tied assistance to Bhutan,” Chidambaram added.

The cabinet also decided to give a standby facility of Rs470 crore (Rs.4.7 billion) to the Maldives.

“Of this, half will be for the import of essential items and the remaining half will be as budgetary support as the Maldives is facing difficulties,” Chidambaram said.

The Economic Times

The ngultrum has depreciated by 15 to 18 per cent against the dollar in the past two months, with one USD now equivalent to Nu 49.30.

“This has increased our import bills, production costs, debt servicing and the balance of payments situation,” a finance ministry official said.

“The constant decline of the ngultrum against the dollar is making third country imports expensive, especially for those that use technology and raw material from them,” an expert said, adding “this could affect the future growth of such businesses since in 2007 goods worth Nu 5 billion were imported from these third countries.”

Even the government budget will be affected with more money needed for electronic imports like computers.

An MP whose son is studying in Bangkok said, “I had to pay an additional Nu 25,000 this time for my son’s fees due to the exchange rate.”

This is expected to affect trade diversification with importers focusing more on imports from India, putting further pressure on the rupee reserves.

Bhutan’s exports have already taken a hit with some steel industries closing down, since Indian steel has less international buyers thus creating a domestic glut and falling prices, the state-run newspaper Kuensel reported.

Even after excluding Bhutan’s debt to New Delhi, the debt owed to other development partners, mainly in dollars, is Nu 16.5 billion.

Express India