Bhutanese economy is predominantly agrarian with almost 85 per cent of population still lives in rural areas depending on agriculture for their livelihood. Agriculture and livestock rearing contribute about 45 per cent to Bhutan’s GNP. Forestry contributes 15 per cent to the GNP and industry and mining 10 per cent. The food crops are rice, maize, millet, wheat, buckwheat and barley. The cash crops include apples, oranges, potatoes, cardamom and mustard. Bhutan exports agro products like apples, oranges, mushrooms, canned fruit and jams. The country also exports forestry products like timber and lemon grass oil. Cement, Ferro alloys, calcium carbide, coal and gypsum are also exported.
The country’s largest source of earning is the hydroelectric power that contributes about 25 per cent of the government revenue. With abundant water resources, Bhutan has the total capacity to generate about 30,000 MW of electricity. The 336 MW Chhukha hydroelectric power project on Wangchu commissioned in 1986 was the biggest contributor to Bhutan’s exchequer till the commission of Tala project. The 1020 MW Tala hydroelectric power project on Wangchu was successfully commissioned in 2006. Numerous new hydroelectric power projects are on the pipeline such as Punatshangchu I and II, Mangdechu, Dagachhu, Sunkosh and Kholongchu hydropower projects. Almost all the hydropower power generated in Bhutan is exporting to India.
Tourism is also the significant foreign exchange earner. The manufacturing sector, although small, contributes significantly to the economy. Bhutan’s economy is basically import based, with 80 per cent of goods imported from India and other neighbouring and third countries. The currency, ngultrum, is pegged to the Indian rupee. Over the five decades of rapid socio-economic development has transformed a medieval country into a modern and developing nation. Bhutan’s economy is one of the smallest in the world but has seen impressive growth over the years. The GDP has grown to US$1,584.9 million by 2010 and at US$2,277.16, today Bhutan boasts of having the highest per capita GDP in South Asia.