New Delhi: Less than a week after Bhutan Prime Minister Tshering Tobgay’s visit to India and ahead of the Lok Sabha elections starting next month, Prime Minister Narendra Modi will be going on two-day visit to the Himalayan kingdom this week. This will be Modi’s third visit to Bhutan since he became Prime Minister. He had earlier visited that country in 2014 and 2019.
The Prime Minister will pay a state visit to Bhutan from 21 to 22 March, Ministry of External Affairs said in a statement on Tuesday. "The visit is in keeping with the tradition of regular high-level exchanges between India and Bhutan and the Government’s emphasis on its Neighbourhood First Policy. During the visit, Prime Minister will receive audience with His Majesty Jigme Khesar Namgyel Wangchuck, the King of Bhutan and His Majesty Jigme Singye Wangchuck, the Fourth King of Bhutan. Prime Minister will also hold talks with the Prime Minister of Bhutan H.E. Mr. Tshering Tobgay," the Ministry said.
India and Bhutan, the MEA added, share a unique and enduring partnership which is rooted in mutual trust, understanding and goodwill. "Our shared spiritual heritage and warm people to people ties add depth and vibrancy to our exceptional relations. The visit will provide an opportunity for both sides to exchange views on bilateral and regional matters of interest and deliberate on ways to expand and intensify our exemplary partnership for the benefit of our peoples," the statement read.
On March 14, Tobgay held a meeting with Modi in New Delhi during the course of which the former extended an invitation to the latter to visit Bhutan. This was Tobgay’s first official visit abroad after being elected as Prime Minister of his country for the second time in January this year.
Following the meeting, the two sides issued a joint statement in which Modi stated that India remains committed to partner with Bhutan in its quest to become a high-income nation in consonance with the vision of Bhutan King Jigme Khesar Namgyel Wangchuck and the priorities of the people and the Royal Government of Bhutan.
“Prime Minister Modi reiterated India’s commitment to step up support for Bhutan’s 13th FYP (Five-Year Plan) including to consider request for the Economic Stimulus Program,” the statement read. “India’s development assistance will be geared towards the development of infrastructure, building connectivity in its broadest form which includes road, rail, air and digital connectivity, and in sectors like agriculture, healthcare, education, skilling and cultural preservation.”
In the Interim Budget 2024-25, the Ministry of External Affairs has been allocated Rs 22,154 crore for fiscal year 2024-25. The largest share of aid portfolio under New Delhi’s Neighbourhood First policy has been granted to Bhutan with an allocation of Rs 2,068 crore against Rs 2,400 crore in 2023-24.
To bring his country out of the economic morass that it is finding itself in, Tobgay had announced an ambitious Rs 15-billion economic stimulus plan with support from India. Making this announcement at a meet-the-press session in Thimphu on February 29, Tobgay said that a specialised task force has been established to craft a comprehensive strategy and supervise the implementation of the plan.
Ahead of the National Assembly elections in the Himalayan kingdom, Tobgay’s People’s Democratic Party (PDP), in its manifesto titled ‘Contract with Bhutan’, promised to pull Bhutan out from the economic doldrums. “Our nation’s economy is teetering on the brink of collapse,” Tobgay stated in a message to the people in the manifesto. “With an average growth rate of just 1.7 per cent in the past five years, our economy is at its worst in our recent history. The private sector, our main driver of growth, has become stagnant, with many businesses either closed or operating at reduced capacity. Youth unemployment has hit a record high of 28.6 per cent.”
He stated that Bhutan’s public debt is at its highest, particularly non-hydro debt at a whopping Nu 108 billion (Rs 108 billion). Foreign currency reserves have depleted to a level that threatens to breach the constitutional requirement. Fiscal deficits have widened while the national revenue stream has dwindled.
“A total of 80,614 Bhutanese people live in poverty in 2022,” Tobgay stated. “That is, almost one in eight Bhutanese is struggling to meet their basic needs for food and other basic necessities. Development in our rural areas has nearly come to a standstill. To make matters worse, in recent years, an unprecedented number of Bhutanese, including professionals and skilled individuals, have been leaving the country in search of better economic opportunities abroad.”
He stated that this has put immense pressure on public service delivery, affecting the country’s hospitals, schools, and public institutions. These unprecedented economic challenges and mass exodus of Bhutanese, he stated, are happening at a time when Bhutan is experiencing a steep decline in fertility rate, which currently stands at 1.8 per cent, below the replacement rate of 2.1.
“If we are unable to reverse these trends, the very viability of our nation will be in jeopardy,” Tobgay had cautioned the people. “If we do not course correct immediately, the very survival and sovereignty of our beloved nation will be at stake.” To rebuild and revitalise the economy and transform Bhutan into a developed nation, the PDP pledged to achieve some key economic goals.
As for India’s commitment to support Bhutan’s 13th Five-Year Plan, it is worth mentioning that New Delhi has been extending economic assistance to the Himalayan kingdom’s socio-economic development since the early 1960s when it launched its Five-Year Plans. India continues to be the principal development partner of Bhutan.
For the 12th Five-Year Plan, India’s contribution of Rs 4,500 crore constitutes 73 percent of Bhutan’s total external grant component. The key areas of focus of the government of India’s assistance include agriculture and irrigation development, information and communication technology (ICT), health, industrial development, road transport, energy, civil aviation, urban development, human resource development, capacity building, scholarship, education and culture.
“Prime Minister Modi appreciated His Majesty’s vision of the Gelephu Mindfulness City, which will lead to economic prosperity and development in Bhutan and in the region in a sustainable manner, and further strengthen economic and investment linkages between India and Bhutan,” the joint statement issued following the Modi-Tobgay meeting further read.
The Gelephu Special Administrative Region (SAR), called the Gelephu Mindfulness City, announced by the Bhutan King on the occasion of the Himalayan kingdom’s National Day in December last year is expected to be a game-changer for the region facilitating productive flow of capital and knowledge. The Monarch of Bhutan made the announcement soon after making an official visit to India in November last year. As part of the trip, King Wangchuk made his first ever official visits to the states of Assam and Maharashtra.
Gelephu Mindfulness City will be developed in Sarpang district of Bhutan bordering Chirang district in India’s northeastern state of Assam. Gelephu is one of three entry points to Bhutan from India, the others being Samdrup Jongkhar to its east and Phuntsholing to its west. During his National Day speech, Wangchuk said that South Asia is experiencing an unprecedented economic transformation.
“This is a period of growth and a period of immense opportunities for our region, which is home to around two billion people,” King Wangchuk said. “The land connection from Gelephu or Samdrup Jongkhar through Assam and northeast Indian states, to Myanmar, Thailand, to Cambodia and Laos, Vietnam, Malaysia and Singapore, is a vibrant economic corridor linking South Asia to Southeast Asia.”
This ambitious initiative, covering approximately 1,000 sq km from Taraythang Gewog to Singye Gewog in the Himalayan foothills, seeks to elevate Gelephu into a prosperous economic centre, not only benefitting Bhutan but also contributing to the broader South Asian region. In his address, Wangchuck highlighted the vision for the Gelephu SAR, recognising the influence of Bhutanese individuals living abroad in propelling the nation toward unprecedented socio-economic advancement. This commitment underscores the government’s dedication to harnessing the potential of its global diaspora.
Wangchuk said that the Gelephu SAR, as an economic hub, will have the autonomy to formulate laws and policies that are needed. It will have executive autonomy and legal independence. “The purpose of establishing this SAR is to create a vibrant economic hub,” the Monarch said. “There are economic hubs elsewhere that invite foreign investment by providing a conducive business environment and compelling incentives. Bhutan’s economic hub will offer all that and more.”
According to the joint statement titled ‘India-Bhutan Partnership for Shared Prosperity’ issued following the meeting between Modi and Tobgay on March 14, both Prime Ministers reiterated their firm commitment to expanding hydro-power cooperation and directed their officials to hold expeditious consultations on implementation modalities for new projects.
“The two sides expressed satisfaction with the progress in construction of the 1020 MW Punatshangchhu-II hydro power project and looked forward to its commissioning in 2024,” the statement read. “They noted with satisfaction the progress made towards finding a technically safe and cost-effective way forward on the Punatsangchhu-I hydro power project.”
The Punatsangchhu-II hydroelectric project in Bhutan that is fully funded by India is set to be commissioned in October 2024. Last month, ahead of its commissioning, Prime Minister Tobgay inaugurated the initial reservoir filling of the project in the presence of Indian Ambassador to the Himalayan kingdom Sudhakar Dalela.
Reservoir filling is an important activity in the concluding phase of constructing a hydroelectric power plant. This process typically involves finalising the river diversion scheme closure, initiating the functionality of discharge structures, and commencing powerhouse operations. Successful completion of this task marks the readiness to initiate power generation within the hydroelectric power plant.
The Punatsangchhu-II is a run-of-the-river hydroelectric power generating facility in the Wangdue Phodrang district of Bhutan. The project is being developed by the Punatsangchhu-II Hydroelectric Project Authority (PHPA-II) under an inter-government agreement between the Government of India and the Royal Government of Bhutan.
India and Bhutan share a longstanding and mutually-beneficial cooperation in the hydropower sector. Till date, the Government of India has constructed four major hydro-electric projects (HEPs) in Bhutan totaling 2,136 MW, including the 336 MW Chukha HEP, the 60 MW Kurichhu HEP, the 1,020 MW Tala HEP and the recently commissioned 720 MW Mangdechhu HEP.
According to the joint statement, both sides welcomed measures to enhance connectivity between India and Bhutan, including the development of rail and road connectivity and the upgradation of trade infrastructure for the seamless movement of people and goods. The sides noted with satisfaction the progress on opening of additional points for immigration and trading routes.
“The two sides noted the progress towards establishment of two rail-links Banarhat (West Bengal)-Samtse (Bhutan) and Kokrajhar (Assam)-Gelephu (Bhutan),” it read. “Northeast Frontier Railway (NFR) is undertaking the Final Location Survey (FLS) of the two rail-links in consultation with the Bhutanese side.”
It is worth mentioning that King Wangchuk’s announcement of the Gelephu SAR project coincided with the concurrent development of a 57.5-km railway line linking Kokrajhar in Assam with Gelephu. The Rs 10-billion project, a result of discussions between King Wangchuck and Modi during the former’s visit to Delhi, signifies a historic milestone in rail connectivity between the two nations. Recognising the pivotal role of smooth trade in fostering economic growth, there are plans to upgrade the existing Land Customs station at Dadgiri in Assam to an Integrated Check Post. This, combined with infrastructure enhancements on the Bhutanese side at Gelephu, will pave the way for a more efficient and streamlined cross-border trade environment.
During Modi’s upcoming visit to Bhutan, no agreement is likely to be signed given that the Model Code of Conduct has come into effect in India ahead of the Lok Sabha elections. However, why the visit assumes importance is also because of China's increasing presence in Bhutan, particularly along the disputed border between the Himalayan kingdom and its northern neighbour. This has raised concerns in India. India has been Bhutan's closest ally and has played a key role in protecting Bhutan’s sovereignty and security.
Bhutan acts as a buffer state between Asian giants India and China. Bhutan shares an international border with China running for 477 km. China has been claiming territories in Bhutan since publishing a map in 1961.
Then came the 73-day standoff between India and China at the Doklam tri-junction in 2017. The Doklam plateau holds significant importance for India's strategic interests. The conflict arose when China sought to extend a road into an area claimed by Bhutan. India raised strong objections, expressing concerns about the potential impact on its overall security interests.
Following multiple rounds of negotiations, the India-China face-off eventually concluded. Subsequently, in October 2021, Bhutan and China entered into an agreement outlining a “three-step roadmap” to accelerate talks and address their boundary dispute.
It is in the light of all these that Modi’s upcoming visit to Bhutan assumes significance.
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