Regions and Countries

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p. 3 of 20 BACK | NEXT I. Country Performance Assessment A. Economic Performance Assessment B. Poverty Assessment C. Assessment of Socio-Environmental Performance D. Governance: Sound Development Management E. Implementation Assessment II. Country Operational Strategy III. Sector Strategies IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Bhutan : I. Country Performance Assessment

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B. Poverty Assessment

12. As with several other economic indicators in Bhutan, reliable data on incomes are not available. The United Nations (UN) classifies Bhutan among the least developed countries, ranking 142nd out of 174 countries in its human development index (HDI) for 1998 (published in 2000).

13. However, the quality of life in Bhutan seems higher than might be inferred from this HDI ranking. This ranking is based on the UN estimate of Bhutan's population (over 1.8 million) rather than the Government's official estimate of 650,000. Indeed, after allowing for these data adjustments, the United Nations Development Programme (UNDP) office in Thimphu concluded that the HDI index for 1996 would have ranked Bhutan 130th out of 175⁶ countries instead of 155th in the official Human Development Report. Reflecting official data and using the UN's HDI classification methodology, Bhutan's Planning Commission Secretariat calculated that the HDI increased from 0.325 in 1984 to 0.521 in 1994 which, if accurate, would be a significant achievement. Either of these revisions would place Bhutan in the "medium human development" country group rather than the "low human development" group, a relatively rare distinction for an otherwise "least developed country."

14. The estimated $586 GNP per head in 1998 is based on the Government's official population estimate and is considered a more accurate reflection of reality. However, while higher than in some other countries, this basic GNP level of $586 per head in Bhutan is still low: some $1.60 per head per day. In this sense, therefore, income poverty is widespread.

15. The Household Income and Expenditure Survey (1992) revealed that the highest household decile received 36 percent of total income, while the lowest 50 percent received only 13 percent. With a Gini coefficient of 0.563, the survey indicated income inequality as well as low average monetary incomes. Similarly, the National Nutrition Survey in 1996 indicated that some 38 percent of children under five were malnourished (weight-for-age) and that 56 percent were stunted (height-for-age). Malnutrition is also a problem for at least 18 percent of women of childbearing age, and iron-deficiency anemia for some 60 percent of pregnant women. While reduced, the incidence of iodine deficiency is still a cause of goiter in about 14 percent of schoolchildren. The immediate causes of malnutrition are a combination of low dietary intake, inadequate child care, and the high incidence of infections, each partly caused by ignorance of proper practices and requirements rather than by lack of food per se.

16. These data are a cause for concern. However, while the Income Survey might reflect the situation with respect to monetary incomes and inequalities fairly accurately, one needs to study their precise impact on the life of an ordinary Bhutanese carefully. Improving access to potable water, sanitation, and free education and health facilities in Bhutan, together with a highly developed tradition for cooperation and labor-sharing-particularly in house-building, village road maintenance, grazing, irrigation, planting, and harvesting-alleviate the more pernicious manifestations of low incomes and inequalities. Cultural traditions, such as the close-knit family and village and the Government's social policies over many years, serve many of the people's basic needs.

17. Even though Bhutan is classified as a "low income food deficit country," its form of low-productivity subsistence agriculture is still generally sufficient to provide for household food security in most regions of the country. This appears to be related to the small size of the population and relatively equal distribution of landholdings. Coupled with this, the extended family and village systems provide security for the most vulnerable groups, and a system of lending/borrowing food during the off-season helps the poorer families, as do the Bhutan Food Corporation's "fair price" shops and the individual's access to wild forest produce.

18. Thus, while life in much of the country's rugged terrain can be harsh, particularly in the more remote rural areas and in winter, many of the characteristics of poverty found in other parts of South Asia and in Africa-and even among people of similar income levels-are not evident. The divide between rich and poor in Bhutan, therefore, does not show itself as being as wide as in several other developing member countries. There is no starvation, although there are seasonal food shortages, malnutrition, and micronutrient deficiencies; there is no urban begging, even though incomes are low and individual access to many consumer goods correspondingly restricted; housing conditions are generally good, although these are being stretched by rural to urban migration and are often substandard for those living as squatters on the edges of Thimphu and Phuentsholing and for road maintenance crews; and, while there are vulnerable and disadvantaged groups, these are not exploited in ways so commonly witnessed elsewhere. Nevertheless, rural living in particular is arduous, requiring long, laborious hours of work for small returns, while the limited road network often requires several hours' walk to reach health and education facilities, to buy supplies, or to transport meager farm surpluses to market. On the other hand, the yields of food crops have increased and new, higher value crops such as fruit and vegetables have been introduced to enrich diets and, where transportation permits, increased incomes. If the population continues to grow rapidly, however, the social situation and domestic perceptions of poverty could change.

19. Although data limitations preclude a definitive analysis of poverty, the overall picture cautions against making hasty interpretations and policy prescriptions that could be ill-suited to the particular context of Bhutan. Bhutan has what amounts in effect to a welfare state that, to the extent that can be sustained financially, mitigates many of the depressing effects otherwise associated with low incomes. On the other hand, the situation should not deter one from addressing the need to raise average incomes. The strategic challenge for ADB, therefore, is how to help raise income levels and, at the same time, to help strengthen the Government's success in addressing wider social issues through increased sustainability, coverage, and quality of social services.

20. Reducing poverty in these circumstances requires continued economic growth, together with the continued spread of health, education, and other facilities to encourage the inclusion of all groups in potential benefits, supported by targeting special assistance at those groups regarded as particularly vulnerable or disadvantaged. ADB would seem to be better equipped to support poverty reduction in Bhutan by promoting economic growth and social inclusiveness through interventions in physical and social infrastructure, private sector development, employment creation and improved economic management rather than targeting the especially vulnerable groups (many of whom live in very remote areas).

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