Mint Explainer: What does India expect from Bhutan’s new government?

Bhutan has elected Tshering Tobgay to become prime minister for a second time. Bhutan has been one of India’s closest regional allies. The country’s pressing economic challenges and an exodus of talent leaving the country were key issues in the election. breaks this down. What were the election results? Harvard educated Tshering Tobgay, who served as prime minister between 2013 and 2018, led his People’s Democratic party (PDP) to a solid victory.

His party secured 30 of the 47 available seats, with the Bhutan Tendrel Party (BTP) winning the other 17. Tobgay’s return marks the first time that a former prime minister has been re elected to the office. Bhutan, a country of around 800,000 people, has been a democracy since 2008. Prime Minister Narendra Modi congratulated Tobgay on his return to office.

What are the key issues Bhutan facing? The economy is the top issue. Since the covid 19 pandemic, Bhutan has struggled economically with high debt, reduced tourism revenues and falling foreign reserves. A youth unemployment crisis has forced thousands to leave the country in search for opportunities abroad.

Bhutan’s government has recognized this, with plans to set up a new special administrative region at Gelephu to attract investment. The country is also looking to increase capital expenditure through the next Five Year Plan. How does India figure in these plans? India has pledged budgetary support for Bhutan’s next Five Year Plan.

The new economic project at Gelephu will also be linked to Assam’s Kokrajhar by rail along with a number of other connectivity projects. Bhutan’s King has also met with senior Indian business leaders during his visits to India in 2023 in order to attract investments to the country. India has long been Bhutan’s top economic partner and helped develop the country’s hydropower sector, which is among the key pillars of the country’s economy.

Are there any implications for India? While all parties largely agree on foreign policy and maintaining a close relationship with India, Bhutan has also considered establishing diplomatic ties with China. Settling a long running bilateral border dispute and enhancing Chinese investments could help turn the country’s economy around.

However, that will worry India given that Bhutan has been considerate regarding New Delhi’s sensitivities on China. This engagement with China is not expected to be reversed under the new government..