Bhutan: New Government, Old Challenges

 Keywords: Bhutan, 2024 Elections, Economy, Tourism, Unemployment, India, China

Date: 19th Feburary 2024

As the serene Himalayan nation of Bhutan conducted the nation’s fourth general election, the world watched with interest as a new chapter in Bhutan’s unique journey towards democratic governance unfolded. The 2024 elections symbolise the continued consolidation of democratic practices in a country that transitioned from a traditional monarchy to a parliamentary style of government in 2008. 

Former Prime Minister Tshering Tobgay’s People’s Democratic Party (PDP) returns to power after winning 30 of the 47 National Assembly seats. Founded in 2007, the PDP first came to power in 2013. The 2024 elections witnessed about a half a million voters deciding between the candidates from the two major political parties, the Bhutan Tendrel Party (BTP) and the PDP. 

While Bhutan's democratic experiment has garnered international praise, it has not been without challenges. Ensuring political stability while managing the delicate balance between tradition and modernity remains a constant consideration. Additionally, issues such as economic diversification, youth unemployment, and maintaining environmental sustainability pose ongoing challenges for the nation. 

This year's election was held against the backdrop of several economic concerns. Bhutan’s tourism economy is still struggling from the long-term repercussions of the Covid-19 outbreak. The country has a youth unemployment rate of 29 percent, while more than half of Bhutan’s population is below 30 years old. This has been forcing a large number of people to immigrate to foreign countries. 

In its electoral campaigns, the PDP promised to implement plans to reduce unemployment over the next five years and explore the possibilities of establishing infrastructural linkages to enhance exports. Over the last five years, Bhutan’s GDP has grown at a gradual pace of an average 1.7 percent. 

The PDP’s victory can be traced to its commitments to stimulate the investment needed to boost Bhutan’s economy and address the issue of youth unemployment. The PDP plans to revitalise the social sector, empower the rural economy and rebuild the economy. 

Achieving a balance between economic growth and sustainable development is likely to form a major challenge for the new PDP government. In 2023, Bhutan decreased its Sustainable Development Fee (SDF), a tourist levy used to offset carbon emissions from tourist activities, by half (from US$ 200 per night to US$ 100) in an effort to assist the country’s tourism industry recover from the setbacks created in the aftermath of Covid-19 pandemic. 

The SDF was a key issue leading up to the elections, showing contradictions between favouring economic progress and the need to safeguard the environment. During its election campaigns, the PDP vowed to examine the SDF and eliminate hurdles to the growth of the tourist sector. Alongside this, the issue of out migration and unemployment are two major issues that the new government will have to deal with. 

During his campaigns, the new Prime Minister Tobgay warned of “unprecedented economic challenges and mass exodus” and vowed to invigorate the economy by attracting more foreign investment and developing the tourist industry. 

The new Bhutanese administration also has the difficult challenge of managing regional power dynamics. Although Bhutan does not maintain formal diplomatic relations with China, Lotay Tshering, the former prime minister, signed a bilateral cooperation agreement with Beijing in October 2023, outlining the responsibilities of a joint technical team in establishing the boundary between the two nations. China has also been wooing Bhutan with financial and security aid through programs like the Global Development Initiative and Global Security Initiative. 

These developments significantly raised concerns for the Indian government. Against this backdrop, the newly-elected Prime Minister Tobgay is believed to be better aligned with Indian interests, and thus rendering possibilities of addressing India’s strategic concerns in the region. 

As Bhutan’s new government assumes office, this is an excellent time to examine and improve the whole scope of bilateral cooperation between India and Bhutan. The changing circumstances provide an opportunity for India and Bhutan to strengthen their collaboration across all sectors to assure regional stability, security, and shared prosperity. 

India-Bhutan efforts to develop new cross-border connectivity will support Bhutan’s ambitious smart city project at Gelephu on the Bhutan-Assam border. Both nations have agreed to conduct the final survey for a 58 km cross-border rail link between Gelephu and Kokrajhar in Assam and further establish a second rail link of roughly 18 km between Samtse in Bhutan and Banarhat in West Bengal’s tea gardens.  

Bhutan plans to build an international airport in Gelephu as part of the Sarpang district Special Economic Zone will provide access to air travel for populations in Northeast India. These developments aim to improve connectivity, boost tourism, and promote Bhutan’s Special Economic Zone initiative with the potential to increase trade and tourism earnings for Bhutan, which has experienced hardships in recent years.

Sreedipta Roy studies political science in the Department of International Relations at Jadavpur University, Kolkata.

Disclaimer: The views expressed above and the information available  are those of the author/s and can therefore in no way be taken to reflect the position of Asian Confluence