Bhutan’s economy is one of the world’s smallest. It is primarily based on select sectors such as agriculture, forestry, tourism and hydroelectricity. The economy is estimated to have expanded by 8.4% in the fiscal year 2013 (ended 30 June 2013). Bhutan’s economy is closely aligned with that of India’s through strong trade and monetary links and is dependent on India’s financial assistance.

Agriculture and forestry provides the main livelihood for more than 69% of the population. Agriculture consists largely of subsistence farming and animal husbandry. Many Bhutanese still live in the country side and although statistics reveal approximately 1 in 5 of the rural population living under the national poverty line of less than Ngultrum 1,100 per person per month, a majority Bhutanese have a shelter over their head and are leading self-sufficient lives. Rugged mountainous terrain has always hindered modern development but despite all the challenges, Bhutan has embraced 21st century with a smile and development progress have never been better. Today, every village has access to basic amenities like clean drinking water, basic health care, education, road connectivity and electricity. Even the remotest of villages are connected to telecommunications network.

Farmers in the villages supplement their income through sale of dairy products like milk, cheese, and butter. Farmers’ cooperatives are initiated throughout the country supplying people with organic farm fresh produces.

Rice, maize, wheat and buckwheat comprise the staple crops while apple, oranges, potato, cardamom, and chili make up the bulk of the cash crop.

Rural Enterprise Development Sector

This is an answer to the interlocking challenges of ensuring sustainable livelihoods for the rural poor and boosting agricultural economy as well as stemming rural-urban migration. Resources for these cottage-based industries are available in the rich biodiversity in the form of canes, bamboos and woods. People in the rural areas produce bamboo and cane products for sale to both locals as well as to tourists.

Tourism Sector

Bhutan enjoys an international reputation for its cautious approach to all development programs, according high priority on conserving the nation’s rich and diverse cultural heritage. Since its introduction in 1974, tourism in Bhutan has followed a policy of cautious growth epitomized by the slogan ‘High value, low impact.’ Tourism has been recognized for its potential to be a major economic sector. It has been a source of major employment for the job market. Bhutan has chosen ‘Ecotourism’ as the tourism development path to the world, and through this Bhutan aspires to positively enhance the conservation of the environment, cultural and religious heritage and at the same time respond to the needs of the local communities.

A total of 105,402 tourists visited Bhutan in 2012, with a total revenue generation of US$227 million. Tourism sector now represents more than 6% of GDP and provides employment to roughly 25, 987 people.

Hydropower Sector

Hydropower is an enormous natural resource endowment. It has been the primary source of energy for domestic consumption and local industrial power needs and has been the major national export and revenue earner for over the last two and half decades. The sector is the engine of growth for the economy.

Hydropower sector continues to drive the economy and contributes to a quarter of the nation’s Gross Domestic Product (GDP) and around 40% of total national income. The Chukha Hydro Power Corporation, Tala Hydro Power Corporation, Baso Chu Hydro Power Corporation, and Kurichu Hydro Power Corporation are some of the existing mega power projects in the country. Hydropower resource development for export to India remains at the core of Bhutan’s economic development strategy. Ten other hydropower projects with a total capacity of 11,636 MW of electricity are currently underway.


The Manufacturing sector is another major contributor to national revenue. With the industrial sector established in Pasakha, small scale industries such as cement plants, calcium and carbide, steel and Ferro silicon, soft drinks and wood based industries have entered the production line.

Bhutan’s economy has expanded at a robust pace driven by the hydropower sector. Per capita gross national income (GNI), one of the highest in South Asia region, has consistently risen from US$ 730 in 2000 to US$ 2,070 in 2011.