The Five Year Plans of Bhutan are a series of national economic development plans created by the government of Bhutan since 1961.
The government of Bhutan has played a pervasive role in its economy and development. Since 1961 the economy has been guided through development plans, which the Development Secretariat and later the Planning Commission directed, subject to the National Assembly's approval. In the World Bank's 1989 appraisal, "Coming late to the development scene, Bhutan was eager to avoid mistakes committed elsewhere. Although strongly dependent on foreign aid, it was determined to follow its own set of priorities, keep public finance on an even keel, build up a well trained but lean bureaucracy, and prevent environmental damage from overexploitation of the forests or uncontrolled growth of tourism." To help avoid further mistakes, the government used traditional social institutions and involved people at the local level in planning and implementation for their own district, subdistrict, or village. "As a result of these factors," said the World Bank, "development in Bhutan has been remarkably free from seeing economic, social, or cultural disruption."
History
India fully funded the First Development Plan (1961–66). The first plan, for which Nu107.2 million was allocated, and the Second Development Plan (1966–71), for which Nu202.2 million was allocated, focused primarily on developing modern budgeting techniques. According to some foreign observers, the first two plans failed to set priorities and achieve economic-sector integration as might be expected of genuine development planning. The major economic-planning emphasis was on public works, primarily roads; forestry; health care; and education.
To make planning more effective, the Planning Commission was established to formulate the Third Development Plan (1971–76), and the Druk Gyalpo served as its chairman until 1991. Under the third plan, public works, still primarily roads, continued to take a significant share of the Nu475.2 million development budget (17.8 percent) but had decreased from its 58.7 percent share in the first plan and its 34.9 percent share in the second plan. Education gradually increased (from 8.8 to 18.9 percent) in the first three plans. The second and third plans were paid for primarily by India, although about 3 percent of total funding became available through the United Nations, starting with the Third Plan. Despite amounts budgeted for planned development, there were additional capital expenditures outside the formal development plan, including public works (mostly road construction) and hydroelectric plants.
One of the major achievements of the Fourth Development Plan (1976–81) was the establishment of district (or dzongkhag) planning committees to stimulate greater local involvement, awareness of government development policies, and local development proposals. The committees, however, had no decision-making powers. Nevertheless, agricultural and animal husbandry came to the fore, taking 29 percent of the Nu1.106 billion allocated for the fourth plan. It was during the fourth plan that Bhutan made its first effort to establish the value of the GDP, which in 1977 amounted to Nu1.0 billion. In that year, GDP was distributed among agricultural and related activities, 63.2 percent; services, 13.1 percent; government administration, 10.4 percent; rental income, 8.1 percent; and manufacturing and mining, 5.2 percent. Per capita GDP was estimated at US$105.
The Fifth Development Plan (1981–87) sought the expansion of farmland to increase the production of staple crops, such as rice, corn, wheat, barley, buckwheat, and millet. The plan also emphasized improvements in livestock, soil fertility, plant protection, and farm mechanization. Its total planned allocation was Nu4.3 billion, but the actual outlay came to Nu4.7 billion. Financing the planning process grew increasingly complex, as indicated by the fifth plan's multilateral funding sources. However, domestic revenue sources for development planning had increased significantly, and the fifth plan included development projects that would further decrease dependence on external assistance. Such concepts as self-reliance in each district, decentralization of the development administration, greater public input in decision making, better control of maintenance expenditures, and more efficient and effective use of internal resources became increasingly important.