Vibrant Bhutan

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By Dr Arvind Kumar*

*Author is President, chair and founder of India Water Foundation, New Delhi. He was recently in Thimpu, capital of Bhutan, to participate in the inaugural ceremony of Institute of Management Studies.

A map of Bhutan showing its borders with Tibet and India as of 2015 (Source: Wikipedia)
A map of Bhutan showing its borders with Tibet and India as of 2015 (Source: Wikipedia)

Nested in the heart of the Himalayas, Kingdom of Bhutan is a landlocked country sharing 477 kilometres of border with the Tibet Autonomous Region of the People’s Republic of China on the north and northwest and about 659 kilometres border with the Indian states of Arunachal Pradesh, Assam, West Bengal and Sikkim. Having a total area of about 46, 5000 square kilimetres, it has the Republic of Nepal to the west, the People’s Republic of Bangladesh to the south  and Myanmar to the southeast as its close neighbours. 

Endowed with abundant natural resources, the Kingdom is one of the fast growing economies in Asia. With the notion of Gross National Happiness (GNH) at the core, Bhutan is pursuing development policies which aim at maintaining equilibrium  between ecological resources and process of development. The GNH has enabled Bhutan in preserving its cultural heritage, while meeting new and specific challenges that relate not only to social and economic factors, but also to a broader approach of development.

Gross National Happiness

The concept of Gross National Happiness (GNH), introduced by the Fourth King, Jigme Singye Wangchuck in 1972,

With Hon’ble Lekey Dorji, Minister for Economic Affairs, Government of Bhutan
With Hon’ble Lekey Dorji, Minister for Economic Affairs, Government of Bhutan

has enabled Bhutan to achieve very fast economic growth in recent decades.  Good governance, sustainable development, cultural preservation, and environmental conservation comprise four pillars of GNH, which seeks to align Bhutan’s values with economic growth. These four pillars are further detailed by the Centre for Bhutan Studies (CBS), based in Thimpu, into a GNH index comprising nine domains, which, inter alia, include: psychological wellbeing, health, time use, education, cultural diversity & resilience, good governance, community vitality, ecological diversity & resilience, and living standards. Viewed in a broad spectrum, these nine domains are evaluated through a combination of thirty-three objective and subjective indicators.

According to some experts, carefully planned and executed surveys are carried out on five-year cycles, and the first full-scale survey was conducted in 2010, which involved over seven thousand respondents. It is opined that the timing of these surveys is in accordance with the country’s tradition of presenting five-year plans, which serve as guiding strategic documents for government operations and are heavily embedded within the context of the goal of increasing GNH.

Over the years, GNH has become deeply ingrained into the working of the Bhutanese government. The Constitution of Bhutan explicitly identifies the responsibility of government to “promote those conditions that will enable the pursuit of Gross National Happiness” and both the Center for Bhutan Studies and the GNH Center are dedicated to the research and development of GNH. Reports indicate that Bhutan’s Ministry of Education is engaged in consistent efforts to shape its curriculum in alignment with GNH.

While expressing their views on GNH, some Bhutanese experts argue that progress should mean more than economic growth. It must be about a society that is really evolved, a holistic development of the individual, including material and other needs. It is about people finding meaningful work and a purpose in life. This is what GNH seeks to achieve, an enlightened society. While asserting that there is need to acknowledge the great contributions of scientific and industrial progress, these experts opine that one should not forget the other “components of what makes us human. If we can foster external, material wellbeing and internal, spiritual wealth, we will have achieved a GNH society.”

Keeping in view the wide recognition garnered by GNH within Bhutan and its increasing international popularity, question arises whether this concept is Bhutan-specific or it can be replicated in other parts of the world. In this regard, one expert opines that undoubtedly GNH was developed to specifically reflect Bhutanese values and culture; nevertheless, what GNH represents is indeed applicable outside of Bhutan.  GNH represents a movement towards developing metrics that measure what people in society care about. One Bhutanese expert has aptly summed up: “All societies want welfare. The important questions are about what welfare means for that society and how they develop metrics to measure it. Bhutan has definitely answered both of these questions, questions that are undoubtedly applicable outside the Bhutanese context.”

Flourishing Economy

With Mr.Chhewang Rinzin, Managing Director, Druk Green Power Corporation Ltd
With Mr.Chhewang Rinzin, Managing Director, Druk Green Power Corporation Ltd, Govt. of Bhutan

Economy of Bhutan has recorded phenomenal growth in recent years. Bhutan’s economy grew by 6.4% in 2016, which was slightly higher than the 6.1% in 2015. According to Asian Development Bank (ADB)’s Asian Development Outlook 2017, Bhutan’s growth is projected to accelerate to 8.2% in 2017, and forecast to surge to 9.9% in 2018. Bhutan’s catapult to the growth trajectory in 2016 is attributed to higher construction and investment, decline in the inflation rate and strengthening of foreign exchange reserves.

Bhutan’s economic outlook is for marked growth acceleration on expanded investment in hydropower for export and added capacity in electricity generation. While keenly focusing on inclusive growth, the government of Bhutan is pursuing policies to foster more adequate urban housing in the face of rapid pace of urbanization.

Bhutan has progressed from the traditional stage to the precondition for economic take off since its launch of planned socio-economic development. Various macroeconomic and human development indicators have witnessed improvements over the years. In the first decade of the present century, Bhutan continued to experience acceleration in average annual growth rate of real GDP to 8.53% from 5.9% in the 1990s.With a per capita income of US$ 2,611 as of 2014, Bhutan falls in the low middle income group.

Planned development has been harbinger of envisaging significant structural changes in the Bhutanese economy moving away from the primary sector towards secondary and tertiary sectors. The rapid growth and consequent structural changes have been driven by the public sector through hydropower projects and financial support from donors. The occupational structure of the economy has, however, not shifted in a manner consistent with the changes in the sectoral composition of GDP and is a disturbing trend reflecting jobless growth.

Undoubtedly, Bhutan’s economic development policy continues to be guided by the overarching philosophy of Gross National Happiness and its four pillars; nonetheless, sustainable economic growth continues to remain a major challenge. Financing of the economic growth largely by external aid, widening current account deficit, weak balance of payment situation, mounting public debt and difficulty in sustaining exports through foreign exchange reserves are major difficulties. 

New Development Policy

The new Economic Development Policy (EDP) adopted by Bhutan in June 2016 sets the agenda and the general direction for the development of sectors that have the highest potential. This Policy departs from the usual sector/agency based approach. Prepared in consultation with a wide range of stakeholders from private to government, success of this document depends on an integrated and wholesome involvement of all the stakeholders. Emphasizing on the fact that to accelerate economic growth, a clear, stable and transparent policy framework is necessary, this document also includes a comprehensive set of incentive packages to boost growth.

Reiterating Bhutan government’s determination to work towards achieving a minimum average economic growth

With Mr. Pema Wangda, Chief Forestry Officer, Water and Management Division, Ministry of Agriculture and Forests,
With Mr. Pema Wangda, Chief Forestry Officer, Water and Management Division, Ministry of Agriculture and Forests, Govt. of Bhutan

rate of 10% and strive to be a middle-income nation by 2020, the EDP lays stress on adopting positive attitude. Emphasizing that economic reforms lead not only to tangible benefits but also in changing the attitudes and work ethics of a society, EDP seeks to bring about a change in the attitude of the people. It notes that the promotion of a rational and scientific temperament, dignity of labour, spirit of adventure, entrepreneurship, creativity and innovation with ethics and hard work are attitudes that are essential for the success of a market-based economy. Policy makers and implementing agencies must lead by example and be oriented towards problem solving and service delivery.

Nurturing a vision of a green and self reliant economy sustained by a knowledge-based society guided by the philosophy of GNH, the EDP promises to provide the highest level of “strategic direction”, to ensure that economy takes the centre stage of development initiatives. Recognizing that unless the constraints to business growth are systematically addressed, the EDP says that capacity of the private sector as the engine of growth cannot be enhanced and in this context, it aims at creating an enabling environment for investment.

The EDP is set to become the apex policy for economic development of the country and shall be the guiding document for all ministries and agencies to stimulate economic growth and more importantly, to ensure that growth takes place in consonance with the principles of GNH. It also provides the basis for government intervention to enhance productivity of the economy as a whole. Wherever necessary, policies, laws, rules and regulations shall be harmonised or amended in line with the provisions of the EDP.  Designed to serve twin objectives of achieve economic self-reliance by the year 2020 and sustain full employment (97.5%), the EDP has set the time line of 2020 to achieve the goals.

It further notes: “The economic development process shall take into account environment mainstreaming in a phased manner that allows for industries to grow as well as engage in cleaner production. The success of the country’s environment conservation efforts shall be one of the main drivers for developing the “Brand Bhutan” theme. Protection of biodiversity, genetic resources and promotion of indigenous knowledge shall be pursued.”

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