IV.

Economy of Bhutan

The United Nations (UN) classifies Bhutan as one of the world’s least developed nations. The country is predominantly agricultural with limited industrial activity and services. Bhutan’s gross domestic product (GDP) was $844 million in 2005.

Agriculture, animal husbandry, and forestry employ 94 percent of the workforce and contribute 25 percent of GDP. Agriculture in Bhutan is primarily devoted to the cultivation of cereal crops to meet subsistence needs. Rice, corn, barley, millet, and wheat are the main crops. Farming methods are generally traditional and labor intensive. Only 3.8 percent of Bhutan’s total land area is cultivated. Livestock such as cattle, yaks, hogs, goats, sheep, and horses are commonly raised. Timber production is also important; oak, pine, and tropical hardwood trees are harvested from the country’s forests.

Trade and other services, including tourism, employ 5 percent of the workforce and contribute 38 percent of GDP. In 1975 Bhutan was opened to tourism, which became the country’s largest source of foreign exchange. However, the government restricts the number of visitors in an attempt to minimize any negative impact on Bhutan’s traditions, culture, and natural environment. Only 1 percent of the labor force is employed in industry (including manufacturing, mining, and construction), although this sector of the economy contributes 37 percent of GDP.

Bhutan relies on hydroelectric power resources for 100 percent (2003) of its domestic electricity consumption (see Waterpower). Hydroelectric facilities in Bhutan produce a surplus of electricity, which is exported to India.

India is Bhutan’s primary trading partner, although trade is conducted with a number of other countries, as well. Bhutan’s major imports include rice, manufactured goods, fuel, and machinery. Major exports include wood products, cement, agricultural products such as apples and oranges, handicrafts, and electricity. Bhutan’s monetary unit is the ngultrum (44.10 ngultrum equal U.S.$1; 2005 average), which is at parity with the Indian rupee. The rupee is also an official currency in Bhutan.

The first road linking India with the Bhutanese capital of Thimphu was opened in 1962. Since then Bhutan has developed a skeletal road system linking most of the Middle Himalayan valleys. These roads have opened up large areas of central and eastern Bhutan. The roads cut into steep hillsides and mountains; during the rainy season frequent landslides block the roads, and remote settlements revert to the isolation of earlier times. About 62 percent of the roads are paved. The Bhutan Government Transport Service operates a bus service to all parts of the country. An international airport is located in Paro. Druk Air, Bhutan’s national airline, was founded in 1981 and started flights between Paro and Calcutta (now Kolkata) in 1983; service has since been expanded to include flights to such cities as Bangkok (Thailand), Dhaka (Bangladesh), and Kathmandu (Nepal). Modern telecommunications link major towns.

Although government ownership of the country’s print and broadcast media ended in 1992, the government still exerts control over the media. The country’s only newspaper, Kuensel, is published weekly in multiple languages in Thimphu. Bhutan Broadcasting Service (BBS) offers radio and television programming. The government lifted a ban on broadcast television in 1999. Cable television is also available in the country.