Bhutan pays more than Rs 5 lakh every day as interest on the Rs 5 billion borrowed from India to meet its currency requirements.
An official from Bhutan's central bank said India is the largest trading partner and almost 80 per cent of the Himalayan nation's total import, from rice to petroleum products, is from its neighbour.
New Delhi agreed to give Rs 3 billion as standby credit to Bhutan during Prime Minister Jigme Thinley's visit to India last year, at an annual interest rate of five per cent.
As that was not sufficient, the Bhutanese central bank took an overdraft of an additional Rs 2 billion from India at an interest rate of 9.2 per cent. Since January, the government has paid Nu 57 million as interest on the rupee deficit.
Rupee earnings from the hydropower sector, which flow in at this time of the year, normally help to reduce the deficit. However, in recent years, rising imports from India have offset rupee earnings from the hydropower sector.
The government's total rupee borrowings from India is Rs 22 billion, of which Rs 17 billion is for hydropower projects.
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