Introduction to major features of bhutanese economy since 1961 by Tanveer Reza Rouf

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An introduction to the major features of the early phases of Bhutanese economy.

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Introduction to major features of bhutanese economy since 1961 by Tanveer Reza Rouf

  1. 1. Major features of Bhutanese Economy since 1961 ECO 242 (Bhutanese Economy –I) Spring 2013 Topic-1 Tanveer Reza Rouf
  2. 2. What is in a name?  Shangri-La (Doig, desmond, Bhutan, the mountain Kingdom, National Geographic Magazine, Vol. 123, 1963, pp. 398-429)  Bhot ant or Bhu uttan (Sanskrit, meaning „end of Tibet‟ or „highland)  Lho Mon (Land south of Tibet- ancient Buddhist writers of Tibet)  Drukyul (Durkpa Kagyupa sect of Mahayana Biddhism came to flourish 1200 years ago)  Land of Thunder Dragon (dragon stands for peace and does not spit fire) Ref: Misra, H.N. 2007. Bhutan: Problems and Policies. Chapter-1: Socio- Economic background.
  3. 3. What is in a name?  Buffer zone (Lord Curzon)  Gated community (protected by mountains and other natural barriers and self imposed isolation for a long time and heavily guarded even to this day)  Migrant’s land? (one theory: originally inhabited by “Tephoo” tribes from Cooch bihar & another theory: Tibetan migrants are actually the Bhoteas as they are the same people)
  4. 4. Some general info  Size = 46,000 sq. km (roughly the size of Switzerland or 41,000 sq. km)  Duars=higher connectivity with India  Population = less than 1 million  Average density= 26 persons/sq. km  4 administrative regions= Eastern, western, central and southern
  5. 5. Regional economy based highly on regional elevation  Northern region  Geography: valleys from 3500m to 5000m and ranges above 5000m, cold climatic conditions, winter temperatures often below freezing point, covered by snow nearly half the year, almost barren, alpine vegetation, grassy ground  Population: sparse nomadic groups  Economy: livestock farming is the only feasible occupation now {what about future?}
  6. 6. Regional economy based highly on regional elevation  Central region  Geography: valleys from 1500m but below 5000m, hill ranges radiate southward, watersheds formed among principal rivers, level land limited to narrow valleys such as Paro, Thimphu, Punakha and Bumthang, Black mountain divides region into western and eastern Bhutan, temperate type of climate, exceptions are Punakha and Wangduephodrang all valleys get very cold during winter, rainfall does not exceed 100 cm/ year, temperate type forests (flora: broad leaved and conifers), fertile rivers valleys grow rice, wheat, barley and maize, highest settlement  Economy: agricultural farming before, but changing fast now {what about future?}
  7. 7. Regional economy based highly on regional elevation  Southern region  Geography: Duar plains and foothills, narrow belt ranging from 30-50 km, hot and humid climate, 500cm/year rainfall, average temp = 20 C, tropical deciduous vegetation, timber rich region, alluvial soil, densely populated region, land is cultivated for paddy, maize, wheat, etc, region most connected to India  Economy: trade based and manufacturing hub due to cheap Indian labor, raw materials and access to Indian railroad networks and Indian market {what about future?}
  8. 8. Natural resource base: Water  Near unlimited water resources  Huge potential for hydro-electricity due to river flow and sparse population  Gov. India‟s support led to construction of first hydro electric plant  1979  only 2.5 MW  Will global warming have significant negative impacts on this potential?
  9. 9. Natural resource base: Forest  Tropical (181.2m to 1510m), temperate (1510 to 3624m) and alpine pasture grounds (3624m to 4832m)  Rich in medicinal plants  Forest cover is maintained at above 60% always as mandated by constitution  All commercial felling was banned and timber trade was nationalized in 1979
  10. 10. Natural resource base: Minerals  Immense mineral deposits  Examples: calc-tufa, coal, copper, dolomite, graphite, gypsum, lead, zinc, limestone, marble, slate, talc and beryl pyrite  Most mineral deposits are concentrated in South only  More exploration needed in Central region  Mining industry contributes very little to economy due to : difficult terrain conditions, absence of transportation and communication facilities and the low unit value of these nonmetallic minerals
  11. 11. Timeline  1907  hereditary monarchy established and Bhutan more united than ever under Ugyen Wangchuk  1949  signed treaty with Govt. of India  1953 Tshogdu (a national assembly composed of representatives of people, civil admin. And monastic order)  1956  serfdom was abolished and land reform measures introduced  1959  China annexed Tibet and sent shockwaves through Bhutan‟s political elites  1961  signed Colombo Plan  1965  Royal Advisory Council established  1968  Council of Ministers established  1971  became a member of UN
  12. 12. Background of Bhutanese socio-political history-1  No authentic info before 6th century AD  Rather chaotic and violent interlude from then until 17th century, when Zabdrung unified the country  Current Bhutan is the way it is due to the changes he brought about  Tibetan-Mongol invasions throughout the history also played a major role in unifying the country
  13. 13. 1st FYP: 1961 to 1966  The first 5 FYP set Bhutan on the way to planned national development.  With an approved outlay of 1747 lakhs of rupees or Ngultrum the plan aimed at creating in the country  Basic infrastructural facilities like  roads, power, communication system, transport , agriculture and animal husbandry.
  14. 14. 1st FYP: 1961 to 1966 Project Amount allocated Roads 620 lakhs Education 100 lakhs Transport 75 lakhs Health 32 lakhs Forests 32 lakhs Agriculture 20 lakhs Power 16 lakhs Animal Husbandry 15 Lakhs Industries 11 lakhs Miscellaneous 91 Lakhs
  15. 15. 1st FYP: 1961 to 1966 The main achievements :  Infrastructure:  1770kms of roads were constructed  including the 208 kms highway which connected Phuntsholing on the Indian borders with Paro and Thimphu.  Other roads constructed were from Paro to Haa, from Tashigang to Darrang , and from Sarbang and Gelegphu to Charing and Trongsa.  Improvements were effected in the road transport systems, and communication facilities on the modern lines were begun in the country.
  16. 16. 1st FYP: 1961 to 1966 The main achievements :  Education: By 1966 there were  108 schools in Bhutan, including 2 public schools with a total enrolment of 15000 students.  Health:  A Public Health Department under a chief medical officer was set up at Thimphu.  Steps were taken to eradicate malaria.  3 hospitals and 40 new dispensaries were established in different parts of country.
  17. 17. 1st FYP: 1961 to 1966  Agriculture:  Department of Agriculture was established,  which started a number of model agricultural farms, seeds multiplication farms, agricultural research station, and development of extension work  Efforts were made to increase the area under fruit and vegetable cultivation  Animal husbandry:  A department of Animal Husbandry was set up  many live stock and sheep breeding farms were established in different parts of the country.
  18. 18. 1st FYP: 1961 to 1966  Forest resources:  The forest department of Bhutan initiated many measures for conserving the forest wealth and the exploitation of the forest  Mineral resources:  Steps were taken in concert with Geological Survey of India to discover deposits  of coal, dolomite, graphite, gypsum and lime stone
  19. 19. 1st FYP: 1961 to 1966  Manufacturing:  The Production capacities of the fruits preserving plants and distillery at Samtse were increased  and theirs sale and marketing was organized in India  Trade relations with India were improved.  Energy needs:  The Bhutan Government established a hydel directorate and two 400 KW Hydel Projects were constructed to serve the needs of Thimphu and Paro.  By an agreement with India, Bhutan received 250 KW of power daily from the Jaldhaka river hydroelectric project for its south western region.
  20. 20. 2nd FYP: 1967 to 1972  Background:  As no census has been taken nor has any detailed statistical information been collected so far  it is difficult to assess the resources and potential of the country  and to formulate a coordinated development plan.  The population of Bhutan is about 8,00,000 of which the urban population would be about 20,000.  The average density of population is about 45 per sq. mile  though in actual fact the density of population is greater in Southern and Eastern Bhutan  and considerably less in Western Bhutan  and negligible in Northern Bhutan bordering Tibet.
  21. 21. 2nd FYP: 1967 to 1972  Background:  As no census has been taken nor has any detailed statistical information been collected so far  it is difficult to assess the resources and potential of the country  and to formulate a coordinated development plan.  The population of Bhutan is about 8,00,000 of which the urban population would be about 20,000.  The average density of population is about 45 per sq. mile  though in actual fact the density of population is greater in Southern and Eastern Bhutan  and considerably less in Western Bhutan  and negligible in Northern Bhutan bordering Tibet.
  22. 22. 2nd FYP: 1967 to 1972  Diversion of a fair proportion of the available man-power to defense requirements as well as development and Civil works, have seriously affected the agricultural output of the country.  The money that has come into the hands of the cultivators in the shape of wages for labor has been spent, in the purchase of consumer goods for which till now they had very little use or need and a very small proportion of it has really flowed into the economy of Bhutan.  The influx of relatively large numbers of workers connected with development activities has further affected the imbalance of the economy and  cost of common products such as eggs, grain, vegetables and other farm produce has risen as much as 300 to 400 % in the last five years.  Once again this money has been mainly frittered away in the purchase of consumer goods and has contributed very little to developing the economy of the country.
  23. 23. 2nd FYP: 1967 to 1972  The implementation of the First Plan was considerably hampered by:  The shortage of trained technical personnel and the difficulty of obtaining staff on deputation or by recruitment from the open market in India.  Shortage of local labor and insufficiency of rations for employment of imported labor. This difficulty is partly overcome by a quota of 200 tonnes of grain a month provided by the Government of India which enables us to employ a labor force of 7,000 persons at any time.  The Plan was considerably set back by the Chinese incursion in 1962.
  24. 24. 1st FYP: 1961 to 1966 Project Amount allocated in 1 FYP (in lakhs) Amount allocated in 2 FYP (in lakhs) Percentage increase Roads, water supply, electrification 620 754 22 Education 100 276 176 Transport 75 169 125 Health 32 142 344 Forests 32 89 178 Agriculture 20 385 1825 Power 16 80 (Hydel) 400 Animal Husbandry 15 75 400 Industries 11 10 -10 Miscellaneous 91 14 -85 Postal 0 (not specified) 63 100 Publicity 0 (not specified) 19 100 Mechanical workshops 0 (not specified) 65 100 Development Wing Hqrs., Office of F. A. & C. A. O. 0 (not specified) 73 100
  25. 25. Economic base: 1971  Fischer, F. (1971):  The great majority of Bhutan‟s population lives and subsists on the basis of an archaic form of integrated utilization of soils and vegetation for agriculture and cattle farming  Market economy is, apart from a relatively insignificant internal barter trade, nonexistent
  26. 26. Major features of Bhutanese Economy since 1961 Classwork Timelines Features 1961 to 1970 1971 to 1980 1981 to 1990 1991 to 2000 2001 to now Role of state in economic organization Main sector contributing to economy Role of hydroelectricit y

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