Economy & Happiness

Bhutan’s Economy: Agriculture, Hydropower, and Guided Growth

Agriculture: The Foundation
Agriculture forms the backbone of Bhutan’s economy, engaging nearly 60% of the population. Most Bhutanese practice subsistence farming. However, the nation relies heavily on imports from India for other basic necessities, making it one of the world’s smallest economies.

Hydropower: Driving Economic Growth
Bhutan’s abundant rivers provide a significant advantage: hydropower generation stands as the country’s primary source of revenue. This sector fuels much of Bhutan’s economic growth.

Tourism: High-Value, Low-Impact
Tourism ranks as the second-highest revenue generator. To preserve its unique culture and environment, Bhutan carefully controls this sector through a policy limiting tourist numbers. As a visitor, you directly support this vital part of the economy.

Trade Relations & Challenges
Bhutan bolsters its economy through trade, primarily with India. Key features include:

• Currency Alignment: The Bhutanese Ngultrum (Nu) pegs directly to the Indian Rupee (INR) at a 1:1 value.
• Regional Cooperation: Bhutan actively participates in SAARC, SAFTA, and BIMSTEC.
• Trade Deficit: Bhutan imports significantly more than it exports, primarily from India, creating persistent trade deficits that challenge the economy.

Investing in Welfare
Despite economic constraints, the Royal Government of Bhutan prioritizes its people’s well-being. It provides essential foundations for development – education and healthcare – entirely free of cost.

Gross National Happiness: Guiding Development
Bhutan executes national development through Five-Year Plans, uniquely guided by the philosophy of Gross National Happiness (GNH). Established by His Majesty the Fourth King, Jigme Singye Wangchuck, GNH ensures every program carefully protects Bhutan’s rich environment, culture, and traditions. This scientific model focuses on creating conditions for genuine happiness and wellbeing, structured around four pillars and nine domains.

(Learn more about GNH’s principles under our dedicated GNH tour plans.)