Bhutan was a predominantly subsistence agrarian country until the 1960s. Agriculture and livestock raising are still the main pillars of the economy, with 85% of the population dependent on these two sectors. The agriculture sector, which includes livestock rearing and horticulture, contributes to 37 percent of GDP. Agriculture based on traditional methods takes precedence over farm mechanization and modern methods. The major crops grown by Bhutanese farmers include rice, wheat, maize and potatoes. Apples, mandarin and cardamom are some of the main cash crops grown for the export market, namely India and Bangladesh. With a bulk of the population being farmers, agriculture is the main stay of their sustenance followed by a large extent with animal husbandry. Animal products such as cheese, butter and milk not only form a major diet for the farmers but also contribute to their income. With many farmers groups and cooperatives being encouraged by the Ministry of Agriculture and Forest, people have been encouraged to set up cooperative stalls where they can easily market their farm products.
The main crops are rice, maize, wheat and buckwheat while cash crops are predominantly potatoes, apples, and citrus such as oranges, cardamom, ginger, and chili. With the setting up of a fruit based industry in the capital, farmers from the nearby areas are able to market their fruit products and thereby earn additional revenue. Given the rich bio-diversity, Bhutanese have also been able to tap the forestry resources. Cane and bamboo works therefore form a source of income. Various cane and bamboo products now find their way into the market that is usually bought by the urban dwellers and the tourists. Industry and mining are still in the first stage of development but are expanding rapidly.
The export of hydroelectric power provides 30% of government revenue and is undeniably the biggest contributor to the Bhutanese exchequer. The Chhukha Hydro Power Corporation, the Tala Hydro Power Corporation, the Baso Chu Hydro Power Corporation and the Kurichu Hydro Power Corporation under the umbrella of Druk Green Power Corporation are some of the mega projects that churn out about 1500 MW of power, most of which are exported to our neighboring country India. With abundant water resources, Bhutan still has the capacity to generate about 30,000 MW of electricity. Bhutan also exports calcium carbide, wood products and cement. In other major export is agricultural product, including apples, oranges, cardamom, potatoes, asparagus, mushroom.
Over the decades, planned socio-economic development has bought about significant changes in the Bhutanese economy. Bhutan has recently applied to become a member of the World Trade Organization. Major exports are hydroelectric power, horticulture products, wood based products and minerals. Consumer goods and essentials like rice, salt, petrol and kerosene make up part of its imports.
Tourism is the greatest source of hard currency. Although the number of visitors to the country is not restricted, it is regulated by the high tariff on tourists in keeping with the government’s policy of preserving culture and cautious modernization. Even though there is many niche markets such as eco-tourism and cultural tourism that offer significant growth potential and are consistent with other development objectives, these niches are yet to be explored to their full potential.
As Bhutan’s major trading partner India is market to 90 percent of its exports and source for 70 percent of its imports. The Bhutanese currency Ngultrum is pegged at parity to the Indian Rupee, and the two countries have a free trade agreement. Bhutan also enjoys a preferential trade agreement with Bangladesh.