CONCEPT NOTE FOR DECENTRALIZATION POLICY i. Context and background – The reason/rationale for proposing the new policy Since the establishment of Monarchy and inception of the Wangchuck dynasty in 1907, decentralization of powers to the people was first initiated in 1953 with the institution of the Tshogdu by the Third Druk Gyalpo. His Majesty the Fourth Druk Gyalpo initiated the political and administrative reform soon after His ascension to the Throne in 1974. The Dzongkhag Yargay Tshogdu (DYT) and Gewog Yargay Tshogchung (GYT) were established in 1981 and 1991, respectively, delegating the responsibility to decide on the development priorities of the individual Dzongkhag and empowering the decision making at the grass roots level. These reforms were aimed at encouraging citizens to participate in the process of decision-making the Fourth King and empower the district administration through delegation of authority. In 1998, His Majesty the Fourth King introduced a system to elect Council of Ministers by the National Assembly through secret ballot and thereafter delegated full executive powers to the Cabinet. In so doing, His Majesty proclaimed to the National Assembly that; “I have been working hard to prepare the people fully participate with alertness and commitment, in the system of deciding matters of our country. It is important to promote participation of people in the system of decision making.” In the above context, His Majesty the Fourth Druk Gyalpo commanded the drafting of the Constitution of the Kingdom of Bhutan in 2001. During the 98th National Day Celebration in 2005, His Majesty the Fourth Druk Gyalpo declared his desire to abdicate the Throne in favour of the Crown Prince. Accordingly, His Majesty the King was enthroned in November 2008. The Constitution of the Kingdom of Bhutan was also adopted in 2008 after the first parliamentary election of a new democratic government. Thus, His Majesty the Fourth Druk Gyalpo has steered the country towards a system of governance that is not dependent on a single individual, by way of His own example. Consequently, Bhutanese society has immensely benefitted from the Druk Gyalpo’s great leadership and wisdom. The Article 22, Section (1) of the Constitution of the Kingdom of Bhutan states that “Power and authority shall be decentralized and devolved to elected Local Governments to facilitate the direct participation of the people in the development and management of their own social, economic and environmental well-being. Section (5) of this Article also states that a Local Government shall strive, within its financial and administrative capacity, to achieve the objectives set out under the Article. While devolution of power and participation of people in the decision making has been initiated, it lacked clear written policy to augment those provisions. His Majesty the King, during his audience with the Dzongdags in 2015, commanded the need to align the pros and cons of decentralization with the principles of democracy. His Majesty pointed out that ‘one- size-fits-all’ planning approach lacks understanding of ground realities, and therefore, it fails to make progress as desired. In recognition of the important roles and responsibilities of Local Governments, all elected leaders (Gups) received Dhar from the Throne since the first Local Government (LG) election. Further, due importance was also accorded to the post of Chairperson (Thridzin) of Dzongkhag Tshogdu following the award of Pata (Sword) to them by His Majesty the King in December 2016 with the firm conviction of their capabilities to make decisions for local development as the “nearest government” of the people. The LG assessment study carried out in 2015 by the National Council of Bhutan recommended the Ministry of Home & Cultural Affairs to develop a consolidated National Decentralization Policy – that would enable the Royal Government to formulate a clearer pathway and future direction of decentralization in the country. Similarly, in July 2016, the Hon’ble Prime Minister had directed the Ministry of Home and Cultural Affairs to study and submit a proposal to achieve the initiative of fiscal decentralization introduced in 2008/2009, 2013 and 2016 in the form of annual capital grants, and capacity development of the Human Resource respectively in the Local Governments. In view of the above background, a formulation of a consolidated decentralization policy is felt necessary and timely. In the absence of such a policy, we could create room for interpreting the decentralization policy to befit one’s own interest, especially with democratization and elected government with fixed term of five years. A decentralization policy will also reinforce the implementation of the principles of the democracy as enshrined in the Constitution and LG Act. ii. Critique of current policy options and approaches Thanks to our visionary Kings that we have necessary Local Government institutions in place to serve as platforms for the citizens through their elected representatives. While steady and remarkable changes in governance have taken place over the past decades, still a hierarchal centralized bureaucratic system needs reorientation to suit to the rapidly evolving era of information technology and knowledge, and demand for citizen centric government. Some of the current problems emanate from: Inter-agency coordination- It is found difficult in an environment where turf protection continues to remain a challenge. ‘One-size-fits-all’ policy approach – This has at times yielded undesirable outcomes. All of these are drawbacks in the absence of a consolidated national strategy for implementation of decentralized plans and programmes. As a complementary document to a decentralization policy, a decentralization implementation plan could also be developed to provide a holistic and exhaustive strategic framework for structural adjustments needed to enhance the autonomy and performance of Local Governments. To ensure effective oversight role for decentralization processes, there is a need for developing strategic implementation mechanisms, which is currently non-existent. iii. Policy Recommendations The proposed policy should, among others, provide clear strategic way forward for decentralization, which, at the moment, is disjointed and sector-specific. The need for such policy is to empower local governments to exercise control over their local affairs through decentralization of powers and authority. In order to streamline bureaucratic rigidities and strict rules, it is necessary to transfer authority, functions and responsibilities with matching transfer of financial and human resources. Such policy will achieve the long term goals of a fully decentralized and democratic government system characterized by open, transparent, accountable and responsive system of governance. With improved coordination among the central agencies and with the local governments, it will improve service delivery, reduce administrative burden, and avoid duplication of efforts, thereby reducing the cost implication to the government exchequer. iv. Integration of GNH and cross-cutting issues The crosscutting issues, at the moment, are driven by specific sectors/agencies. However, the Government putting in place an overarching policy that encapsulates all these crosscutting issues will provide a common, funneled direction for implementation. Putting in place this policy will also mean the government is well-informed of these cross- cutting issues and takes ownership of them through endorsement of the policy. In particular, having this policy will have the following specific benefits: Political stability will be secured by active participation of the citizens in matters affecting their lives; Build political leadership at the community level; Accountability of the government will be enhanced because of its close proximity to the local populace and constant scrutiny; Responsiveness of the government will be improved because local representatives will be best placed to know the exact nature of the local needs and how they can be met in a cost-effective way; Local specific plans will be tailor-made for the communities using detailed latest information; Higher motivation with enhanced responsibility. Likewise, once the awareness or implementation of programs on cross-cutting issues reach out to the grass-roots through this policy, there will be better ownership of these issues and could have huge positive impact in the long run. v. Process and indicative timeline The proposal has been endorsed by the Ministry for submission to the GNH Commission. Following the decision of the Ministry (8th Ministerial Coordination Meeting – held on 12th May 2017), the preparatory works have begun. Importantly, the following areas have been broadly agreed; PPD of the MoHCA to take the lead coordination role under overall supervision of the Director General of the Dept. of Local Governance. The Working Group has also been identified. In terms of timeline, the policy will be formulated as per the following schedule: Concept note submission to the GNHC - first week of July 2017; Approval from GNHC – August 2017; Actual work commencement – September 2017; and Launch – 2018. Since we lack domestic expertise, International Technical Assistance will be sought. In principle, the Helvetas Swiss Inter-cooperation has agreed to provide both financial and TA support. (Terms of Reference will be shared to the Research and Evaluation Division, GNHC at the earliest). In terms of