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Bhutan's Economy
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Bhutan
was a predominantly subsistence agrarian country until the 1960s. At present,
agriculture continues to be the main source of livelihood for about 79
percent of the people living in the rural areas. The agriculture sector,
which includes livestock rearing and horticulture, contributes to 37 percent
of GDP. Agriculture based on traditional methods takes precedence over
farm mechanization and modern methods.
The major crops grown by Bhutanese
farmers include rice, wheat, maize and potatoes. Apples, mandarin and cardamom
are some of the main cash crops grown for the export market, namely India
and Bangladesh. Over the decades, planned socio-economic development has
bought about significant changes in the Bhutanese economy. Bhutan has recently
applied to become a member of the World Trade Organization. Major exports
are hydroelectric power, horticulture products, wood based products and
minerals. Consumer goods and essentials like rice, salt, petrol and kerosene
make up part of its imports.
The
country has the potential to generate an estimated 30,000 MW of electricity.
Tapping this resource contributes to 30 percent of GDP. Chukha Hydropower
Project, the first of its kind in the country, generates 336 MW of which
78 percent is exported to India. More recent projects are expected to raise
national revenue significantly.
The
Manufacturing sector contributes to 14 percent of GDP with products such
as Calcium Carbide, Ferro Silicon, cement, processed food, and wood based
industries in the establishment of more energy intensive industries in
the future is expected to facilitate the growth of this sector.
Tourism
is the greatest source of hard currency. Although the number of visitors
to the country is not restricted, it is regulated by the high tariff on
tourists in keeping with the government's policy of preserving culture
and cautious modernization. Even though there is many niche markets such
as eco-tourism and cultural tourism that offer significant growth potential
and are consistent with other development objectives, these niches are
yet to be explored to their full potential.
As
Bhutan's major trading partner India is market to 90 percent of its exports
and source for 70 percent of its imports. The Bhutanese currency Ngultrum
is pegged at parity to the Indian Rupee, and the two countries have a free
trade agreement. Bhutan also enjoys a preferential trade agreement with
Bangladesh.
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