The Sorry Saga of Bhutan's North

The Sorry Saga of Bhutan's North
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Monday, September 4, 2006


Poverty: a rural story

Posted on Monday, September 04, 2006, @ 03:09:52 EDT

4 September 2006- Every four in five Bhutanese poor live in the rural areas according to the Bhutan Common Country Assessment 2006 report published by the Bhutan UN office.The report identifies the main causes of poverty as limited access to markets, limited arable land, few rural finance schemes, limited programmes focused for the poor, heavy dependence on agriculture, and limited rural based planning.

According to the Bhutan living standard survey, 2003, about 32 percent of Bhutanese were living in “income poverty.” Poverty was predominant in the east with 49 percent of the poor living there.
Constrained by the distance from the market and the lack of infrastructure and a population of just over half a million, the consequent small domestic market limited the scope of specialisation and reaping the economies of scale, the report states.
Scarcity of labour compounded by illiteracy and unskilled labour in agriculture also dwindled agriculture productivity.
With only 7.8 percent arable land and small land holdings of almost 70 percent of farmers owning less than five acres of land, which was relatively infertile, made the land generally unproductive.
Limited rural finance schemes also limited the prospect of growth.
Today, only the Bhutan Development Finance Corporation Limited offered a few schemes but even those were skewed towards the better-off dzongkhags states the report.
The dependence on agriculture was high and rural communities lacked the skills to diversify to non-farm activities. “Bhutan is hampered by the lack of data for employment planning and a lack of capacity in the Ministry of Labour and Human Resources for liaising with employers to determine what skills are needed and where,” the report states.
In light of limited programmes focused for the poor, the report noted that the “government, both at the center and within the dzongkhags, has very limited experience in developing such focused programmes…” It recommends for a need to revisit Bhutan’s strategy for equitable development.
The government has, however, placed a special focus to poverty alleviation. In the ninth plan, nearly 25 percent of the total budget outlay was given to health and education combined making Bhutan one of the few developing countries that allocated more than 20 percent of its budget to the social sector.
Bhutan had also seen some achievements over the years with a move from a low to a medium human development category. The proportion of people living under the poverty line decreased from 36.3 percent in 2000 to 31.7 percent in 2003.
According to the report, the priorities for reducing poverty were to develop a skilled labour force and look into high-value low-volume business for export and tourism. Economic diversification and a need to develop the financial sector to boost private sector expansion were recommended with a focus on small and medium sized enterprises, particularly in rural areas.
Other challenges include access to micro finance in the rural areas, more arable land to increase production, differentiated programmes for the poor and women to information, market, health care education and other socio-economic opportunities.
The need to maintain and use poverty data in implementing national policies was also recommended.

By Tashi Dorji

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