The economy of Bhutan, one of the world’s smallest and least developed countries, is based on agriculture and forestry, which provide the main livelihood for more than 60% of the population. Agriculture is the primary source of livelihood for the majority of the people in Bhutan. Approximately 80% of the populations in Bhutan are involved in the agriculture sector and over 95% of the earning women in the country work in the agricultural sector. Agriculture in Bhutan is characterized by its labor intensive nature with relatively low intensity of farm inputs.
Major crops cultivated in Bhutan are maize and rice where 49% of total domestic cultivation is maize and 43% for rice. Agriculture in the country includes cultivation of wheat and other minor cereal crops. Paddy is the primary crop in those regions where proper irrigation is available. Apart from paddy, other crops like wheat, barley, oil seeds, potato and different vegetables are also cultivated in these lands. Maize is mainly cultivated in dry land regions at lower elevation. Forests are also responsible for regulating the availability of water for agricultural purpose.
Goals & Objectives of Agricultural sector “To intensify and diversify adopting an integrated approach in nutrient and pest management and achieve at least 70 percent self-sufficiency on the food grains”. * Ministry of Agriculture Based on the above statement the ministry of agriculture holds the following goals & objectives: * National Food security * Conservation of natural resources * Sustainable economic production * Enhancement of rural income * Social and Regional balance Role of the Agriculture sector
Agriculture in Bhutan has a dominant role in the economy of the country and is the largest sector in the Bhutanese economy. Some of the roles of the agriculture are as follows: 1) Source of employment: Agriculture is one of the main sources of income for the Bhutanese since Bhutan is a developing country and depends mostly on the agricultural products. Agriculture sector provides has provided employment opportunity and will continue to provide for some more years. 2) Contribution to National Income: National income is the total money earned within the country.
In Bhutan, agricultural sector provides the majority contribution to the capital earned within the country. It comprises of one third Gross Domestic Product of our country. 3) International Trade In spite of its remote and land-locked location, Bhutan has been relatively successful as an agricultural exporter. The value of agricultural exports has grown at an annual rate of almost 9% since 2000. Taking advantage of the cooler climate, Bhutan exports oranges, potatoes, vegetables, and apples to India and Bangladesh which helps in promoting international trade. ) Contribution to Government revenue: The tax collected through agricultural lands is one of the main sources of income for the government which in turn is used to protect the welfare of the people. Challenges faced by the Agriculture Sector Agriculture sector in Bhutan is facing problems undermining their growth and development. Though the Royal government is putting in great effort to develop and promote the sector it still faces some challenges as follows: * Natural calamities * Labor Shortage * Lack of marketing facilities * Social factors
Agricultural Finance Finance is the life blood of the agriculture sector and helps in enhancement of the agricultural production like in purchasing the fertilizers, pesticides, seeds, etc. In Bhutan there are financial institutions who provide agriculture loans in the form of short-term, medium-term and long-term funds. The financial institutions that provide credit to the farmers are: * Bhutan Development Bank Limited * Royal Insurance Corporation of Bhutan * Bank of Bhutan * Bhutan National Bank Industrial Sector in the Bhutanese Economy
Bhutan is one of the least developed countries in the world. Before 1960s, manufacturing was a household work and a few items like agricultural tools, weapons, handicrafts, wood product were produced on a small scale. However, after 1961, the number of industries expanded steadily. Nevertheless, industrial development experienced relatively in slow pace in Bhutan due to weak entrepreneurial orientation, high transport, underdeveloped infrastructure, etc. The industrial growth would enhance the living standard of the people and increase the rate of economic growth of a nation.
In Bhutan the basis of industrial growth are “Sustainable Development” and “Gross National Happiness”. Types of Industries 1) Agro-Based Industries Name of Industry| Location| Activity| Bhutan Fruit Products Ltd. | Samtse| Fruit processing and vegetable product| Bhutan Agro Industries| Wangchuk Taba, Thimphu| Fruit processing and vegetable product and MS water| Penjola| Bathpalathang, Bumthang| Fruit processing| Army Welfare Project| Samtse, Gelephu & S/Jongkhar| Liquor| 2) Forest Based Industries Name of Industry| Location| Activity|
Bhutan Board Products Ltd. | Dala, Chhukha| Plain and Laminated board and RTA Furniture| Wood Craft Centre| Langjophakha, Thimpu| | Lhaki Wood Industries| Gelephu, Sarpang| Ply Wood Products| Name of Industry| Location| Activity| Bhutan Carbide and Chemicals Ltd. | Pasakha, Chhukha| Calcium Carbide| Bhutan Ferro Alloys Ltd. | Pasakha, Chhukha| Ferro silicon, Micro silicon| Druk Cement Pvt. Ltd. | Pasakha, Chhukha| Cement| Druk Plaster and Chermical Ltd. | Pemagatshel| Plaster of Paris| Bhutan Gypsum Products| Pemagatshel| Plaster of Paris|
Penden Cement Authority Ltd. | Gomtu, Samtse| Cement| Lhaki Cement| Gomtu, Samtse| Cement| 3) Mineral Based Industries Role of Public Sector and Private Sector Industries in Bhutan Public sector industries are those industries owned and managed by the government of a country whereas Private sector industries are those who are owned by individuals and corporations for profit. Some of the public industries in Bhutan are Chhukha Hydro Power Project, Druk Air Corporation, Bank of Bhutan and etc.
A public sector industry helps in generating employment opportunities, develop infrastructure and contributes to the government revenue, etc. The Royal Government after recognizing the significant role played by the private sector has been freely assisting them with technical and financial help. Government’s Assistance to the Industries of Bhutan The Royal government helps in developing and promoting the industries sector by providing them with various incentives and assistance. Following are some of the incentives or assistance that the government offers: 1) Tax Incentives
By providing tax holidays for three consecutive years for newly established manufacturing industries and vocational institutes and five years for auto mechanical. 2) Assistance Schemes Government provides support programmes and schemes for entrepreneurial development and starting business such as Comprehensive Entrepreneurship Course, EDP Loan Scheme and Loss Sharing Credit Granting Scheme. 3) Other Incentives The electricity charges and the lease rate in the industries are low as compared to any country which the government provides in order to enhance their growth. Export and Import Policy of Bhutan
The Royal government after realizing the importance of International Trade has started supporting the export oriented industries to enhance economic growth. So the government is in the process of developing a very comprehensive Export-Import Policy and still the international trade policy is in a draft form. Service Sector The service sector has a significant role to play in an economy without producing tangible goods like that of primary and secondary sectors. Service sector comprises of all service industries such as trade, transport, communication, banking, insurance, education and health services, etc.
Some of the very important components of service sectors in the Bhutanese economy are as follows: * Transportation services: Transport is an essential component of service sector as it links to other parts of the world. Road transport has been the main mode of passenger travel in the country. Public transport operators are exempted from taxes and those operating on non-profitable routes are provided buses on subsidies. * Communication services It plays an important role in promoting socio-economic development and it consists of postal services, telegraph services and telecommunication systems.
In our country, the development of communication has helped in overcoming the constraints presented by landlocked and mountainous terrain. * Tourism services Tourism is another very important component of the service sector and has been contributing significantly to the government’s revenue. Further it has created much needed employment opportunities in our country. The development of the private sector would not have been possible without the contribution of tourism industry. * Education services
Education is crucial in creating productive labor force and in enhancing the rate of the economic development of a nation. In our country, formal modern education was started during the time of the First King of Bhutan. Since then the Royal Government has been investing considerable amount of its budget for the promotion of education in our country. Within a short time, our country has been able to create modern education system right from the tertiary level. * Medical services Medical service plays a very important role in increasing and enhancing the quality of human capital formation in a nation.