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Bhutan’s Unique Success in Reducing Poverty
Image Credit: hktang / Flickr

Bhutan’s Unique Success in Reducing Poverty

 
 

The most striking feature of Bhutan’s socioeconomic trajectory has been the unprecedented progress made toward poverty reduction over the last two decades. When the country’s National Statistics Bureau reported that Bhutan’s poverty rate has been reduced to 8.2 percent in 2017 from 12 percent in 2012 the news hardly came as a surprise to the public, and quite rightly so. Between 2004 and 2012, the country’s poverty rate had been reduced by 19.7 percent and — over the past 13 years — the rate has been reduced by 23.5 percent, with an average annual reduction rate of 1.8 percent. The portion of the population living in extreme poverty also saw a drastic decrease from 5.9 percent in 2007 to 2.8 percent  in 2012 and 1.6 percent in 2017.

Sources point to the fact that the pace of Bhutan’s poverty reduction record has been the fastest relative to that of other countries in the South Asian region and those developing countries which were in the same league in 1990. Economic prosperity through improved living standards has contributed to decreases in the percentage of people living below the poverty line. Today Bhutan is one of the fastest growing economies, with an average annual GDP growth rate of 7.5 percent between 2006 and 2015, against the global average of 4.4 percent. The progress achieved in poverty reduction is also testified by its success in halving extreme poverty ahead of time, one of the eight Millennium Development Goals. This has also translated into improved life expectancy; the typical Bhutanese who had a probable lifespan of a mere 40 years in the 1950s would now go on to live 30 more years, with the country’s life expectancy reaching 70.2 years most recently. Bhutan is also on its way to graduate from its status as a least developed country (LDC) by 2023, and might become the first Asian LDC to graduate.

So, how did Bhutan attain such drastic levels of poverty reduction? There are no answers in black and white, only clues in the shape of inclusive initiatives undertaken over the years. While data related to poverty and its indicators came to the fore only in 2004 with the conduct of the first poverty analysis report — based on the Bhutan Living Standards Survey 2003 — the growing prosperity and wellbeing of the Bhutanese was carved out in the beginning of the 1960s, with the implementation of planned development in 1961 in the form of the First Five Year Plan. Over the decades, Bhutan underwent 11 phases of developmental programs through successive Five Year Plans — with varying initiatives targeted toward addressing poverty and raising socioeconomic standards. A glimpse into the past will explain that pro-poor initiatives with a push for expansion of social amenities, rural development, and income generation sources have been the common denominator of all successive Five Year Plans.

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Most importantly, numerous targeted poverty reduction programs were undertaken in the last two Five Year Plans in order to address the socioeconomic needs of the poorest villages and households in the country. One such initiative has been the Rural Economy Advancement Program (REAP), which was first piloted during the 10th Five Year Plan (2008-2013) and in the first two years of the 11th Five Year Plan (2013-2018). The program identified 75 villages as requiring targeted support from the government. The National Rehabilitation Program (NRP) was initiated by His Majesty’s Secretariat with the objective to reduce poverty by enhancing the productive asset base of marginalized households through provision of land, transitional and livelihood support, and socioeconomic facilities; pro-poor interventions ranging from construction and renovation of houses, supply of agricultural inputs, and income-generating interventions are being implemented under this broad initiative.

The Common Minimum Program was also implemented to uplift the livelihood and wellbeing of people in rural areas through the provision of basic infrastructure and socioeconomic facilities. Under this program, projects such as the construction of farm roads and the blacktopping of Gewog (village block) center roads, installation of rural banks and farm shops, provision of 100 units of free electricity to each and every rural household, and tax exemption for small-scale businesses in rural areas have been implemented.

With Gross National Happiness at the heart of its development philosophy, Bhutan has also taken significant strides in achieving global poverty reduction targets through coordinated integration and reinforcement. Given the holistic nature of their approaches, there is a great deal of convergence and synergy between the Sustainable Development Goals and Gross National Happiness. Of the 17 SDGs, 16 are found integrated and captured within the four overarching pillars of Gross National Happiness. Out of the 169 SDG targets, 143 targets have been found relevant to Bhutan and it has prioritized three SDGs in the last Five Year Plan, one of which is “poverty alleviation.”

One of the main drivers of prosperity in rural areas — besides the commercialization of agriculture — has been hydropower; the trickle-down effect of spillovers from the construction of hydropower projects in recent years, through expansion of roads, employment generation, and a boom in businesses surrounding project areas, has uplifted a large portion of the population from poverty. Increasing trade volumes in the form of exports of commercial crops to its neighboring countries, especially India and Bangladesh, have benefitted the poorer section of the population.

The Way Forward

The progress achieved by Bhutan in poverty alleviation through multifaceted initiatives over a short span of time is commendable and exemplary by any standards. Yet, against the face of other socioeconomic realities and imperatives that permeate the country at large, the future offers anything but room to bask in the glory of past achievement.

Poverty in Bhutan is by and large a rural phenomenon, with 11.9 percent of the rural population living in poverty relative to 0.8 percent in urban areas. Demography-wise, 62.2 percent of the country’s population is rural-based, and this grim reality is further augmented by the fact that a happiness survey published in 2015 found those residing in rural areas less happy than their urban counterparts. It was likewise observed that farmers are the least happy of all professions.

The incidence of poverty is also the highest among those households whose heads are 65 years and older; this indicates that there is limited capacity to engage productively in economic activity for the elderly and highlights the need to bolster safety nets. Another pressing concern in Bhutan is youth unemployment, as 10.6 percent of the youth are unemployed against the national average of 2.4 percent; on this front, too, much needs to be done.

The unique path traversed by Bhutan in alleviating poverty is exemplary in the strictest sense and will nonetheless be not without challenges. Against this backdrop, nothing is more sobering a reminder than a word of wisdom from the distant past. The 1629 legal code of the country reads: “If the government cannot create happiness for its people, there is no purpose for the government to exist. Insofar as the legitimacy of the government is predicated on maximizing the happiness of its people, advancing the living standards of the grassroots — which make up the majority of the population base — appears to be a step in the right direction.

Kezang Wangchuk is a diplomat with the Ministry of Foreign Affairs, Bhutan. He holds a Post Graduate Diploma in Public Administration from the Royal Institute of Management, Bhutan, and a Bachelor’s Degree in International Relations from Seoul National University, South Korea.

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