The average GDP growth rate in the first four years of the 11th plan was 6 percent.

Targeted growth rate was 10 percent.

The economy grew from Nu 105B in 2013 to Nu 148B in 2016, and is estimated to reach Nu 183B this year.

According to the 11th Plan final document, delay in commissioning of the hydropower projects disrupted the GDP growth of the country.

The delay in commissioning of the mega hydro projects also affected another 11th Plan target-percentage of internal revenue to total expenditure. Based on the assumption that the hydro project would come on line as per the initial deadlines, it is targeted to finance 85 percent of the country’s total expenditure from domestic revenue.

Today, the achievement is 62 percent, down from 65 percent in 2013. However, this doesn’t mean that domestic revenue has declined. In fact, the domestic revenue has increased by about 20 percent in the 11th Plan, which can be attributed mainly to increased revenue from taxes and dividends.

Expenditure in the 11th Plan has also increased. Capital expenditure saw an increase of about 47 percent, from Nu 74B in the 10th Plan to Nu 109B in 11th Plan. Likewise, the current expenditure in the 11th FYP was Nu 114B, an increase of Nu 40.20B from the 10th Plan.

Over the past years, analysts have poured their concerns over the Bhutanese economy’s dependence on hydropower (single sector).

Past trends show that the country’s economic growth spiked with every addition of hydropower project on line. For instance, in 1986, the 360 MW Chukha Hydropower project was commissioned and the country achieved a growth rate to 25.4 percent the following year.

The share of electricity to GDP also rose to 19 percent.

In 2006, with the commissioning of 1020 MW Tala hydropower project GDP growth spiked to 19.7 percent  the following year and the share of electricity to GDP also increased to 22 percent.

However, in recent times there have been efforts to diversify the economy base. It is also one of the recommendations of the 11th Plan document to diversify the export market. Efforts such as improving the ranking on ease of doing business index, promoting cottage and small industries and building the image of brand Bhutan has been underway but yet to yield results.

One of the target of the 11th Plan to achieve economic development was to up the country’s export (without electricity to more than Nu 28B), from Nu 15B in 2012. This target would also have been achieved if initial deadlines of the project were achieved. Today, exports without electricity is Nu 25B and it is reflected as an indicator on track.

In addition to the slow progress and delay in the hydropower construction, demonetisation issue, and the introduction of goods and services tax (GST) in India disrupted Bhutan’s macroeconomic prospects at the end of the Plan.

Because of this, the World Bank revised the country’s economic growth projections from 9.9 percent to 6.8 percent in 2017 and revised growth of 2018 from 11.7 percent to 7.7 percent.

It has also been estimated that a year’s delay in the completion of hydropower project will reduce GDP growth rate by 3 to 4 percentage points, exports by US$250–300M, and revenues from tax, dividend, and royalty by 0.5 to 1.0 percent of GDP.

Tshering Dorji