Embassy of India Thimphu,Bhutan

Development Plan Assistance

Embassy of India
Thimphu

India-Bhutan Development Partnership

India’s development support to Bhutan is an important pillar of our close and enduring ties. Over the past five decades since Bhutan’s first plan commencing in 1961, India's development support has helped advance Bhutan's developmental parameters significantly, and the Kingdom graduated from Least Developed Country (LDC) to Middle-Income Country (MIC) status in December 2023. The development partnership is largely governed by the overarching mechanism of bilateral Development Cooperation Talks or Plan Talks co-chaired by the Foreign Secretaries wherein the two sides jointly decide the quantum, composition, and modalities of the various components of support. In addition to the plan assistance support, GoI has provided financing support for construction of hydropower projects, which is considered a strategic resource by Bhutan. Since 2023, GoI has also provided financial support to Gyalsung Infrastructure, which is outside the plan framework.

13^th Five Year Plan (2024-2029): During Prime Minister Shri Narendra Modi’s state visit to Bhutan in March 2024, GoI announced development support of INR 10,000 crores for the 13^th FYP period. Of this, INR 7,000 crores has been earmarked for Project Tied Assistance (PTA) projects, INR 1,000 crores for High Impact Community Development Projects (HICDP), INR 1,500 crores for RGoB’s Economic Stimulus Programme (ESP) and INR 500 crores for Programme Grant.

71 projects under PTA, amounting to about INR 6,650 crores, have been agreed between the two governments and are under implementation. The projects under implementation cover areas such as agriculture, irrigation, ICT, health, education, scholarships, capacity and human resources development, infrastructure development, energy, and urban development.

572 HICDP projects amounting to INR 846 crores have been approved by the two governments and are under implementation. HICDPs, also known as Small Development Projects (SDP), are short-gestation projects mainly in areas such as drinking water supply networks, irrigation canals, farm roads, basic health units, and other rural infrastructure. The Programme Grant (PG) component is a direct budgetary support to Bhutan.

The ESP is a INR 1,500 crores programme launched by the Royal Government of Bhutan in May 2024 to reinvigorate the domestic economy through fiscal and monetary measures in priority sectors such as agriculture and livestock, cottage and small industries, tourism, start-ups, creative industry, Desuung Skilling Programme (DSP), One Gewog One Product (OGOP), youth employment and training, education, and rural home ownership. A separate ESP Secretariat in the RGoB oversees the execution, review and monitoring of the programme. Earlier during the 11^th Plan, GoI had provided a total of INR 500 crores to RGoB for a similar ESP.

12^th Five Year Plan (2018-2023): For the 12^th Five Year Plan from November 2018 - October 2023, GoI committed an amount of INR 5000 crores. A total of 83 Project Tied Assistance (PTA) projects and 524 High Impact Community Development Projects (HICDP) were undertaken during this period through 100% grant. A few major projects may be seen below:

(I) Gyaltsuen Jetsun Pema Wangchuck Mother and Child Hospital, Thimphu (inaugurated in March 2024)