BHUTAN

Bhutan

Abstract

In this study, we try to explore the philosophy of "Gross National Happiness” in a holistic context. The main focus of the research is on “Gross National Happiness” and its relation with “Bhutan”. The research also analyzes many aspects of “Gross National Happiness” and tries to gauge its effect on Bhutan. Finally the research describes various factors which are responsible, and tries to describe the overall effect of “Gross National Happiness” on Bhutan.

Table of Contents

Abstract2

Introduction4

Economic Growth4

Monetary Policy6

Fiscal Policy6

Exchange Rates7

Other Observations7

External Sector8

Political Stability8

Bhutan Trade, Exports and Imports10

Bhutan Industry Sectors11

Conclusion11

Bhutan: Planning for Happiness12

Gross National Happiness (GNH)12

Bhutan

Introduction

This isolated landlocked Himalayan country, sharing borders with China and India, has a population of 672,500 (2005 estimate), with a female life expectancy of 54.5, one of the few countries to have a lower life expectancy rate for females than for males. It has a birth rate of 33.6 per 1,000, and an infant mortality rate of 98.4 per 1,000 live births. But by 2008, Bhutan had become a two-party parliamentary democracy. Based on agriculture, forestry, and hydroelectricity, Bhutan's economy is one of the smallest and least developed in the world. The current king has established an overarching development philosophy of "Gross National Happiness." It recognizes that there are many dimensions to development and that economic goals alone are not sufficient (Mittra, 2004). 

Economic Growth

Bhutan's economy is very small and is heavily dependent on exports of hydroelectricity, primarily to neighboring India. The implementation of the tenth five-year plan (July 2008-June 2013) and a new economic development policy (EDP) will be major challenges for the country. The government presented its budget documents and reports for fiscal year 2011/12 (July-June) to parliament in June 2011. According to the documents, the total resources that are expected to be available in 2011/12 stand at Nu32.5bn (US$730m). This amount will be made up of domestic revenue of Nu18.6bn and external grants of Nu13.9bn. External grants will make up 42.6% of total revenue and will cover 66.5% of capital expenditure, indicating that Bhutan remains heavily dependent on external aid and grants, particularly from neighboring India. Grants from the government of India will account for 74.3% of total grants (Mehra, 2004).

Against these resources, the government has budgeted for total expenditure of Nu37.9bn in 2011/12, representing an increase of 10.9% on spending in 2010/11. Since 2011/12 is the fourth year of Bhutan.s tenth five-year plan period, the government acknowledged that the budget was an ambitious one. It hopes to finish implementing most of the targeted programmes and policies contained in the plan during 2011/12, leaving the final year of the plan period (2012/13) for consolidation of existing programmes and initiatives. Of the total expenditure envisaged for 2011/12, current expenditure is projected at Nu17.2bn, representing a 9% increase compared with 2010/11. The rise is mainly on account of the full implementation of revised civil service salaries:

Salaries and wages will account for 42.4% of current expenditure and 39.2% of domestic revenue. The other important component of current expenditure is higher maintenance costs on account of growth ...