Module Code and Title:       AEC303          Bhutanese Economy II

Programme:                         BA in Development Economics

Credit Value:                         12

Module Tutor:                       Sanjeev Mehta

General objective: This module aims to consolidate students’ knowledge about the Bhutanese Economy and develop their critical understanding of the relevant issues. This module will provide them with a broader understanding and critique of the regulatory framework, sector-specific development polices, and achievements.

Learning outcomes – On completion of this module, learners should be able to:

1. Examine the regulatory and policy framework governing the Bhutanese economy.
2. Analyse agrarian relations in Bhutan.
3. Identify the factors determining productivity of the agriculture sector.
4. Explain the framework of the monetary policy of Bhutan.
5. Review the performance of financial institutions in Bhutan.
6. Describe the role of social and physical infrastructure.
7. Participate in public discourse on the issues related to the Bhutanese economy.

Learning and Teaching Approach: This module will be taught by means of lectures, guest lectures, tutorials, classroom workshop, seminar and self-directed study. Lectures will aim at explanation of various concepts and theories aided by tutorials. Guest lecturers will be invited on the basis of expertise on a particular topic. Students will also attend any relevant seminar or conference organised in Thimphu. In classroom workshops, students will use secondary data to analyse the trends on various macro parameters of the Bhutanese economy or review some of the relevant research papers and undertake debate on relevant issues.

Assessment Approach:

A. Group debate (1): Portion of Final Marks: 20%

Students will be divided into groups of 3 to participate in a debate on themes related to regulatory and policy framework, roles and contributions of financial institutions, monetary policy. Each group is expected to turn in a short written report (500 words) detailing their research preparation (individual write ups should be attached as appendix) for the debate a week before their debate is scheduled.

• 3%       Report on debate preparation (Group mark)
• 4%       Organization and clarity (Group mark)
• 5%       Arguments (Including examples provided; Individual mark)
• 3%       Rebuttal (Group mark)
• 5%       Presentation Style (Individual mark)

B. Quizzes (3): Portion of Final Marks: 15%

Students will take 3 quizzes (5% each) of 30 min duration, covering approximately 3 weeks of material, to test their knowledge of basic facts and figures related to the Bhutanese economy.

C. Critical Essay: Portion of Final Mark: 15%

Each student shall write one critical essay. The essay should focus on a topic of current interest related to Bhutanese economy/ economic policy. Word limit: 1000 words.

• 2%       Logical flow of thoughts
• 3%       Ability to comprehend relevant issues in the debate
• 7%       Evidence based arguments
• 1%       Language skills
• 1%       Subtleness of conclusion
• 1%       Structure of the Essay

D. Midterm Examination: Portion of Final Mark: 20%

Students will take a written exam of 1.5 hr duration covering topics up to the mid-point of the semester.

Pre-requisites: AEC302 Bhutanese Economy I

Subject Matter:

1. Macroeconomic Policies and their Impact
   • Review of major policies: fiscal, trade, investment and monetary, other regulatory framework
2. Agriculture
   • Agrarian relationship, agrarian structure and technology
   • Agricultural growth and productivity
   • Agricultural finance and capital formation
   • Infrastructure
   • Agricultural marketing
   • Review of agricultural policy
3. Industry
   • Review of industrial policy framework
   • Rate and pattern of industrial growth
   • Industrial dispersal
   • Problems and prospects of industrialization
   • Roles of public and private sector
   • Cottage and small scale industry
4. Banking and Finance
   • Royal Monetary Authority and its functions
   • Monetary policy framework
   • Review of key deployment and reforms
   • Growth and performance of commercial banks and NBFIs
   • Financial inclusion
   • Role and scope of micro finance
5. Public Finance
   • Budget policy and fiscal framework, resource allocation mechanism, multi-year rolling budget
   • Public expenditure: compositions and trend, public expenditure management system
   • Public revenue: composition and trend
   • Budget deficit, public debt
6. Social and physical infrastructure
   • Health and education
   • Roads and Transportation
   • Communication
7. Energy Sector
   • Review of hydroelectricity policy and renewable energy policy
   • Patterns of financing of hydro power projects
   • Socio economic impact of hydro power project
8. Tourism
   • Development of the tourism policy in Bhutan
   • Economic impact of the tourism sector
   • Debates and trends in the tourism policy

Reading List:

1. Essential Reading
   • Ghimiray, M. (1993). Comparison of Traditional and Modern Farming System in Bhutan: Background Paper. NEC, Bhutan.
   • Energy policy of Bhutan.
   • Mehta, S. (2012). “Growth Crisis in the Bhutanese Agriculture Sector: An Exploratory Analysis of the Causes”, “Bhutan Journal of Research and Development” of Royal University of Bhutan, vol.1, no. 1, spring 2012, ISSN 1321-4585.
   • RGOB (2013). Eleventh Five Year Plan: Main Document. GNHC.
   • RGOB (2008). Tenth Five Year Plan: Main Document. GNHC.
   • RGOB (2012). Cottage, Small and Medium Industry Policy of the Kingdom of Bhutan. Ministry of Economic Affairs.
   • RGOB (2010). Economic Development Policy. Ministry of Economic Affairs.
   • RGOB (2008). Royal Charter for Druk Holding and Investment. DHI.
   • RGOB (2010). FDI Policy. Ministry of Economic Affairs.
   • BDFC (different years). Annual Report on Agriculture Credit. Thimphu.
   • RGOB (1999). Bhutan 2020: Vision for Peace Prosperity and Happiness. Ministry of Planning.
   • RGOB (2000); National Account Statistics 1980-2000, CSO, Planning Commssion
   • RGOB (different years); Selected Economic Indicators, Royal Monetary Authority.
   • RGOB (different years); Annual Budget Report, Ministry of Finance.
   • Sen Gupta, B. (1999). “Bhutan: Towards a grass-root participatory policy”. Konark Publishers Pvt. Ltd. New Delhi.
   • Selected issues of CBS journal.
   • Yetsho, T. (2010). Memoirs of Agrarian Reforms in Bhutan: An Exploratory History Based on Oral History. International Institute of Social Studies. The Hague.

Date: January 15, 2016