Governance under the Fourth Druk Gyalpo – Part I

The Fourth King, His Majesty Jigme Singye Wangchuck had bolder and broader economic vision that was proclaimed in His Coronation speech on 2ndof June in 1974:

“The most important task before us at present is to achieve economic self-reliance to ensure the continued progress of our country in the future. Bhutan has a small population, abundant land and rich natural resources and sound planning on our part will enable us to realize our aim of economic self-reliance in the near future.  If the Government and people join hands and work with determination, our people will achieve prosperity and our nation will become strong and stable. Today we are extremely happy to have with us representative of friendly countries and other guests to participate in our celebration.”

His Majesty the King Jigme Singye Wangchuck introduced a unique development philosophy of Gross National Happiness (GNH) that had tenets to mixed economic system with the primary objective to promote social welfare state with some features of capitalism, and retaining attributes of socialist-communism. The concept of GNH is a practical fusion of Buddhist spiritual values and the economic principles promoting a balance between material and non-material development.  Almost akin to the Buddhist Economics, the GNH puts emphasis on the three intertwined and interdependent aspects of human co-existence: the individual, society and the environment.

The basic precepts and premise ascribes to work on three functions: to give man a chance to utilize and develop his aptitude, to enable him to overcome his self-aggrandizement by engaging with other people in common tasks; and to bring forward the goods and services needed for a better existence.  It has incorporated indigenous practices and culture alongside its modern, western-style institutions and, therefore, exhibits a non-linear developmental approach. In most countries, development is almost universally at odds with indigenous peoples and their cultures.

The development philosophy of GNH goes along with the social welfare state, where the government’s primary objective is to serve the needs of its people and ensure well-being of all its citizens. Bhutan still remained mostly an agrarian country, yet its citizens were provided with the benefits that come with the industrial civilization such as improvements in sanitation and healthcare. The government provides several facilities to its citizens through free basic education and health care, housing, and other social amenities. Bhutan’s social welfare state provides equal opportunity and assures individual liberty.

Like most of the economies in the world today, Bhutan has consciously followed mixed economic systems, with public and private ownership and has free-markets with state interventionism. The big industries that exist in Bhutan are largely hydropower, mining, construction, and tourism. Towards the end of reign by His Majesty the Fourth Druk Gyalpo, except for the hydropower, all state as well as private monopolies were broken up. Private sector was involved in all industries, such as tourism, mining, construction, airlines, transportation, banking and non-banking services, mobile, trade and commerce.

His Majesty the Fourth Druk Gyalpo was always cautious from ills of capitalism and introduced mass-scale production in eco-friendly industries such as hydropower and tourism, whereas mining industries were limited to small-scale productions. Bhutan has been committed for environment sustainability and can be observed through the policies of the Fourth Druk Gyalpo fixing proportion of land under protected area status, proportion of land under forest cover, creation of sustainable conservation finance, mainstreaming environment concerns into development, reliance on hydropower (eco friendly) for domestic and revenue generation through exports, and a ‘low impact, high value’ approach to tourism.

Globalization is a homogenizing force, importing western culture along with capitalism as symbolized by ubiquitous western-style dress and fast-food. However, this is not the same in Bhutan. Instead, one can find a thriving indigenous culture and Buddhist ethos with Western technologies and gadgets. The emblematic of Bhutan’s aberrant approach to development is the incorporation of indigenous values, beliefs and institutions along with the Western approach. His Majesty said “Bhutan must modernize and not westernize”.   For instance, Bhutan has been promoting traditional medicine in parallel with the Western Healthcare system. Bhutan always rejected those developments that are judged harmful and will affect the well being of people. Bhutan introduced several protectionist policies and strict regulations, not to kindle capital growth, but to prevent its destructive emergence.

Several elements of neo-liberalism policies were implemented under the leadership of His Majesty the Fourth Druk Gyalpo. Bhutan gradually advanced decentralization and from monarchy to a parliamentary democracy, starting 1981. The decentralization reforms implemented accompanied deregulation policies and promoted private sector development, in full recognition of the need to bring services closer to the public. His Majesty the Fourth Druk Gyalpo divested the state-owned corporations as well as private sector. Several government agencies, especially in sectors of banking and insurance, telecom, transport, mining and industries, were corporatized and privatized. For instance  Khothakpa mines (1993) and Bhutan Government Transport System (1985-1991) were privatized. Several Agencies were corporatized, such as: Bank of Bhutan, Bhutan Power Corporation, Bhutan Telecom, Royal Insurance Corporation of Bhutan, Bhutan Tourism Corporation. The state monopoly in banking sector was broken up by establishing Bhutan National Bank, Druk PNB Bank and Tashi Bank. His Majesty also introduced self-reliance policy for the first time in the history of Bhutan by establishing three revenue generating sectors in 1970s, i.e, hydropower, mining, and tourism sector.

His Majesty Jigme Singye Wangchuck’s political-economic vision echoed the fiscal conservatism.  It is a fiscal policy and fiscal responsibility that generally advocates for low taxes, reduced government spending, minimizing government debt and promoting space for privatization. His Majesty’s fiscal conservatism was akin or analogous to classical liberalism or American National System advocated by Hamilton:

“(a) protecting industry through selective high tariffs (especially 1861–1932) and through subsidies (especially 1932–70) (b) infrastructure development (c) a strong national bank with policies that promote the growth of productive enterprises rather than speculation.: 

“to become economically independent and nationally self-sufficient. The creation of a strong central government able to promote science, invention, industry and commerce, was seen as an essential means of promoting the general welfare and making the economy of the United States strong enough for them to determine their own destiny.”

Edmund Burke argued that government does not have the right to run up large debts and then throw the burden to the taxpayer. While His Majesty the Fourth King pursued a policy of “achieving economic self-reliance to ensure the continued progress of our country’ He was always mindful of sustainable debt and the creation of intergenerational burden.  He was judicious both in private and official life.  He was truly conscious and abhorred deficit spending, repeatedly called for the reduction of government spending, required prudent and cautious management of the national debt and judiciously balancing the national budget. He adored when late Father Mackey submitted the phrase in Wangdiphodrang “cut your coat according to your cloth” which spoke much of his inclination and preference in life. This inclination molded the eco-political paradigm of Bhutan during his reign.

His Majesty Jigme Singye Wangchuck’s perception resembled Schumacher’s theory that “Small is Beautiful” and “Small is possible” and Bhutan is small and absolutely possible for a planned development and strengthening sovereign Bhutan to become economically independent and nationally self-sufficient.  Hence, His Majesty the Fourth King’s economic vision proclaimed during the Coronation combined conscious development and environment conservation was also analogous with what Amartya Sen pointed on the aims of economic and social well-being of people and economic growth:  “Economic growth is one aspect of the process of economic development”.

To be continued…

Contributed by

Justice Sonam Tobgye (Retired)

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