Bhutan’s Prime Minister L T Tobgay (left) paid a visit to his Indian counterpart Manmohan Singh after winning electionsBhutan is marching forward, saying happiness is much more important than economic growth. When global recession sent growth plunging in many countries, Bhutan witnessed a GDP growth rate of 8.2 per cent, according to an estimate by the Asian Development Bank in 2012. Back in the 1980s, Bhutan was much poorer than India. Today, Bhutanese are richer than Indians: In 2012, its per capita GDP was $2,986 against India’s nearly $1,500.
India is a major factor behind the country’s growth and happiness. A lot of this GDP growth was spurred by giant hydropower projects that India has been building in Bhutan for four decades. India also “advises” it on its foreign and defence policies. India’s grants fund Bhutan’s Five Year Plans; it supported 74 per cent of the 10th Plan and 20 per cent for the 11th Plan.
The Border Roads Organisation’s Project Dantak builds and maintains most roads in Bhutan. In 1961 it built the first all-weather road in the country between Phunseling near the Indian border and Thimphu. India also provides petrol and cooking gas to Bhutan at the same subsidised rates at which it provides to its own population.
Bhutan is so dependent on India that the withdrawal of subsidies on petrol and cooking gas between the two rounds of polling this year spurred whispered allegations of “interference”. The withdrawal switched the fortunes of the People’s Democratic Party (PDP), which was in the opposition since the kingdom became a constitutional monarchy. In the primary round of polls in May, PDP trailed the ruling Druk Phuensum Party but came out on top in the second round of polls in July. PDP’s leader, now the prime minister, Lyonchhen Tshering Tobgay, is seen as being pro-India. The Bhutanese see the withdrawal of subsidy as a crude attempt by India to influence the elections. They are unambiguous that India did this to teach Bhutan a lesson.
India felt its former prime minister Jigme Thinley was cozying up to China, Bhutan’s other giant neighbour. In 2012, Thinley met that country’s prime minister Wen Jiabao in Rio de Janeiro. Under Thinley’s leadership, Bhutan was also planning to open diplomatic relations with China. Bhutanese say this is realpolitik; they have to strike a balance in their relations with their two giant neighbours. They hold regular talks with China to settle the demarcation of the international border. But Bhutan’s expansion of international reach irked India, which has so far handled Bhutan’s foreign policy.
In August, after India refused to shell out Rs 550 crore as the remainder of its commitment for Bhutan’s 10th Five Year Plan, Bhutanese look at India as a cantankerous parent. To improve the souring relation, Bhutan recently bought two helicopters from India for search and rescue operations as proof that bilateral ties were going strong.
While Bhutan looks up to India for growth and development, India’s interest in Bhutan is obvious. Bhutan is strategically located as a buffer against China. It is also a source of cheap and abundant electricity for India’s north-eastern region. Though India sees GNH as a hurdle to expand hydel projects in Bhutan, foreign ministry officials say it will continue to provide grants and loans to the government. This effectively ties Bhutan’s economy and future to India.
As Bhutan taps its abundant rivers and streams to generate hydropower and expands the scope of tourism, it will be interesting to see how the kingdom retains its forest wealth and principles of GNH. Its balancing act holds lessons for the world.
