Economic Growth and Agricultural Transformation

Economic Growth and Agricultural Transformation:
An Exploration with Refe...
Economic Growth and Agricultural Transformation

agenda of augmentation of nation-wide value-added in general and agricult...
Economic Growth and Agricultural Transformation

herders and cottage workers and appropriated by the ruling power and bure...
Economic Growth and Agricultural Transformation

were grossly involved in eighteenth and nineteenth century commerce and t...
Economic Growth and Agricultural Transformation

Bhutan could organize the first-ever survey of population, livestock, and...
Economic Growth and Agricultural Transformation

of gross domestic product measured in current and constant (1983) prices ...
Economic Growth and Agricultural Transformation

Table- 1
Gross Domestic Product at Factor Cost in the Current and Constan...
Economic Growth and Agricultural Transformation

Bhutan started with a meager gross domestic product amounting to Ngultrum...
Economic Growth and Agricultural Transformation
negative values respectively in the context of Bhutan, the gross and domes...
Economic Growth and Agricultural Transformation

to the reliability of any estimate of the per capita income, there has be...
Economic Growth and Agricultural Transformation

value of gross domestic product at current prices in agriculture sector w...
Economic Growth and Agricultural Transformation

Ngultrum 809 millions reckoned at the constant 1980 price. In the period ...
Economic Growth and Agricultural Transformation

quantitative information about contribution of agricultural subsectors an...
Economic Growth and Agricultural Transformation

husbandry and forestry together, was the dominant sector of economic acti...
Economic Growth and Agricultural Transformation

In the early eighties, the economic activity of forestry alone contribute...
Economic Growth and Agricultural Transformation

There was a slower decline in terms of current price valuation. In 2005, ...
Economic Growth and Agricultural Transformation

in the first decade of the new century. Whatever be the other set of comp...
Economic Growth and Agricultural Transformation

The conclusion of the continuing process of structural transition in the ...
Economic Growth and Agricultural Transformation

stood at Ngultrum 4711 millions in the early eighties in the twentieth ce...
Economic Growth and Agricultural Transformation

commissioning of the Chhukha hydroelectric project in the mid-1980s and t...
Economic Growth and Agricultural Transformation

domestic product in Bhutan had been low and lull in these periods. In oth...
Economic Growth and Agricultural Transformation

aggregate plan allocation for the economy. A reading of the public plan a...
Economic Growth and Agricultural Transformation

the productivity and output in the agricultural sector have not improved ...
Economic Growth and Agricultural Transformation

business houses, who have consolidated the ownership and control of branc...
Economic Growth and Agricultural Transformation

monasteries ……….……… First, since the big merchants like the king or his n...
Economic Growth and Agricultural Transformation

“The first hydroelectric project in Bhutan was constructed on the Samteli...
Economic Growth and Agricultural Transformation

what was once an isolated, hidden and unapproachable land …………..…… The do...
Economic Growth and Agricultural Transformation

14

Bhutan is attempting to emerge as a GNH-state (Gross National Happine...
Economic Growth and Agricultural Transformation

References
Aris, Michael (1979), Bhutan: The Early History of A Himalayan...
Economic Growth and Agricultural Transformation

Planning Commission (1989), Sixth Five Year Plan, 1987-92, Planning Commi...
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Growth and agriculure in bhutan

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Growth and agriculure in bhutan

  1. 1. Economic Growth and Agricultural Transformation Economic Growth and Agricultural Transformation: An Exploration with Reference to Bhutan1 Abstract The agenda of general material growth and nation-wide welfare programmes have long been ignored in the tiny Himalayan kingdom of Bhutan. A persistent attainment and consequent systematic measurement of the wealth and income of the nation was not a part of the lexicon of the state, government and bureaucratic administration during the pre-modern era. The welfare state and government, whose foundations had already been laid down in the yesteryears down the line of past centuries, took it seriously to start pursuing its own autonomous independent national improvement programme, policy and planning in 1960. A perusal of time-series of contemporaneous growth performance makes it clear that there had been a fabulously high growth rate witnessed over the last two and half decades in the country. The growth rate has been comparatively much higher than other neighboring countries in the south Asia. The growth rate in agriculture has however been disappointing for the last one and half decade. This aspect is not hidden behind the smokescreen of persistent growth in national income aggregates, modest increase in the value-added in agriculture and observable decline in the share of agricultural sector in the national income. Combined with the increasing phenomena of diversion of agricultural land to construction and allied enterprises and substitution of acreage under food crops by acreage under commercial cops and horticultural plants, the agricultural stagnation symbolizes the involution. Under the regime of a dirigisme, developmentalist welfare state orchestrating a paternalistic and protectionist structure of governance, the multiplying number of the poor and the deprived bespeaks of the failure of the engine of growth in pulling the masses along. The social and economic differentiation among the masses attending the non-inclusive and non-diffusing pattern of economic growth and deepening with the agricultural involution process has further been fuelled by the phenomenon of rampant corruption among the officialdom. Key Words: economic growth, agricultural growth, agricultural stagnation, agricultural involution, value-added, food crop, commercial crop, regional imbalance, corruption, bureaucracy Introduction Bhutan is a least-developed country in south Asia today. It is small in size of population and geographical space. It is landlocked by boundaries with China and India. The agenda of general material growth and nation-wide welfare programmes have long been ignored in this tiny Himalayan kingdom. A welfare state originated from the wreckage of the archaic structure of governance quite late in the country. It took shape in the sixties in the twentieth century. It was heavily loaded with preoccupations centered at the enlargement and expansion of infrastructure related with education, health-care and transport and communication only. The It is a modified version of the paper published in the SAARC Journal of Human Resource Development, vol. 5, no.1, 2009 1 Mahmood Ansari 1|Page
  2. 2. Economic Growth and Agricultural Transformation agenda of augmentation of nation-wide value-added in general and agricultural value-added in particular in measurable terms could not gain primacy till the beginning of eighties. A serious concern with attainment of economic growth and its measurement were only belatedly chosen as the express agenda of the state and government. A welfare state metamorphosing into a developmentalist entity came into formation in the eighties of twentieth century. The first-ever estimate of gross national and domestic product could be compiled for the year of 1980 only, and the first-ever series of national income aggregates could be published in the month of December of 1987 only. Completing two and half decades of continued public attempts at welfare and development in general and measurement of economic growth as reflected in the estimates of hardcore categories of the gross national product and gross domestic product in particular, the project goes on and is vehemently carried forward with the mediation of a modernized overhauled bureaucratic set up of civil servants in this tiny kingdom. There is as yet the unfinished task of pulling the engine of economic growth, however. Mass poverty, chronic food deficit and lack of access to safe drinking water still dominate the scenario of rural landscape. The agricultural and rural sector with which the national economy is as yet identified with is relatively stagnant and suffers from lack of economic vibrancy and viability. An in-depth critical study of the link between the protectionist welfare planned state and economic growth in this east Himalayan nation is required urgently. The present paper has but a modest objective of analyzing the nature, characteristics and composition of economic growth with a motive to delineate and discover the origin of the features of change and transformation in the country. In particular, the change and transformation in agriculture is the principal focus in delineating the path of trajectory of economic life of the masses in the countryside. It is interesting to study a nation, which suffers as yet from the absence of comprehensive, precise, reliable and meaningful quantitative data and which is enmeshed in a complex set of a number of social and economic constraints to be overcome to achieve a decent standard of living for the masses. 1. Economic Growth In Bhutan, the hill populations had survived in the past on the strength of being able to produce not only the necessary means of subsistence but also a meager amount of surplus in the form of material produce as well as human labour. Whereas production of the necessary means of subsistence comprising principally of rice, maize, buckwheat, cheese, butter and chilly had ensured the perpetual reproduction of the households of the tillers of the soil, weavers of the fabric and nomadic pastoralist in the countryside, the appropriation of commodity and labour surplus by the custodians of extra-economic coercive power (among whom the state actors were predominant) had ensured the preservation and swelling ranks of the leisure class of elites. Though almost entire volume of the necessary produce might have been consumed by the producer households themselves in the past, the appropriated surplus produce did not all go to meet the conspicuous consumption of the elite section of the rugged-mountainous society in the Himalayas. Some considerable part of it used to be put on the channels and network of trans-Himalayan trade in Bhutan. The mechanism of frontier marketing and trans-Himalayan barter and exchange did help realization of the surplus produced by the peasantries, livestock Mahmood Ansari 2|Page
  3. 3. Economic Growth and Agricultural Transformation herders and cottage workers and appropriated by the ruling power and bureaucracy in the past centuries. It is however as yet not clear as to what percentage of the aggregate agricultural produce of the country was entering into the trans-Himalayan and frontier trade and commerce. The present level of trade historiography is in no position to help in making even a rough hunch about the probable volume and monetary value of the aggregate produce of the eighteenth and nineteenth century (contemporaneously called national income in the modern times). In a principally agrarian and livestock economy that Bhutan was identified with in the olden days, the aggregate volume of the necessary means of subsistence produced and the surplus appropriated constituted the national produce (no distinction between the gross and net produce allowed for) and the aggregate value of these could be taken as an approximation to the category and measure of the national income of the past. Unfortunately, no precise quantitative estimate of these yesteryears’ national income and product exist in the literature of Bhutanese historiography as yet. In other words, the past estimate of national income and produce remain shrouded in darkness. The fact of aggregate volume and value of the produce of the yesteryears being not estimated and the fraction of it being disposed off through trans-Himalayan trade and commerce not deciphered set apart, a study of the features of trade network brings in clear relief certain noted specificities. First, there was in existence a specialized barter trade in the form of the gift exchanges of luxuries among the chieftains and princesses. It abounded in the former times of the eighteenth century. The spatially and temporally fragmentary evidences of the medieval historic events did manifest that they were the royals as well as the yesteryear bureaucrats called the ‘courtiers’ of Bhutan and Cooch Behar of Bengal, who had gift exchange relations with each other. The pattern and characteristics of Himalayan trade evolved in such a way that the predominance of the gold, silver, silk and horse being the then principal items of exchange during the seventeenth century was replaced partially and complemented with the exchange of mint-coins during the eighteenth century in Bhutan (Pommaret, 2000) 1. The amount and value of medieval exchange of gifts as well as that of the mint-coins are however as yet again not known for certain. Second, the trans-Himalayan as well as the frontier-trade were basically a means of exchanging a small, quite small surplus. The trade volume was undoubtedly small, and the amount of the agricultural good traded was rather too small and insignificant. It is as yet not very clear as to whether the rural economy of Bhutan did produce enough surpluses in excess of that being appropriated by the rulers or not. The trade literature indicates that the contribution of Bhutanese marts and traders was primarily confined to orchestrating the transfer of the agricultural surplus originally produced in Tibet, China and India across the international borders. Since only a small part of the agricultural surplus produces, which were in the nature of being forcefully appropriated by the ruling and power elite and the administrative personnel, was put to the channel and network of exchange sphere of trade and commerce, some part of the amount of necessary consumption of peasantries, forcefully removed from the farms, might had also found outlet in the channels of trans-Himalayan trade and commerce. This is a logical conjecture. Whatever it was (there is not even a minimum concrete material and authentic English-language documentation available till now); the tradition of frontier-exchange was continued throughout the nineteenth century. Third, the past history is one composed of the inalienable and inescapable fact that they were primarily the state-officials and courtiers who Mahmood Ansari 3|Page
  4. 4. Economic Growth and Agricultural Transformation were grossly involved in eighteenth and nineteenth century commerce and trade of Bhutan, and therefore, the gains from trade went largely to the King, his nobles and monasteries. This was certainly the case in Tibet and largely the scenario in Bhutan as well 2. Fourth, despite the past levels of aggregate amount of produce on the agricultural farms and pastures and the extent of forced commercialization in this largely and predominantly agricultural economy being as yet unknown, there were a number of important marts situated across the locations of foothill and hilly borders of Bhutan3. The chain of network of trade in luxuries had evolved later into a privatized barter traffic in necessities of grains, livestock produces and textiles during the eighteenth and nineteenth century (Sarkar and Ray, 2006), and a number of individual traders and professional trading communities became active out there in the course of time4. All said, it is not only the aggregate volume and value of agricultural trade (export) but also the aggregate proceeds from the agricultural household taxation which is as yet not known, however. All these trade information together with the fragmentary data on the household taxation are therefore of no help in deriving and estimating the past level of national income and produce of Bhutan. In short, a persistent attainment and consequent systematic measurement of the wealth and income of the nation was not a part of the lexicon of the state, government and bureaucratic administration during the pre-modern era of 1651-1906 AD in Bhutan; the state machineries were too preoccupied with the old activities and functions related with the conduct of warfare, fiscal administration and religious governance. The western notion and concept of economic growth proper was nowhere so as to stamp upon the day-to-day economic administration of a unified polity of the past. In that prolonged period of history covering almost two and half centuries, there was not a single persona of a trained expert-advisor visiting the country. There were none, who could ever bring forth the growth ideas of Adam Smith and distribution ideas of David Ricardo to Bhutan. The absence of the phenomenon and processes entailed by the forces of imperialism and colonialism had a simple implication: it meant an absence of any such personae advising the native government with regard to the notions of progress and prosperity in this tiny landlocked Himalayan nation for a long time. What was true of the period of 1651-1906 AD was equally true of the period of 1907-1979. Not even a rough measure of the national produce in this predominantly agricultural economy, which would have amounted to simply being the aggregate amount of agricultural crops, livestock and forestry products only, did exist till 1979. It was though not the concern of the state apparatus of this era to frame policies and launch the programmes of material progress and affluence, there were nonetheless in existence some notions of social welfare and substantial advancement of the society. Such notions were embraced by the state and the government in the early decade of the second half of the twentieth century. The welfare state’s concern for progress were reflected in the protracted attempts to bring forth some piece-meal reforms in the areas of demarcation of ownership of farmland, rationalization of structure of public taxes and emancipation of slaves. These were however carried only late in the fifties and early sixties in the twentieth century. All these were accomplished moreover only in the backdrop of absence of nation-wide aggregate socio-economic data and information. The pre-modern epoch of 1907-1959 was characterized by nearly absolute lack of quantitative estimates of the population and farming household, cropped land, animal feed and livestock product, and produce of the artisan-craft and cottage industry. In 1969 only, the government of Mahmood Ansari 4|Page
  5. 5. Economic Growth and Agricultural Transformation Bhutan could organize the first-ever survey of population, livestock, and cropland in the country (Pre-Investment Survey of Forests, 1980). This was a landmark. It brought forth the realization that the macro-concept of gross national and domestic products and the nationalist ideology of fast and rapid growth of national income and per capita income could then not to be postponed anymore and any longer. Given the absence of a political tradition of quantifying the economic life of populace and produce of the territory, the post-1959 and post-1969 state had to simply borrow then the ideology of systematic measurement of economic growth from elsewhere in the world. It was duly borrowed, but then it required certain milestones to be crossed before treading on such irreversible path finally in 1980. The capital township of Thimphu was required to be developed towards the end of the sixties, and it was to be electrified as well through the first generation of hydro-electricity in the country5. The construction of modern official complex and the face-lift of the capital-town were to be completed in the sixties to create a befitting and enabling environment for systematic planning about the economic growth in Bhutan. Strategically, it also required sealing the international border of Bhutan with Tibet region of China as well. All these were duly done before a plan to achieve economic growth and a machinery to measure it could be put in place. The welfare state and government, whose foundations had already been laid down in the yesteryears down the line of past centuries, took it seriously to start pursuing its own autonomous independent national improvement programme, policy and planning in 1960. Preoccupied with the transport, communication, education and health-care during the fist phase of first consecutive three five-year plans6, the unambiguous and explicit verbalization of the specific objective of economic growth proper had but to wait for a couple of more years further in the country. In other words, the western concept of gross national product and gross domestic product, which captures the magnitude of value-added in the economy and which is the magnitude of the gross value-added at the current-year price and base-year price respectively, could not then become popular till late in Bhutan. There were further requisites to be fulfilled before the ambitious programme could start. The think-tank organization called the Planning Commission could be established only in 1971 7 (the year of beginning of the third five-year plan), and the effort to establish the Central Statistical Cell could fructify only in 1973 (renamed later in 1979 as the Central Statistical Organization, and finally further renamed as the National Statistical Bureau in 2004). The national aspiration centered at quantified growth of the economy and increased income to improve the material standard of living of the people was announced only with the onset of the fourth Five-Year Plan. The national goal of ‘economic self-reliance’ became then the articulated successive preoccupation in the official parlance. Measurement and Estimate In the history of quantification and numerical measurement, the beginning of eighties of twentieth century was important in Bhutan. It was only for the second last year of the fourth five-year plan that the first-ever quantitative estimate of the national income could be made available. This reflected that the attainment of increasing volume and value of gross national product and gross domestic product became the strategy of economic development only since 1980; the statement is not an over-estimation despite the historic fact that the first-ever estimate Mahmood Ansari 5|Page
  6. 6. Economic Growth and Agricultural Transformation of gross domestic product measured in current and constant (1983) prices (which was called the ‘conventional series’) could be released only in December 1987 (Central Statistical Office, 1989, P. i). Given the nature of the state and its nationalist ideology being oriented towards the social welfarism and economic developmentalism in the sixties and eighties onward respectively, the measurement and enhancement of the gross national product had become since then the principal function of the state machinery in Bhutan. Under the framework of a dirigisme state, the state-led and government regulated economic progrmmes and policies were then part and parcel of the same endeavour and zeal. In short, the concern with overall social conditions of progress and prosperity via enrichment of network of education, health and transport 8 emerged historically and temporally almost prior to the specific preoccupation with the attainment of economic growth via increases in the magnitude of gross national product and gross domestic product in Bhutan. It is a historical reality that such a concern with national and domestic product and income kept on becoming a fixation along with budding and maturing bilateral relations with the independent post-colonial India. The Central Statistical Office of the Planning Commission in Bhutan embraced this framework of measurement of the performance of the national economy in 1980, and since then measured the various aggregates of the national income, produce and income including the gross national and domestic produce rather regularly without a break (later in the independent office of National Statistical Bureau). In other words, it is worth pointing out at this juncture that the progress, prosperity and affluence of society and economy had been measured, in the past since 1980 and are as yet unfailingly reckoned, in terms of estimates of gross national product and gross domestic product only, and any possibility of the internationally acceptable quantitative estimation of the so-called ‘gross national happiness’ is to wait till uncertain future in Bhutan9. The economic growth has been quantitatively measured in terms of the value of aggregate produce and income generated in a year. The accurate measure of national income has been the estimate of net national product at factor cost (in constant or current price), though it has as well been accounted by the estimates of various other aggregates of gross and net domestic and national product and its distribution in the population in a country. It hardly needs clarification that only material goods and measurable services produced in the economy has been estimated in the national income accounting framework. In such a materialistic perspective about the economy, the human being has mattered only as a producing and consuming agent in the society, and the nation has been conceivable as a sum total of value-adding masses integrated with each other by the one and only one bond – the culture of consumption, production and physical/biological survival. Such a framework of measurement of economic growth has traditionally allowed for counting the material production of aggregate value-added 10 – the commodity which has a value in the market, and which can be brought in relation to the measuring rod of money in a nation in a year. In the literature on the national account statistics, the nomenclature ‘national’ has been distinguished from the categorization ‘domestic’. The nomenclature ‘national’ has connoted that the net reward earned by citizens from the productive activities accomplished outside the boundary of the country has been accounted for; the categorization ‘domestic’ implied that the rewards and income generated by only those economic activities which has taken place within the geographical boundary of a country has been estimated for national income accounting purpose. The gross and net value has been differentiated on the basis of respective inclusion and exclusion of the value of depreciation or the capital consumption allowances in the economy. Mahmood Ansari 6|Page
  7. 7. Economic Growth and Agricultural Transformation Table- 1 Gross Domestic Product at Factor Cost in the Current and Constant Prices in Bhutan: Year-wise, 1980-2006 (In Million Ngultrums) Years of Observation Gross Domestic Product at Factor Cost Current Prices 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Constant 1980 Prices Constant 2000 Prices 1012.00 1255.10 1442.20 1722.40 1896.80 2127.80 2574.50 3161.90 3668.50 4127.90 4744.70 5242.00 6020.00 6675.00 7944.00 9193.00 10673.00 12674.00 14600.00 17001.00 19620.30 22344.10 25544.20 28317.60 30927.40 34953.20 39662.30 1095.00 1204.80 1269.20 1370.20 1465.70 1519.80 1674.50 1973.10 1993.90 2087.00 2224.60 2303.40 2388.80 2517.60 2645.40 2914.00 3094.70 3320.70 3490.20 3700.40 N.A. N.A. N.A. N.A. N.A. N.A. N.A. 5284.00 6054.40 6214.70 6877.50 6994.70 7309.50 8211.00 10298.00 10657.50 11460.00 11731.80 11946.00 12468.00 12834.00 13207.00 14174.00 14997.00 15628.00 16542.00 17824.00 19620.30 20943.90 22991.20 24550.80 26038.80 27833.80 30268.80 Sources: Adapted from the Central Statistical Office of Planning Commission, 1989, pp. 11-13; National Statistical Bureau of Central Statistical Organization, 2004, pp.33-6 & pp. 8-9; National Statistical Bureau, 2005, pp. 140-41; Central Statistical Office of Planning Commission, 2000, pp. 7-8; National Statistical Bureau, 2007, pp. 24-7 Notes: 1. N.A. refers to “not available”; 2. The estimates are based on the production method of accounting the national income statistics; 3. Since the depreciation and net exports are very low and negative values respectively in the context of Bhutan, the gross and not net and the domestic and not national measure of aggregate produce are relevant. Mahmood Ansari 7|Page
  8. 8. Economic Growth and Agricultural Transformation Bhutan started with a meager gross domestic product amounting to Ngultrum 1012=00 millions, measured at the factor cost in the then current prices in 1980; later, it was evaluated to be equivalent to Ngultrum 1095=00 millions at the constant 1980 prices and to Ngultrum 5284=00 millions at the constant 2000 prices. Twenty years after towards the turn of the century in 1999, the gross domestic product at the factor cost in the then current prices was Ngultrum 18327=00 millions; in terms of the constant 1980 prices and the constant 2000 prices, it was Ngultrum 3700=40 millions and Ngultrum 17824=00 millions respectively. In 2006, the gross domestic product at the factor cost stood at Ngultrum 39662=30 millions in the then current prices; it was Ngultrum 30268=80 millions at the most recent constant 2000 prices. In terms of the three-year average figure, Bhutan started with the gross domestic product at the factor cost in the then current prices at Ngultrum 1236 millions and measured in terms of constant 2000 prices at Ngultrum 5851 millions only in the beginning of eighties. A journey across seventeen years down the line, its real gross domestic product at the factor cost at the constant 2000 prices was Ngultrum 14933 millions – almost 2.5 times increase. The three-year average gross domestic product at the factor cost in the then current prices during 2004-2006 was Ngultrum 35181 millions; in terms of the constant 2000 prices, it was Ngultrum 28061 millions in the same duration. Table- 2 Gross Domestic Product at Factor Cost in Bhutan: Three-Year Average Value at Current and Constant Prices, 1980-2006 (In Million Ngultrums) Three-years Period 1980 – 1982 1983 – 1985 1986 – 1988 1989 – 1991 1992 – 1994 1995 – 1997 1998 – 2000 2001 – 2003 2004 – 2006 Three-years’ Average Value of Gross Domestic Product at Factor Cost Current Prices 1236.43 1915.66 3134.96 4704.86 6879.66 10846.66 17073.76 25401.96 35180.96 Constant 1980 Prices 1189.67 1451.90 1880.50 2205.00 2517.27 3109.80 3595.30 N. A. N. A. Constant 2000 Prices 5851.03 7060.57 9722.40 11712.60 12836.33 14933.00 17995.43 22828.63 28060.47 Sources: Adapted from the Central Statistical Office of Planning Commission, 1989, pp. 11-13; National Statistical Bureau of Central Statistical Organization, 2004, pp.33-6 & pp. 8-9; National Statistical Bureau, 2005, pp. 140-41; Central Statistical Office of Planning Commission, 2000, pp. 7-8; National Statistical Bureau, 2007, pp. 24-7 Notes: 1. N.A. refers to “not available”; 2. The estimates are based on the production method of accounting the national income statistics; 3. Since the depreciation and net exports are very low and Mahmood Ansari 8|Page
  9. 9. Economic Growth and Agricultural Transformation negative values respectively in the context of Bhutan, the gross and domestic measure of aggregate produce are relevant. A perusal of time-series of growth performance makes two sharp points sufficiently clear: First, there had been a fabulously high growth rate witnessed over the last two and half decades in Bhutan. The growth rate has been comparatively much higher than other neighboring countries in the south Asia11. The compound growth rate of gross domestic product at factor cost in 1980 prices (the old series) was 6.8 percent during 1981-1986; it was but further higher at 8.7 percent during 1980-1987. In the perspective of observation in terms of the then current prices, the compound growth rate of gross domestic product at factor cost for the period of 1980-1986 was 16.6 percent whereas the same for the period of 1980-1987 stood at 18.2 percent. The average annual growth rate of gross domestic product had been 7.0 percent for the long period of 1980-2004. The period of 2000-2005 saw the average annual growth rate of gross domestic product touch the level of 7.8 percent. Second, the pattern of trend of growth was a pointer to the fact that there had been rather lack of steady and consistent trend of growth in the country. The irregularities were marked and rather pointed, once the story of growth was periodized into the cohort size of five years. It was observed that the annual average rate of growth of gross domestic product peaked to the level of 10.2 percent during the period of 1985-90 but declined fast and reached to the ditch level of 3.9 percent during the next period of 1990-95. A medium level of 6.8 percent growth rate was attained during 1980-85 only and the economy had again returned to the rate of growth standing at 6.6 percent during 1995-2000. Table – 3 Annual Average Periodic Growth Rate of Gross Domestic Product in Bhutan: 1980-2004 (In Percentage) Periods of Observation 1980-1985 1985-1990 1990-1995 1995-2000 2000-2004 1980-2004 Per Annum Average Growth Rates of Gross Domestic Product 6.8 10.2 3.9 6.6 7.8 7.0 Source: Estimated from NSB (2004) and RMAB (2005) quoted in UNDP-APRMPRP, 2006, p.27 A scrutiny of estimates of national income is to be combined with that of the population. Such a scrutiny is a pointer to the fact that the per capita income has continuously been nonetheless lower in Bhutan in terms of international comparison. The per capita income was certainly low in 1981; it was much below even a thousand Ngutrum in a year12. It is as yet comparatively low, and this is despite a reasonably high rate of growth of gross domestic and national product in recent years13. It is nonetheless the trend that the gross domestic product has been increasing in the recent years with its concomitant continuous increase in the per capita income. With regard Mahmood Ansari 9|Page
  10. 10. Economic Growth and Agricultural Transformation to the reliability of any estimate of the per capita income, there has been an acute problem for a long time because of the unavailability of reliable and precise data of human population in the country. There surrounds a political controversy and problem of statistical jugglery on the estimate of population in this south Asian country. In case of assumption of the population growth rate standing at 3.0 percent approximately, the average rate of growth of per capita income would come to stay at a respectable level of 4.0 percent per annum during the period of 1980-2004 in the country. On the additional assumption that nearly twenty-four years intervene generally between two successive human generations, an average person of the present generation today would be found to be almost two-and-half times richer than that of the preceding generation in the country. Such a conclusion however would require the further unrealistic assumption of highly equitable distribution of income and asset in the country and also the unrealistic assumption that the economic growth reflected in the high growth rate of gross domestic product has trickled and percolated down to the level of the masses. 2. Agricultural Success Bhutanese economy is primarily an agrarian and identifiably a rural economy. The national accounting framework is very useful in putting forward an aggregative analysis of agriculture14. In an aggregative analysis of the agricultural sector, it is of paramount importance to analyze the trend of generation of value-added (contribution of agriculture to gross domestic product/net domestic product) over the years. The estimate of value-added is the difference between value of gross produce and the paid-out material cost of production in agriculture; such an estimate gives us neither the separate estimate of the ‘value of gross produce’ nor the separate estimate of the ‘paid-out material cost’ of production. The ‘value of gross produce’ is already netted of the ‘paid-out material cost’ of production to arrive at the estimate of gross and net value-added in agriculture in the National Account Statistics data. Since such value-added data is not netted of the ‘imputed value of family labour’ used on the farms, neither the agricultural gross domestic product nor net domestic product are capable of giving us a clue to the measure of the economic surplus in agriculture. Such value-added data are still very helpful in discovering the vital changes in Bhutanese agriculture, for example, the structural transition in the economy, commercialization of agriculture and input-output relations in renewable natural resource sector in the process of general economic growth of macroeconomy. An analysis of time-series data since 1980 down the line of years indicates that agriculture had accomplished its role in contributing to the gross domestic product over the years in a significant manner. The gross domestic product in agriculture at factor cost in 1980 prices was Ngultrum 621 millions in 1980, and a decade later in 1990, it was Ngultrum 993 millions. A further decade later, it stood at Ngultrum 1278 millions in 1999. There was an increase of 2.06 times in the real magnitude of gross domestic product during 1980-1999. Allowing for the fluctuating price regimes and increasing prices of vital commodities to have the effect, the gross domestic product at factor cost in the then current price in agriculture was Ngultrum 477 millions in 1980, which increased to Ngultrum 1873 millions in 1990 and further to Ngultrum 5048 millions in 1999. Reckoned in terms of current price valuation, there was an increase of 10.58 times in the nominal magnitude of gross domestic product during 1980-1999. The nominal value of the national income aggregate in agriculture increased nearly five times faster than the real value of it across the two intervening decades in the country. More recently, the Mahmood Ansari 10 | P a g e
  11. 11. Economic Growth and Agricultural Transformation value of gross domestic product at current prices in agriculture sector was Ngultrum 8256 millions in the year of 2005. Table – 4 Agricultural Sector Gross Domestic Product at Factor Cost in Bhutan: Current Prices and Constant 1980 Prices (In Million Ngultrums) Years of Observation 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Agriculture - Gross Domestic Product at Factor Cost Current Prices 477.40** 539.10** 615.50** 726.60** 837.10** 949.70** 1099.70** 1229.80** 1482.20** 1629.60** 1872.60** 1943.70 2460.50 2801.90 3427.10 3897.70 3540.00*** 4230.00*** 4702.00*** 5048.00*** 5569.00*** 6037.00*** 6884.00*** 7292.00*** 7864.00*** 8256.00*** Constant 1980 Prices 621.40* 636.10* 692.20* 742.20* 806.50* 883.90* 881.00* 925.80* 939.70 962.90 992.80 1024.60 1004.00 1040.20 1081.20 1124.20 1196.20 1233.30 1249.20 1277.90 N.A. N.A. N.A. N.A. N.A. N.A. Sources: Adapted from * Central Statistical Office of Planning Commission, 1989, p. 11; ** National Statistical Bureau of Central Statistical Organization, 2004, P.33; National Statistical Bureau, 2005, pp. 140-41; *** Royal Monetary Authority of Bhutan, 2006, p. 17 Note: ‘Agricultural Sector’ includes agriculture proper, livestock, fishing and forestry In the course of decade of 1980-1989, the average amount of gross value-added produced at the factor cost was Ngultrum 959 millions reckoned in terms of the then current price and Mahmood Ansari 11 | P a g e
  12. 12. Economic Growth and Agricultural Transformation Ngultrum 809 millions reckoned at the constant 1980 price. In the period of 1990-1999, these value-added in agriculture were Ngultrum 3392 millions and Ngultrum 1122 millions respectively. In comparison with the former period, there was in the latter duration almost 3.5 times increase in the gross value-added in agriculture at the current price but only 1.4 times increase in the same when reckoned in terms of the base-year price of 1980. Over the long period of twenty years at a stretch, the average per annum gross domestic product in the agriculture at the current price was Ngultrum 2176 millions and at the constant base year price Ngultrum 966 millions i.e. 1980-1999. Such an improvement in the growth profile of agriculture has been a reminder that either the value of gross produce had continuously been increasing on the assumption of a more or less stable level of the paid-out cost of production over the years or that the paid-out material cost of production had continuously been declining on the assumption of a fairly stable level of the gross value of produce in agriculture or both phenomena had been happening simultaneously. It seems in retrospect that it was the former which had been happening in Bhutan. This is a valid conjecture since the input cost of production whereby major modern inputs are imported from India and neighbouring countries had increased rather than decreased in this duration. We will find later in our discussion that those were the sector of economic activities connected with the hydro-electric generation and construction of structures where the value-addition had been augmenting very rapidly in the recent past. Table – 5 Relative Contributions of Agricultural Subsectors and Production Systems to Gross Domestic Product at Market Price in Bhutan: Current Prices, 1991 (In Million Ngultrums) Production Systems/ Subsectors Wetland Dry land Forest Plantation/ Orchard Tsheri-land Pastoral land All Subsectors Agricultural Subsectors Livestock Forestry Agriculture 245.8 195.0 166.1 237.3 196.9 212.6 190.1 199.0 1.4 65.0 34.9 217.7 111.6 101.6 34.1 126.6 70.6 14.0 976.4 798.0 645.9 (40.3) (33.0) (26.7) All Subsectors 606.9 (28.1) 646.8 (26.7) 390.5 (16.1) 317.6 (13.1) 247.3 (10.2) 211.2 (8.7) 2420.3 (100.0) Source: Pradhan, et al, 1994 quoted in Dorjee, 1995, p. 14 Note: The figures in parentheses in bold font in the last column represent row percentages and in the last row the column percentages It is quite interesting then to look at the relation among the subsectors of agricultural economy, which is another way of looking at some tentative input–output relations among the subsectors in Bhutan. It is only with onset of the concept of renewable natural resource system that the Mahmood Ansari 12 | P a g e
  13. 13. Economic Growth and Agricultural Transformation quantitative information about contribution of agricultural subsectors and production systems became available for the early nineties. The problem is this that data available relates to the gross domestic product at market price in the subsectors of agriculture. The value-added data at the base-year price is not available. The market value analysis has the deficiency that the heterogeneity of price regimes operating in different subsectors and agro-ecological niche zones would necessarily make a fictitious difference in monetary terms, though the real magnitude might not have differed by such wide margin in reality. Be that as it may. In 1991, the gross value added by all the subsectors of agriculture, livestock and forestry together was 2420.3 million ngultrums; this was also the figure of gross value added in all the agro-ecological niche based production systems on dryland, wetland, tsheriland, pastoral land, plantation-orchard land and forestland together. The highest magnitude of value added was contributed by the livestock subsector, followed by the forestry and then the agriculture proper. Alternatively speaking in terms of agro-ecological niche of production system, the highest magnitude of value added was contributed by the wetland and dryland together, followed by forestland, plantation-orchard, tsheriland and pastoral land in decreasing order. There is a further constraint of analysis: the comparisons across decades and decadal profile of growth in various subsectors are difficult to carry out since the proper decade-wise information is lacking. It is in the backdrop of a fast sustained increase in the national income and produce, slow improvement in the contribution of agricultural sector to pace of general economic growth and major share of livestock and forestry subsector in the value-addition process within agriculture that a specific welcome phenomenon within the crop producing farm subsector has of late been perceptibly visible. This relates with the commercial crops on the farm and plants in the orchard. Recently, there has been an increasing tendency to substitute acreages for the commercial crops. This has been one of the indicators of budding process of commercialization of agriculture 15. In the saga of a historical narrative about the turning point in economic growth in recent times, the importance of products of horticulture within agricultural sector has also been increasing. In particular, the value-added contribution of the farms of commercial crops of apple, oranges, areca nut and cardamom has been growing in the recent decades. Whereas the production of apple has mostly been confined to the orchards of alpine northern region, the plantation of oranges, areca nut and cardamom have flourished in the subtropical plains of the southern region in the country. It is nonetheless the scenario that a time-series data on the value-addition by these crops and plants are difficult to obtain at present. Structural Transition and Stagnation A brief history of non-steady but fast economic growth and relatively slow imbalanced agricultural improvement has already unfolded and the phenomenon of structural transition has set in the Bhutanese economy since the mid nineties, whereby the contribution of agriculture in the national economy has been declining fast. The aggregative analysis of agricultural sector of activity, which includes agriculture proper, livestock, fishing and forestry brings to light this significant phenomenon of “structural transformation” of the economy in clear relief. The petty subsistence agriculture, which had encompassed the symbiotic whole of crop farming, animal Mahmood Ansari 13 | P a g e
  14. 14. Economic Growth and Agricultural Transformation husbandry and forestry together, was the dominant sector of economic activities, labouremployment and material livelihood of populace in the semi-temperate and sub-tropical regions within the country. In particular, the pastoral economy was symbiotically linked with the arable agriculture, and therefore, crop farming including livestock rearing was the only principal source of income for more than three-fourth of the population. In this subsistence agricultural niche, the collection of forest products was a major source of the household earnings-in-kind. In other words, the major pattern of rural livelihood was underpinned and reinforced by the exploitation of mountainous renewable natural resources of the arable valley land and pastures, milch livestock and draught animals, the Himalayan forest and plant cover, and a limited amount of man-made capital asset and tangible household wealth. The simple commodity producing peasantries, livestock herders, forest-product-gatherers, weavers, cottage workers and agricultural labourers constituted the majority of population. The country harboured a sector of economic activities, which was simultaneously facilitated and constrained by the fertile valleys of arable land and pastures that are separated from one another by a series of high and complex interconnecting ridges from north to south across the country. The agricultural technology matrix was formed by the combination of the use of traditional skills on the major portions of arable land and pastures with the application of improved seeds and inputs on a minority of rice farms and the simple machineries in the logging operations in the forest. The capital base of agriculture was composed of traditional tools and equipments, and the use of modern machines in agriculture was acutely limited. With such a narrow base of land, labour, capital and technology devoted to the subsistence agricultural production, the prospect of generation of surplus was constrained and limited. The rural economic life was not able to completely break away from the structures of medieval economy and society of the yesteryears, which was then also primarily rural and agricultural-pastoral in nature. Such a historical continuity without any significant agri-technological and agri-institutional rupture constituted a considerable barrier in the progress of agriculture in the seventies and eighties in twentieth century. Table – 6 Share of Agriculture Sector in Output in Bhutan: Constant Price, 1980-2004 (in Percentage) Years of Observation 1980 1985 1990 1995 2000 2004 Share of Agriculture Sector in Output at Constant Prices 52.3 49.4 40.3 34.1 28.5 24.0 Source: Estimated from NSB (2004) and RMAB (2005) quoted in UNDP-APRMPRP, 2006, p.28 Mahmood Ansari 14 | P a g e
  15. 15. Economic Growth and Agricultural Transformation In the early eighties, the economic activity of forestry alone contributed 15 percent to the gross domestic product, and the rest 48 percent of the domestically produced gross value added was contributed by the combined subsectors of the agriculture proper and animal husbandry. The agriculture sector as a whole accounted for over 63 percent of the Gross Domestic Product. These were the then current price based valuation. In terms of constant prices, the share of agricultural sector in gross output was 52.3 percent in 1980. The high contribution of these rural activities to the gross value-added produced domestically in the country was indicative of the high dependence of the majority of the population on traditional activities associated with the subsistence agriculture. A journey of over fifteen years from the early nineteen eighties and the event of structural transition were clearly visible in the declining share of agriculture in the national economy. In terms of constant prices, the share of agricultural sector in gross output declined to stay at only 34.1 percent in 1995. Reckoned in terms of current prices, however agriculture and allied activities had accounted for 38.6 percent of the gross domestic product in 1996. In terms of constant prices, the share of agricultural sector in national output was further down to 24.0 percent in 2004. Table – 7 Gross Domestic Product at factor Cost in Agriculture Sector in Bhutan: Growth Rate over the Preceding Year, 1980-2006 (in Percentage) Years of Observation Growth Rates of Gross Domestic Product at Factor Cost in Agricultural Sector Current Prices Constant 1980 Price Constant 2000 Price 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 8.9 10.1 6.7 13.9 22.3 13.7 16.4 16.3 9.7 8.9 10.3 8.4 14.0 5.9 7.8 5.0 7.3 3.1 3.2 (-)2.0 3.6 3.9 4.0 6.4 3.1 1.3 3.0 2.4 N.A. N.A. N.A. N.A. N.A. N.A. N.A. (-)0.7 0.6 (-)0.3 0.9 1.5 2.0 3.9 2.3 1.5 4.6 5.0 2.7 2.1 1.8 0.4 1.7 Sources: Adapted from the data of the Central Statistical Office of Planning Commission, 1989; National Statistical Bureau of Central Statistical Organization, 2004; National Statistical Bureau, 2005; National Statistical Bureau, 2006; National Statistical Bureau, 2007 Note: N.A. refers to not available Mahmood Ansari 15 | P a g e
  16. 16. Economic Growth and Agricultural Transformation There was a slower decline in terms of current price valuation. In 2005, the contribution of agriculture proper alone stood at 22.4 percent of gross value-added at the current price . In other words, agriculture proper signifying the vital land and staple crop farm in this predominantly rural society produced only approximately one-fifth of the over-all value of material goods and services produced in the national economy. A causation study into the phenomenon of structural transition leads one to the discovery of the phenomenon of “agricultural involution” characterizing the Bhutanese agricultural economy of late. The growth rate in agriculture had been disappointing for the last one and half decade. This aspect is not hidden behind the smokescreen of persistent growth in national income aggregates, modest increase in the value-added in agriculture and observable decline in the share of agricultural sector in the national income. Combined with the increasing phenomena of diversion of agricultural land to construction and allied enterprises and substitution of acreage under food crops by acreage under commercial cops and horticultural plants, the agricultural stagnation symbolizes the involution. The average annual growth rate of gross value-added in agricultural sector had been 3.6 percent during the period of 1980-2004. It had however been pretty low, almost below 3.0 percent per annum in most of the years since 1991. It was as low as 0.4 percent per annum during 1990-1995. In the preceding period of 1985-1990, it was but surprisingly as high as 5.6 percent per annum. The decade-wise comparison establish it that it hovered around 5.5 to 5.6 percent during 1980-1990 but fluctuated at a lower level of 2.9 to 3.2 percent during 1995-2004. There was exceptional growth rate beyond the benchmark of 3.0 percent in real terms (at constant 2000 prices) in only two years. It had but again slowed down, and since 2003 it had been hovering around below 2.0 percent per annum at the constant 2000 prices. In 2005, the real growth rate at constant 2000 prices over the preceding year was merely 0.4 percent. Table - 8 Periodic Annual Average Growth Rate in Agriculture in Bhutan: Sub-sector-wise, 1980-2004 (In Percentage) Periods of Observation Annual Average Growth Rate Crop Subsector 1980-1985 1985-1990 1990-1995 1995-2000 2000-2004 1980-2004 Livestock Subsector Forestry Subsector 6.7 4.6 1.9 3.0 2.7 3.8 6.0 5.6 (-) 0.5 3.6 4.1 3.7 3.1 7.4 (-) 0.8 2.0 3.3 3.0 Source: Estimated from NSB (2004) and RMAB (2005) quoted in UNDP-APRMPRP, 2006, pp.28-29 Agriculture while being subjected to the essential phenomenon of structural transition attending the path of augmenting rate and level of economic growth of the nation has done very poorly in the recent years, and the recovery if at all there was any has been pretty slow and imperceptible Mahmood Ansari 16 | P a g e
  17. 17. Economic Growth and Agricultural Transformation in the first decade of the new century. Whatever be the other set of complex forces and factors accounting for such a phenomenon, it is no less contributed by the fact that the growth rate of real magnitude of gross domestic product improved from 6.8 percent in 2001 to 10.9 percent in 2002 whereas the growth rate in the primary sector declined from 5.37 percent in 2001 to 3.2 percent in 2002. The real growth ate of GDP at constant 2000 prices have fluctuated from 7.2 percent in 2003 to 6.8 percent in 2004 to 7.1 percent in 2005 to finally 8.5 percent in 2006. In the primary sector, the component of real GDP growth rate continued to decline in a sustained manner from 2.2 percent in 2003, 1.6 percent in 2004, and 1.2 percent in 2005. There had been fluctuations in the growth rate attained by all the three subsectors of agriculture during the long period of 1980-2004. The livestock and forestry subsectors had even witnessed negative annual average growth rate during 1990-95. While much of the fluctuations in the growth rate in agriculture and allied activities had followed simply the pattern and trend of fluctuations in the overall growth of the economy, the pretty low and very slowly improving productivity in the crop sector had been the main devil behind the low growth rate in agriculture in terms of domestic product component in Bhutan. While the livestock subsector witnessed a decline in the average per annum growth rate from 6.0 percent during 1980-1985 to 4.1 percent during 2000-2004, the forestry subsector had seen its per annum growth rate improve from 3.1 percent during 1980-1985 to 3.3 percent during 2000-2004. The annual average growth rate of agriculture proper declined sharply from 6.7 percent during 1980-1985 to 2.7 percent during 2000-2004. The major crop yields had hardly improved in any significant manner in the last decade. The most remarkable point is this that the labour absorption of agriculture had not declined over the years at the rate at which the contribution of agriculture sector in the overall value-added in the economy had been declining over the decades. Table – 9 Share of Agriculture in Annual Average Growth Rate of Gross Domestic Product in Bhutan: Constant Prices, 1980-2004 (in Percentage) Periods of Observation Agriculture Sector Contribution to Gross Domestic Product Growth at Constant Prices Crop Subsector 1980-1985 1985-1990 1990-1995 1995-2000 2000-2004 1980-2004 21.58 9.01 7.83 6.42 4.07 7.8 Livestock Subsector 14.31 8.71 (-) 1.59 5.18 4.43 5.7 Forestry Subsector 5.98 8.24 (-) 2.17 2.15 2.68 3.5 Agriculture Sector 41.87 25.96 4.07 13.75 11.18 17.0 Source: Estimated from NSB (2004) and RMAB (2005) quoted in UNDP-APRMPRP, 2006, pp.27-30 Mahmood Ansari 17 | P a g e
  18. 18. Economic Growth and Agricultural Transformation The conclusion of the continuing process of structural transition in the national economy and agricultural involution has been as such that the share of agricultural sector in the average growth rate of real gross domestic product has declined from being close to 42 percent during the early five years of 1980s to just 11 percent during the early four tears of the turnaround of the century. In the average growth rate of real gross domestic product, the share of agricultural crop subsector had declined quite faster from 22 percent during 1980-1985 to stay at merely 4 percent during 2000-2004. The contribution of agricultural crop as well as livestock subsectors in the average growth rate of real magnitude of value-added in the economy has been almost at par with each other in recent years. 3. An Appraisal In a least developed country, which is primarily agricultural in economic structure and dominantly rural in social structure, populaces survive by reproducing the necessary means of material subsistence but often fail to keep the record of the produce of the process of labour and production. It is then contingent of necessity upon the supreme power, almost resembling with the power of the state, to maintain the record of the aggregate produce of the populace in a territory. It is then a tragedy that the medieval coercive power over and above the society of toiling masses has historically been notorious and ever failed to keep any such record. The Bhutanese state power of medieval time, which extended till sixties or probably eighties in the twentieth century, was no exception in this regard. A perusal of history is a testimony that there exists no record of the past aggregate produce of the country. The recent accounts of the national income and produce since 1980 are then a solace. Under the paternalistic regulatory framework of the machineries of a modern state-in-transition, a modern government-intransition and a modern bureaucracy-in-transition, such accounts have become available. Such documentation shows that the engine of economic growth has been pulled for the continuous last two and half decades. The monetized value of the aggregate produce has kept on increasing uninterruptedly over the years, and is presently quite high. In the framework of economic governance under the umbrella of a paternalistic, protectionist, welfarist, developmentalist and dirigisme state, a major part of the achievements in the field of increasing national income and its various aggregates are not that much a result of the initiatives taken on the part of the private individual entrepreneurs and their private investment as much as these are primarily the outcome of the public allocations and investments in the production enterprises and sectors of activities in the economy. The public investment and planned allocations of monetary resources (financed through mobilization of comparatively small domestic resources and large international aids) to the sectors of economic activities has a major role. A comparison with private investment is not possible because reliable quantitative information on the bifurcation between the private and public investment and capital formation is not available. The joint efforts of private individuals in a lesser measure and the government to a comparatively much greater extent have been as such that the country started with a meager planned government outlay of Ngultrum 107 millions in the early sixties to develop the national economy. In the early seventies, it was however able to allocate the public monetary resource equivalent to Ngultrum 475 millions to maintain the already developed assets, institutions and the economic structure of the sectors of the economy and venture into additional desired areas of development. Within a decade, the planned public allocation increased by ten-folds, and thus, Mahmood Ansari 18 | P a g e
  19. 19. Economic Growth and Agricultural Transformation stood at Ngultrum 4711 millions in the early eighties in the twentieth century. Approximately twenty years after, say, towards the beginning of the turn of the century, the country was able to devote almost Ngultrum 70000 millions for the sake of maintaining and sustaining the national income growth initiatives in the country (i.e. the ninth five-year plan allocation). It is to be noted with concern then that the annul average planned public allocation of the government was Ngultrum 942 millions approximately during the five-year plan period of 1981-86, but the annual average gross domestic product at factor cost in current prices for the five year period of 1981-85 (inclusive of both end-years) stood at Ngultrum 1688 millions approximately – less than double return. Most recently during the five-year plan period of 2002-2007, the annual average planned public allocation was however almost Ngultrum 14000 millions approximately, but the average annual gross domestic product at factor cost in current prices for the five year period of 2002-2006 (inclusive of both end-years) stood at Ngultrum 31881 millions approximately – more than double return. The growth rate of gross domestic product at factor cost in the current prices, which was standing at 15.4 percent in the year of 2002 over the preceding year and which got maintained at 13.3 percent in the year of 2006 over the preceding year, might be able to explain the phenomenon cited above. In terms of constant prices, there was however a slight decline. Deflating against the price rise, the growth rate of gross domestic product at factor cost in the constant 2000 prices in the year of 2002 was 10.9 percent over the preceding year, and it was maintained in the year of 2006 at 8.5 percent over the preceding year. A major explanation is however to be found in the changing composition and dominance of public actors – bureaucrats versus technocrats. The macroeconomy as conceived in terms of the structure of goods producing sector of agriculture and manufacture in general and the sectoral economy as conceived principally in terms of food sector of crops on farms and livestock products on pastures could not perform satisfactorily. The agriculture and rural development being the principal area of operation of the erstwhile status-bound bureaucrats could not become vibrant and dynamic sectors in Bhutan. They were the bureaucrats who were planning about the agriculture and rural development programmes for long, and onus of stagnant rural sector must go to them. The theater of recent value-addition and growth lies there in the sectors of activities connected with hydroelectricity generation and construction. They are rather primarily the artisans and technocrats, who are active in the hydroelectricity projects and the construction sector. These artisans and technocrats have been pulling the national economy faster in recent years and their contribution has undoubtedly surpassed that of the bureaucrats. There has been huge contribution of hydroelectric power generation projects called the Chukha and Tala hydroelectric projects. In a small-sized land-locked rural economy which has over the years been heavily assisted, both financially as well as technically, by the international aid-donors, the credible attainment has therefore been concentrated and never widespread. It has been conducive to create dynamism which is but unambiguously confined to a definite class of economic activities that are related with production of a particular industrial good – construction – and a specific service – hydroelectricity. Since the pattern of economic growth had been underpinned mainly and solely by the pattern of activities related to “hydropower’ and the export of electricity to India, the non-steady wild pattern of fluctuations in the economic growth had followed the rhythm of economic activities predominantly influenced by the single sector of energy and energy-related construction activity in the country. Since the Bhutanese economy had been driven principally on the strength of the large hydropower projects in the last two decades, a high level of construction and related activities immediately preceding the Mahmood Ansari 19 | P a g e
  20. 20. Economic Growth and Agricultural Transformation commissioning of the Chhukha hydroelectric project in the mid-1980s and the boom in the earnings following the commissioning of the project had pushed the growth rate of gross domestic product rather to the pretty high level. This happened again in the preceding and succeeding period of the commissioning of the Tala hydroelectric project as well. Table – 10 Public Allocation to Agriculture under Plans in Bhutan: Five-year Plan-wise (In Million Ngultrums) Plan Period First Five-year Plan (1961-66) Second Five-year Plan (1966-71) Third Five-year Plan (1971-76) Fourth Five-year Plan (1976-81) Fifth Five-year Plan (1981-86) Sixth Five-year Plan(1987-92) Seventh Five-year Plan (1992-97) Eighth Five-year Plan(1997-2002) Ninth Five-year Plan(2002-2007) Tenth Five-year Plan(2008-2013) Public Allocation to Sectors of Activities (for Five Years) Agriculture Livestock F. C. B. Forestry AgriculSubsector Subsector Subsector Subsector tural Sector 1.90 1.50 0.00 3.20 6.60 All Sectors Together 107.20 21.60 5.80 0.00 6.90 34.30 202.20 58.30 24.20 0.00 28.40 110.90 475.20 259.00 61.50 0.00 110.30 430.80 1106.20 331.50 105.60 99.50 200.20 736.80 4711.20 880.40 331.00 106.50 418.20 1736.10 9559.20 709.01 327.89 N.A. 479.02 2433.64 15590.00 N.A. N.A. N.A. N.A. 3528.64 30000.00 N.A. N.A. N.A. N.A. 4548.36 70000.00 N.A. N.A. N.A. N.A. 14140.88 141692.21 Sources: Planning Commission, 1989, pp. 10-2; GNH Commission, 2008, p. 64 Notes: The abbreviation F.C.B. stands for the institution of the Food Corporation of Bhutan; the Plan document was printed for the first time only during the third five year plan in 1972; it seems that the five year planning process was suspended, and there was an ‘Annual Plan’ in the year of 1986-87 and again 2007-08 The downswing of growth rate had equally been conditioned, caused and determined by the respite and interval underpinning the long gestation period involved with such mega projects and the intervening period between such large hydropower projects. The growth rate of gross Mahmood Ansari 20 | P a g e
  21. 21. Economic Growth and Agricultural Transformation domestic product in Bhutan had been low and lull in these periods. In other words, the discrete and lumpy nature of the hydropower projects had conditioned and caused the irregularities in the pattern of gross domestic product growth. In the early two decades between 1980 and 2000, the hydropower energy had been the most dynamic and dominant sector of economic activity in Bhutan. It was but the energy-related construction which had been the dynamic and dominant sector over the last decade in the country. The growth of the national economy in the recent years of the new century has been driven solely by the upcoming Tala project related construction and boom in the housing sector. In short, the nature and pattern of growth of gross domestic product in the country had been highly dependent upon, and therefore, influenced by the economic outcome of the dominance, dynamism and high growth of the energy and construction sector alone. Table – 11 Annual Average Public Allocation to Agriculture under Plans in Bhutan: Five-year Plan-wise (In Million Ngultrums) Plan Period First Five-year Plan (1961-66) Second Five-year Plan (1966-71) Third Five-year Plan (1971-76) Fourth Five-year Plan (1976-81) Fifth Five-year Plan (1981-86) Sixth Five-year Plan (1987-92) Seventh Five-year Plan (1992-97) Eighth Five-year Plan (1997-2002) Ninth Five-year Plan (2002-2007) Tenth Five-year Plan (2008-2013) Average for Early Four Plans (1961-81) Average for Middle Two Plans (1981-92) Average for Recent Four Plans (1992-2013) Annual Average Public Allocation to Sectors of Activities in Million Ngultrums Agricultural Sector 1.32 6.86 22.18 86.16 147.36 347.22 486.73 705.73 909.67 2828.17 29.13 247.29 1232.57 All Sectors Together 21.44 40.44 95.04 221.24 942.24 1911.80 3118.00 6000.00 14000.00 28338.44 94.54 1427.04 12864.11 Percentage of Outlays in Agricultural Sector 6.15 16.96 23.33 38.94 15.64 18.16 15.61 11.76 6.50 9.98 30.81 17.33 9.58 Sources: Planning Commission, 1989, pp. 10-2; GNH Commission, 2008, p. 64 Notes: Plan document was printed for the first time only during the third five year plan in 1972; It seems that the five year planning process was suspended, an there was an ‘Annual Plan’ in the year of 1986-87 and again 2007-08 It is to be appreciated that it is the amount of public allocation for the maintenance and improvements in the rural economy that is comparatively much more imperative than the Mahmood Ansari 21 | P a g e
  22. 22. Economic Growth and Agricultural Transformation aggregate plan allocation for the economy. A reading of the public plan allocation documents leads to the following crucial disturbing observations: first, there existed in the past and continues as yet a marked strategy of devolution of planning to the sectoral level only . In other words, the system of regional level allocations does not exist in the present despite being attempted at a point of time in the past. Second, there was a crucial positive trend in observation in the past. The planned public allocation to the agricultural sector in particular was kept on increasing in percentage term till the fourth plan period. Surprisingly, it dived thereafter and the low percentage allocation in course of the ninth plan approximated the original first plan low percentage level. For example, the first plan devoted 6.2 percent of total outlay to the agricultural sector; the outlay devoted to the agricultural sector out of the total outlay of the ninth plan stood at 6.5 percent only. The agricultural sector outlay was as low as 3.06 percent during the eighth plan. In a primarily rural and agricultural country, such a trend of government expenditure is not only astonishing but also creates a sense of despair. It has a sharp implication. The gains from growth might have been unequally distributed across the sectors of the economy. It was only recently that the trend was reversed. The tenth plan did devote almost ten percent of total outlay to the agricultural sector only. Probably, the realization that the trend of low growth in agriculture could not be reversed unless the public investment and expenditures in this sector was increased had led to such a trend-reversal decision on the part of the planners in the nation. Third, the percentage contribution of the agricultural sector in the national income have witnessed of late a declining trend in the manner of declining percentage of outlay devoted to this sector. This was despite it that the contribution of agricultural sector in absolute money terms had kept on increasing over the years in the last two and half decades in the country. The phenomenon of declining percentage share of agriculture in the national income has been treated in the official literature as the arrival of the phenomenon called the “structural transition in the economy” in Bhutan. It is then to be guarded that there are not much to be read as positive and irreversibly beneficial, since this latter phenomenon is to be read with the fact of stagnant productivity and yield of major crops in agriculture, rural to urban migration of labour, and high level of rural inequality and poverty16 in the countryside (which is out of the scope of analysis in the present paper). The fact of high economic growth in the backdrop of the food insecurity and poverty for a sizeable size of population of human beings make only little and limited practical sense. Under the protectionist umbrella of a dirigisme state, the pattern of planned economic governance with the mediation of a tightly bureaucratized set-up has led to a pattern of economic growth that has been rather non-“inclusive”. A distorted growth has set in. There has been a distributional failure. This distributional failure is a telling narrative of the failure of the erstwhile ministerial-departmental and district bureaucracy in facilitating the gains from growth to percolate down to the level of village and household in the countryside. It is the failure of the bureaucratized and publicly administered distributional framework of the government which account for the failure of “trickle-down effect” of the mainstream economic growth in the country. It is not to deny that an agro-bureaucracy has certainly come of age in Bhutan. The public (ministerial) Department of Agriculture with its body of extension staffs and the Council of Renewable Natural Resources with its multiple research centres and sub-centres has provided a platform for the agro-bureaucracy to consolidate its position as a visible, organized, cohesive and credible organ of the government in the country. Despite it being quite difficult to assess the exact magnitude of the “trickle-down effect” of the development and growth, it is clear that Mahmood Ansari 22 | P a g e
  23. 23. Economic Growth and Agricultural Transformation the productivity and output in the agricultural sector have not improved in any considerable extent. Since the food and commodity component of the national income have lagged much behind than that of the sector of activities associated with the generation of services, the consequence has been simple and visible: the prevalence of escalating food deficits and income poverty. The engine of growth has not pulled the bogey of agricultural sector any forward to a level whereby the food insecurity and insufficiency could have been overcome. The gains from growth have not only failed to diffuse sectorally, it has also failed to distribute regionally in the country. There has not only been an overall regional bias in the pattern of growth but also that the international financial and technical aid assisted growth has produced an urban bias. The public and private resources have centered at Thimphu and Phuentsholing only. It has been the township of Thimphu in particular and Chhukha district of the western region in particular which have been the main beneficiary of growth in the country. All is not bleak, however; the growth has brought a certain level of convenience and comfort for a certain class of people as well. There has come to stay a considerable measure of a phenomenon of “demonstration effect” at work in Bhutan, which has led over the years a certain middle class of people to aspire for a certain brand of westernized life pattern and materially struggle to attain the same17. The unaccounted phenomenon of migration to cities of the United States of America to earn more and catch up with the neighbors has also started to strike roots in Thimphu. This creates a hope for the future potentialities and possibilities of diffusion of the same material spirit up to the grass-root level. Conclusion Under the regime of a dirigisme, developmentalist welfare state orchestrating a paternalistic and protectionist structure of governance, the multiplying number of the poor and the deprived bespeaks of the failure of the engine of growth in pulling the masses along. The Food Corporation of Bhutan was created in 1974 under duress and compulsion of food deficit in the country. The Corporation was supposed to complement the already existing efforts of the private trader-importer of food grains in Bhutan. The early seventies rather necessitated heavy reliance on the food imports through the branches of the Food Corporation of India at Siliguri (West Bengal) and Guwahati (Assam) to the stores of Food Corporation of Bhutan at Phuentsholing. In 1976, a Country Office of the World Food Program of the United Nations Organization was established in Bhutan. The uneven and imbalanced growth pattern with its attending characteristics has produced pointed implication: a process of social and economic differentiation in the society-in-transition in Bhutan. In the yesteryears, the class perspective of the Bhutanese society was as such that there was division of non-royal and non-monk population into a minority of a powerful class of the courtiers, retainers and provincial bureaucrats on the one hand and a majority of subordinate class of the peasantries, herdsmen, cottage weavers and forest produce gatherers on the other. Contemporaneously, there are multiple classes of people claiming a share in the material base created by the process of sustained economic growth and development. A middle class of both permanent and temporary residents, consisting both of the middle level civil and military official servants as well as the newly rich traders and shopkeepers, is noticeable in the townships as well as the countryside. The income and rewards of the town centered bureaucrats and traders in particular seem to have improved much faster than their counterparts in the countryside. An upper layer of big Mahmood Ansari 23 | P a g e
  24. 24. Economic Growth and Agricultural Transformation business houses, who have consolidated the ownership and control of branches of trading companies all around the country, is also visible and traceable. Such business magnates, in collaboration with the top-positioned heads of bureaucratic organizations, are probably in one way or the other influencing and directing the rule and governance pattern in the country. The part of the gains from the process of sustained economic growth, which is pocketed by these dominant classes, is not as yet accurately known; however, the share of the subordinate classes of deficit farmers, migrant workers and landless petty hawkers and itinerant vendors in the gains from economic growth are certainly low enough to protect these groups from their vulnerability to fall into the traps of disguised unemployment, consumption poverty and resource deprivation in the country. The social and economic differentiation among the masses attending the non-inclusive and nondiffusing pattern of economic growth and deepening with the agricultural involution process has further been fuelled by the phenomenon of rampant corruption among the officialdom. The corruption has increased in the corridors of bureaucracy. With the mushrooming of international-assistance aided projects and government programmes, the chances of involvement in the activities of rent-seeking, leisure pursuits and aid-syndrome have increased rather irreversibly. These have resulted in instituting the vices of administrative centralism and distributional inefficiency deep into the system of governance. The policy implication is then simple: the new technocrats and the associated modern bureaucracy outside the system of royal civil service commission may be allowed to be at the centre of orchestration of the stage show of growth and the official regulated distribution system as handled by the erstwhile semi-feudal bureaucratic arrangements need to be revamped and improved further on an urgent basis without fail, so as to make a move towards inclusive growth and development. The political economy of growth in the age of parliamentary democracy with the political promises of equity and justice needs it. Notes: 1 It was this international gift exchange between the royals of two countries which was instrumental in allowing the Bhutanese King to be able to oblige the bureaucracy with the inland gifts. To quote: “However, it is not yet known when the Bhutanese started having their coins minted in Cooch Bihar by sending silver ingots there. This practice, which existed in 1785, continued till 1789, when the British closed the Cooch Bihar mint. In 1783 S. Turner mentioned the "commodiousness of this small piece (the narainee, a base silver coin), the profits the people of Bhutan derive from their commerce with Cooch Bihar". The coins minted in Cooch Bihar didn’t have a true monetary value in an economy based essentially on barter, but they were among the objects gifted by the Bhutanese rulers during the distribution of gifts (man ‘gyed) to lay persons and monks. One such example is the distribution of 47,000 silver coins to all Bhutanese who paid taxes, officials, monks and soldiers during the enthronement of the Zhabs drung Jigme Dragpa in 1747” (Pommaret, 2000, pp. unpaged). 2 To quote an authoritative remark about the growth of marts: “Both in Bhutan and Tibet, the state was grossly involved in the country’s external trade so that the benefit of trade went largely to the king, his nobles and other associates including the Mahmood Ansari 24 | P a g e
  25. 25. Economic Growth and Agricultural Transformation monasteries ……….……… First, since the big merchants like the king or his nobles did not participate in the detailed execution of trade, they used to employ trade agents and professional persons to accompany the caravans ……………….. Secondly, both countries allowed small merchants to carry out trade on their own. They traded mostly with their counterparts in the neighbour countries, but sometimes with their big merchants as well ….…………….. The prevailing custom was that a particular group of merchants dominated a given stretch of the route. Thus, for example, the Bumthang merchants controlled the trade route from Bumthang to Lhasa while the merchants of Punakha controlled trade in between Gyantse and Shingatse, and monopolised trade up the valley of the river Mo Chu to Lingshi La. Lastly, although the major trade was carried out by the state in both countries, production was left entirely to private enterprises. ……………. Traders had no large stake in production. Purchasing goods from local markets, they “fit out large caravans to carry it to places at several months” march” (Sarkar and Ray, 2006, pp. 59-61). 3 To quote another remark: “Rangpur, which is in present day Bangladesh. In the 18 th century Rangpur was the destination of the grand annual caravan, which came from western Bhutan. The most used entry point to Bhutan was Buxa Duar (Pasakha). During the time of the 13th Temporal Ruler Sherab Wangchuk cloth formed a large part of the imports (Benaras silk, cotton, English flannel) and exports (Tibetan wool, Chinese silk, Bhutanese cloth). Horses, lac (Laccifer lacca), madder used for dyeing, ivory, musk, gold dust, silver, amber, spices and tobacco (even though it was theoretically prohibited by the Law Code of 1729) were also traded” (Pommaret, 2000, p. unpaged). 4 To quote a remark: “Hajo was from the 17th century a thriving pilgrimage and trading place in Assam. …………………. The Muslims practiced metal casting and the nearby town of Sualkuchi became an important centre of silk trade. Trade, linked among others, to pilgrimage, was active because in the 19th century "a person called the Wazir Barua, of the Kalita family, had a hereditary charge of the intercourse with Bhutan ……………….. All the messengers and traders of Bhutan, all servants of the Deva Raja (Temporal ruler of Bhutan), must first go to Siliambari. The Barua there levied no duties, but received presents in order to prevent his throwing impediments in the way of business, and no one was allowed to purchase at Siliambari without employing him as a broker …..………….. The east Bhutan-Assam axis was particularly important for the trade of cloth, with exchanges based on cotton, silk and dyes. It is known that at a fair in Assam in 1875, the Bhutanese exchanged woollen blankets, madder, bags and more than four tonnes of lac for cotton and raw Assamese silk textiles” (Pommaret, 2000, p. unpaged). 5 Even till the late sixties, the capital town was itself not fully equipped to carry out the development programmes. To quote some memoirs: “On October 29, 1967, ………….…….. Thimphu, the capital, was smaller than even the smallest of villages of my native place. The only prominent building was the Dzong (the Secretariat, literally meaning a fortress). The only guest house had three rickety rooms ……………… At night, I counted just about thirty lights in the capital of Bhutan ……………… On January15, 1968, I was appointed as the special officer of India in Bhutan (Das, 1995, pp.4-5). A further remarks brings it to notice that: Mahmood Ansari 25 | P a g e
  26. 26. Economic Growth and Agricultural Transformation “The first hydroelectric project in Bhutan was constructed on the Samteling Chhu in Thimphu. This mini-hydel, commissioned in 1967, catered to the newly established capital gradually emerging from paddy fields around the extended Thimphu dzong (Zurcher and Choden, 2004, p.129). 6 Bhutan has been a planned economy since 1961; this was the year when the first five-year plan (1961-1966) was launched under the guidance of technical expertise and with financial assistance from the neighbouring country, India. The Plan document in Bhutan was however printed for the first time only during the launching of the third Five Year Plan in 1972. To quote the Third Five Year Plan document of Bhutan: “The two Five Year Plans, formulated in consultation with the Planning Commission, India, were launched in 1961 and 1966 respectively. These Plans were aimed at creating the basic infrastructural facilities like roads, power, communication system, transport and suitable administrative set-up, besides developing agriculture and animal husbandry” (Third Plan Document, 1972, p. unpaged). 7 To quote: “The trade route to Tibet in the north having been closed, greater economic relations with India became inevitable. Nehru offered economic assistance which was gratefully accepted. Men and money from India poured in and a crash programme of economic development started. An integrated development plan was prepared by India’s Planning Commission in 1960, which became the first Five Year Plan of Bhutan” (Das, 1995, P.13). 8 To quote a recent assessment: “The introduction of Western medicine and Western education appears to have made a great impact on society. I would like to introduce a few examples of people’s interactions with it. A lady in her late twenties working in a tour agency described how when one becomes sick in the village people first go to see an astrologer to find out the cause and do the relevant puja [religious worship] (depending on the cause), and then, if they are not cured, they go to a Basic Health Unit (BHU) or a hospital ……………….. An education officer confessed that in the modern education sector it is becoming difficult to teach indigenous beliefs, such as belief in spirits, since they can not be probed scientifically. One old gentleman told me, “With the introduction of Western medicine and Western education, many aspects of Bhutanese life started to be questioned” (Ueda, 2003, pp. 50-51). 9 Karma Ura (Undated) attempts to capture the historical path of progress in terms of stages of transformation leading to the emergence of explicit goal of “development” in the following way: “Looking briefly at investment patterns since 1961, it is possible to delineate some key features of transformation. The years between 1961 and 1973 can be characterized as the first phase, which concentrated on road construction and internationalization of relations ………………. After the problems of inaccessibility were partly overcome and the delivery of goods and services made more cost-effective, the establishment of health, education and agricultural extension services expanded rapidly between 1973 and 1983. This second phase is marked by drastic expansion of services ……………….. The need to augment revenue naturally led to the third phase of development - from 1983 to 1987 - concentrating on revenue-generating investment in hydroelectric and mineral based projects ……………. The fourth phase, roughly stretching from 1988 to 1998, is characterized by expansion of air-links and digital telecommunications networks in Mahmood Ansari 26 | P a g e
  27. 27. Economic Growth and Agricultural Transformation what was once an isolated, hidden and unapproachable land …………..…… The dominant features of the period after 1998 appear to be democratization and globalization (Ura, undated, p. 4; bold letters added). 10 The National Accounts Statistics of Bhutan asserts that while discussing the economic growth via the measurement of magnitude of Gross Domestic Product, along with the estimation of per capita income, one must be clear about the following: “In economics, production means addition to the utility which can be valued …………….. Addition to utility which is scarce in relation to demand is known as value added. So production means addition to value. Product is nothing else but ‘value added’……………….. Value-added is the measure of the difference between the value of total output of the sector and the value of intermediate consumption(IC). In other words, if from the gross value of output of the sector, we deduct the value of the goods and services purchased from the producers of other industrial sectors used up in the process of production, what is left is the gross value added …………….. If the value of IC is exclusive of the value of the consumption of fixed capital (CFC) (loss of capital assets in terms of wears and tears - also known as depreciation of capital stocks), the value added would be termed as ‘gross’. If IC includes CFC, the value added would be termed as ‘net’………………. ” (CSO-NAS, 1989, p. 29). 11 12 It is to be underlined that the first three plans and four years of the fourth plan consecutively were executed and implemented without any data of Gross National Product/Gross Domestic Product of the country, despite it that the Central Statistical Cell was established way back in 1973 only, which was renamed as the Central Statistical Organization in 1979, and then renamed finally as an autonomous body called the National Statistics Bureau; second, the Planning Commission in Bhutan was involved in the work of planning the national and sectoral economy without any macroeconomic data of GNP/GDP throughout the period of 1971 to 1979; third, there has been three-times changes in the choice of the base year. The first-ever conventional time-series on GDP covering period of 1981 to 1984 in current and constant (1983) prices was made available in November 1985, and the second conventional series of estimates of GNP/GDP measured in current and constant (1983) prices was made available in December 1987. There was revision of the base year thereafter. The first-ever revised series of GNP/GDP measured in current and constant (1980) prices covering the period of 1980 to 1987 was made available in May 1989, and the latest revised series of GNP/GDP measured in current and constant (2000) prices covering the period of 1980 to 2003 was made available in 2004. To quote: “The estimated GDP amounts to Nu. 1020.5 millions, and with a mid year population of 1.165 million, the per capita GDP comes to Nu. 876 …………….…. This would indicate that Bhutan has one of the lowest per capita incomes in the world” (Planning Commission, 1981-86, p. unpaged). 13 In 2003, after passing of more than twenty years, the National Statistical Bureau was however confident to inform: “The revised nominal GDP at market prices is estimated at Nu. 28,542 million. Therefore, with the estimated population of 0.734340 million, the estimated per-capita GDP is Nu. 38,868, which is equivalent to US $834. The GNP per-capita is estimate(d) at Nu. 35,411 or equivalent to US $760” (National Statistics Bureau, 2004, p.1). Mahmood Ansari 27 | P a g e
  28. 28. Economic Growth and Agricultural Transformation 14 Bhutan is attempting to emerge as a GNH-state (Gross National Happiness-state). Whatever this nomenclature stands for, the outline of both traditional social progress as well as the modern economic growth has ever been first and foremost a saga of material improvements and advances in agriculture. The progress of the nation and improvements in agriculture is as yet measured in terms of the level of gross material output of plants and crops, livestock products and forest produces, and the national accounting measure of the contribution of agriculture to the constant and current market value of gross national and domestic products is yet a continuing serious enterprise. 15 The official data publication agency in 2003 concluded that “The agriculture products when bifurcated, the share of cereal products are declining, where the value added share of horticulture products are increasing gradually” (National Statistical Bureau, 2004, P.2). 16 In January 2008, the annual report of Royal Monetary Authority of Bhutan added a new dimension and concern, which was apart from and exclusive of the category of the per capita income: “Within the Bhutanese economy, real GDP growth increased to 8.5 percent in 2006 from 7.1 percent in 2005 ………………. Despite impressive GDP growth and increase in nominal per capita GDP, the incidence of poverty still remains high at 32 percent ………………… The increase in the unemployment rate has been marginal from 3.1 percent in 2005 to 3.2 percent in 2006” (RMAB, 2008, pp. 7-9). 17 To quote a similar recent assessment that did rely on multiple authorities of Bhutan: “Four decades of development activities appear to have brought many economic and social changes to Bhutan. Although the majority of people in Bhutan live at least half a day’s walking distance from a road (Planning Commission 1991: p.114), the impact of development activities, as Karma Ura writes, are felt even in the remote mountains (1997: p.239). People know through various means about life in towns and this inflow of information makes some people aspire to a certain degree to a “colourful” town life” (Ueda, 2003, p. 49). Mahmood Ansari 28 | P a g e
  29. 29. Economic Growth and Agricultural Transformation References Aris, Michael (1979), Bhutan: The Early History of A Himalayan Kingdom, Aris & Phillips Ltd., Warminster-England Ardussi, John (2004), “Formation of the State of Bhutan (’Brug gzhung) in the 17 th Century and its Tibetan Antecedents”, Journal of Bhutan Studies, vol. 11, Winter CSO-PC (Central Statistical Office of Planning Commission) (2000), Statistical Bulletin: Agronomic Survey- 1988, Catalogue No. 301, Royal Government of Bhutan, Thimphu CSO-PC (Central Statistical Office-Planning Commission) (1989), Statistical Yearbook of Bhutan – 1988, Catalogue Number – 101, Royal Government of Bhutan, Thimphu, May Central Statistical Organization (1989), Agronomic Survey of 1988-89, quoted in Central Statistical Office-Planning Commission (1991), “Statistical Yearbook of Bhutan – 1990”, Catalogue Number – 101, Royal Government of Bhutan, Thimphu, July Central Statistical Office (2000), “National Account Statistics – 1980-1999”, Planning Commission, Royal Government of Bhutan, Thimphu, May Das, B.S. (1995), Mission to Bhutan – a Nation in Transition, Vikas Publishing House Pvt. Ltd., New Delhi Dorjee, Kinlay (1995), “An Analysis of Comparative Advantage and Development Policy Options in Bhutanese Agriculture”, Dissertation ETH No. 11081 submitted to the Swiss Federal Institute of Technology, Zurich (Mimeo.) G N H Commission (2008), “Draft Tenth Five Year Plan, 2008-2013, Vol. - I: Main Document”, Royal Government of Bhutan, Thimphu, February National Statistical Bureau (2004), National Account Statistics, 1980-2003, Royal Government of Bhutan, Thimphu, November National Statistical Bureau (2004), Statistical Yearbook of Bhutan - 2003, Catalogue No -1, Royal Government of Bhutan, Thimpu National Statistical Bureau (2005), Statistical Yearbook of Bhutan 2005, Catalogue No -101, Royal Government of Bhutan, Thimpu National Statistical Bureau (2007), National Account Statistics, 2000-2006, Royal Government of Bhutan, Thimphu, October Planning Commission (1972), Third Five Year Plan: Main Document, 1971-76, Planning Commission of the Royal Government of Bhutan , Thimphu Planning Commission (1982), Fifth Five Year Plan: Main Document, 1981-86, Planning Commission of the Royal Government of Bhutan , Thimphu Mahmood Ansari 29 | P a g e
  30. 30. Economic Growth and Agricultural Transformation Planning Commission (1989), Sixth Five Year Plan, 1987-92, Planning Commission of the Royal Government of Bhutan, Thimphu Planning Commission (1991), Seventh Five Year Plan: 1992-1997: Main Plan Document, Vol. - 1, Planning Commission of the Royal Government of Bhutan, Thimphu Pommaret, Françoise (2000), “Ancient Trade Partners: Bhutan, Cooch Bihar and Assam (17th-19th centuries)”, Journal of Bhutan Studies, vol. 2, no. 1 Pradhan, P. M. , K. Dorjee and P. R. Goldsworthy ( 1994), “ Bhutan’s Research Needs and Priorities for the Management of Natural Resources: A Small Country’s Perspective” in Peter Goldsworthy and Frits Penning des Vries (1994) (Ed.), Opportunities, Use and Transfer of Systems Research Methods in Agriculture to Developing Countries, Kluwer Academic Publishers, Netherlands Pre-Investment Survey of Forests (1980), “Report on Pre-Investment Survey of Forest Resources in Bhutan”, Government of India in collaboration with the Department of Forests of the Ministry of Agriculture of the Royal Government of Bhutan, Dehradun Ray, Indrajit and Ratna Sarkar (2005), “Reconstructing of Nineteenth Century Trade Route between Bhutan and Assam: Evidences from British Political Missions”, Journal of Bhutan Studies, vol. 13, Winter Royal Monetary Authority of Bhutan (2006), Annual Report, 2004-05, Research and Statistics Division, Royal Government of Bhutan, Thimphu Royal Monetary Authority of Bhutan (2008), “Selected Economic Indicators”, Royal Monetary Authority of Bhutan, vol. 22, no. 1, March Sarkar, Ratna and Indrajit Ray (2006), “Two Nineteenth Century Trade Routes in the Eastern Himalayas: The Bhutanese Trade with Tibet and Bengal”, Journal of Bhutan Studies, vol. 15, Winter Ueda, Akiko (2003), Culture and Modernization: From the Perspective of Young People in Bhutan, Centre for Bhutan Studies, Thimphu Ura, Karma (Undated), The Bhutanese Development Story, Monograph Number – 15, Centre for Bhutan Studies, Thimphu Ura, Karma (1997), “Tradition and Development” in C. Schicklgruber and F. Pommaret (Eds), Bhutan: Mountain Fortress of the Gods, Bookwise, New Delhi Zurcher, Dieter and Kunzang Choden (2004), Bhutan: Land of Spirituality and Modernization – Role of Water in Daily Life, New Dawn Press, Inc., New Delhi Mahmood Ansari 30 | P a g e

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