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Economy Of Bhutan

Despite being a small country, Bhutan’s economic development in the recent years has been growing rapidly and it is emerging out to be one of the successful economically independent countries.


Present Scenario

2016 Economic Freedom Score: 59.5 (up 2.1 points).
Global Ranking: 97th.
Regional Ranking: 20th in the Asia–Pacific Region.
Notable Successes: Property Rights and Freedom from Corruption.
Concerns: Open Markets and Regulatory Efficiency.
Overall Score Change Since 2012: +2.9.

With the government running large budget deficits, Bhutan’s public debt is over 100 percent of GDP. In 2015, in an attempt to control the growth of debt, the cabinet approved a draft public debt policy. Lingering constraints on more dynamic private-sector development include an inefficient regulatory framework, pervasive non-tariff barriers, and a rudimentary investment code.

Bhutan’s economy is one of the smallest in the world. Majority of the people are illiterate and reside in rural areas. 31% of the Bhutanese live under poverty line but in general all Bhutanese have shelters and sufficient food to eat. The living standard of the people has also started to grow over the recent years. The villages have schools and Basic Health Units and are also electrified and connected with farm roads. All villages now have access to basic amenities such as education, running water, basic healthcare and are connected by roads and electricity. Even the most remote villages have connection to the telecommunication network including mobile phone service.

Bhutan has taken some crucial steps in order to modernize its economic structure and reduce poverty. Recently, a higher priority has been placed on measures to diversify the economy. The public sector, especially hydropower, has long been the main source of economic growth, but the government now recognizes that broad-based private-sector development is crucial.

Bhutan National Bank, Thimphu

Economy in Bhutan is based on agriculture, forestry hydropower and tourism. The agrarian practice is mainly based on subsistence farming and animal husbandry. Handicrafts like weaving, wood craft, bamboo and cane craft, paintings etc. also add to the income. The main food crops are maize, rice, buckwheat, barley and wheat. The cultivation of cash crops like apples, oranges, ginger and cardamom has added to the national revenue. The country has always been self-sufficient in terms of food consumption. Cattle products like milk, butter and cheese have been the major diet besides adding to the income of many farmers.With the opening of tourism in 1975, the country has made a significant expansion in tourism industry. The development in tourism has led to boom in arts and crafts. The tourist arrival has increased by manifolds and is one of the main contributors to the revenue of Bhutan.

Chukha Hydro Power Corporation

However, Hydro-electricity remains the biggest revenue generator of Bhutan. The country has the potential to generate an estimated 30,000 MW of electricity. Chukha hydropower project, the first of its kind in the country, generates 336 MW. The biggest hydropower so far is Tala which is 1020 MW. The bigger chunk of the generated power is consumed by India. More hydropower projects are in the pipeline.The manufacturing sector contributes to 14 percent of GDP with products such as Calcium carbide, Ferro silicon, cement, processed food, and wood based industries. The establishment of more energy intensive industries in the future is expected to facilitate the growth of this sector.Today, Bhutan has the highest per capita income in south Asia with US$ 1,321.

Cottage Industries

Bhutan’s rich biodiversity provides the country with ample forest resources and this has brought about the development of a thriving cane and bamboo handicraft industry. Craftsmen weave a number of beautiful and intricate items out of bamboo and cane including hats, backpacks, floor mats and traditional bowls. These items are then sold to tourists or Bhutanese, supplying a secondary income source.


The Bhutanese Tourism Industry was first opened in 1974. Since then it has grown to become, a major contributing factor to the Bhutanese economy creating countless employment opportunities and generating additional revenue for the government.

The government is committed to building a sustainable tourism industry that is not only financially viable but also limits the negative cultural and environmental impacts commonly associated with the culture of mass tourism. By establishing a policy of “High Value, Low Impact’ tourism, the kingdom of Bhutan seeks to ensure that it attracts only the most discerning visitors with a deep respect for cultural values, traditions and the natural environment.

To this end efforts have been made to ensure that even remote areas are publicized and able to reap the benefits of tourism while still respecting their traditions, culture and natural environment.


The Manufacturing sector is another major contributor to national revenue. With the industrial sector established in Pasakha, small scale industries such as cement plants, calcium and carbide, steel and Ferro silicon, Coca Cola and also wood based industries have started developing.

As a result of the recent economic development, Bhutan has one of the highest per capita incomes in South Asia at US$1,321. However despite this high level of growth and development, efforts stringent regaliations have been enacted in order to protect Bhutan’s natural environment.

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A great trip, thank you. Also appreciated Bishnu, our driver.


What our customers have to say

You have wonderful guides. They are well educated, highly informed problem solver, historian and good communication skills. They showed us presentation from normal programme with different topics. They let us discuss interests – photography and arrange programme accordingly. They always showed positive energy and passion to us. They never argued, instead suggested. We are very happy. My husband was very happy with them as he describe him as professional guide. Thank you so much.


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Thanks to you and our very nice and patient guide, we had an amazing experience. He was very patient with our questions about Bhutan and very gentlemanly during the entire journey. We appreciate it very much

Yingjie Wu

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