Kingdom of Bhutan Study for Poverty Profiles in the Asian Region

Final Report

August 2010

JAPAN INTERNATIONAL COOPERATION AGENCY

OPMAC Corporation Poverty Indicator

Basic data GDP, PPP GDP per capita, Region Population, Population Country (constant 2007 PPP GDP growth (̪) Year total growth international $) (constant 2007 (annual %) (millions) (annual %) (billions) international $)

Ap Bhutan 2007 0.7 1.4 3.2 4,837 5.2

(Source) United Nations Development Program, “Human Development Report 2009” (2009) (Note) * AF: Africa, Ap: Asia and Pacific, CLA: Central and Latin America, ME: Middle-east and Europe

Poverty Inequality Poverty incidence (%) Poverty Poverty Survey Gini Source Year Gap Index Gap Index year index National Rural Urban at $1.25 (National)

Bhutan Living Standard 16.9 39.9 1.7 7.0* 6.1 Survey 2007 0.352 2007 2007

(Source) National Statistics Bureau, “Poverty Analysis Report 2007” (2007) (Note) * Data of Poverty Index at $1.25 is for 2003. (World Bank, “World Development Indicator 2010” (2010))

Remarks (Areas, populations & social groups considered to be vulnerable and Gini index disadvantageous)

Not specified. Map of Bhutan Maps of Social indicator ㄘ᧛⽺࿎⠪Ყ₸㧑㧔ࡉࡠ࠶ࠢ࡟ࡌ࡞㧕2007 ᐕ Rural Poverty Headcount Ratio (%) by Gewog, 2007

Source: World Bank, "Poverty Maps of Bhutan (Draft)"

6 ᱦ߆ࠄ 18 ᱦߩዊቇᩞߩ಴Ꮸ₸ (%) School attendance among population aged 6 to 18 years old (%)

Source: World Bank, "Poverty Maps of Bhutan (Draft)"

ਥⷐ㆏〝ߣੱญಽᏓ㧔⋵೎㧕2005 ᐕ Major Road and Population Distribution by Dzongkhag, 2005

Source: Office of the Census Commissioner, "Dzongkhag Level Population and Housing Census Indicator Maps of Bhutan 2005", Administrative Boundary Map of Bhutan ㄘ᧛਎Ꮺ㔚ൻ₸㧑㧔ࡉࡠ࠶ࠢ೎㧕2005 ᐕ Rural Household Electrification Rate (%) by Gewog, 2005

Source: World Bank, "Poverty Maps of Bhutan (Draft)" Table of Contents

Poverty Indicator Map of Bhutan Maps of Social indicator Table of Contents List of Abbreviations and Acronyms

Chapter 1 Income Poverty Analysis...... 1 1.1 Measurement of Income Poverty ...... 1 1.1.1 Source of Data for Poverty Analysis...... 1 1.1.2 Poverty Line...... 1 1.2 Income Poverty Indicators ...... 1 1.2.1 Poverty Trends at National Level...... 1 1.2.2 Poverty Trends in Urban and Rural Areas...... 3 1.2.3 Poverty Trends by Region...... 4 1.2.4 Poverty Trends by Socio-economic Characteristics...... 6 1.3 Inequality Indicators ...... 7

Chapter 2 Non-Income Poverty Analysis ...... 9 2.1 Government-Designated Poor Areas and Socially Vulnerable Groups...... 9 2.2 Vulnerability Analysis...... 10 2.2.1 Vulnerability Analysis Mapping...... 10 2.2.2 Nutrition ...... 11 2.3 Gross National Happiness...... 12 2.4 Poverty in Socio-Economic Dimensions ...... 13 2.4.1 Roads...... 13 2.4.2 Electricity, Telephone, Water, and Sanitation...... 14 2.4.3 Education and Health Service ...... 16 2.4.4 Financial Services ...... 17

Chapter 3 Explanatory Factors of Poverty in Bhutan ...... 19 3.1 Domestic Factors ...... 19 3.1.1 National Development and Public Expenditure...... 19 3.1.2 Agriculture, Land Distribution, Natural Resource Management ...... 21 3.1.3 Industrial Structure and Employment...... 22 3.2 Geopolitical Factors ...... 24 3.3 Factors related to Globalization ...... 25

Chapter 4 Mechanism of Social Protection ...... 27 4.1 Formal Public Social Security System...... 27 4.1.1 Pension and Provident Fund...... 27 4.1.2 Insurance Scheme...... 27 4.1.3 Social Support by the His Majesty the King’s Welfare Secretariat...... 28 4.2 Quasi-formal Social Security System ...... 29 4.2.1 Microfinance Institution...... 29 4.2.2 CSO’s Activities Targeting the Poor...... 30 4.3 Informal Social Security System...... 32 4.3.1 Informal Finance ...... 32 4.3.2 Role of the Monastic Bodies ...... 32 Chapter 5 Poverty Monitoring ...... 33 5.1 MDGs Progress...... 33 5.1.1 MDG 1: Eradicate Extreme Poverty and Hunger...... 33 5.1.2 MDG 2: Achieve Universal Primary Education...... 33 5.1.3 MDG 3: Promote Gender Equality and Empower Women ...... 34 5.1.4 MDG 4: Reduce Child Mortality ...... 34 5.1.5 MDG 5: Improve Maternal Health...... 35 5.1.6 MDG 6: Combat HIV/AIDS, Malaria and Other Diseases...... 35 5.1.7 MDG 7: Ensure Environmental Sustainability...... 36 5.1.8 MDG 8: Develop a Global Partnership for Development...... 36 5.2 Monitoring Indicators in the National Plan...... 39 5.3 Poverty Monitoring...... 39 5.3.1 Monitoring Mechanism...... 39 5.3.2 BhutanInfo...... 40

Appendix Appendix 1: Poverty and Inequality Indicator Appendix 2: Gross National Happiness Indicators (Pilot)

Annex (1) List of Major Policy Documents (2) List of Major Statistical Surveys (3) List of Major Microfinance Institutions (4) List of Major NGOs (international and national) and CSOs (5) List of Major Socio-economic Research Institutions (6) List of Useful Websites and Other References

List of Tables and Figure [Table] Table 1-1: Poverty Incidence and Number of Poor in Bhutan ...... 2 Table 1-2: Poverty Gap and Severity ...... 2 Table 1-3: Poverty Headcount Ratio by Area...... 3 Table 1-4: Poverty gap and severity by Area ...... 3 Table 1-5: Poverty Incidence by District (2007) ...... 4 Table 1-6: Poverty Gap and Poverty Squared Gap by District (2007) ...... 6 Table 1-7: Poverty and Food Poverty Rates by Area and Sex of Household Heads (2007).. 7 Table 1-8: Poverty Measures of the Population Three Years and Above by Educational Attainment of the Household Head (2007) ...... 7 Table 1-9: Gini Coefficient by Area ...... 8 Table 2-1: Undernourishment by Region ...... 11 Table 2-2: Time to Nearest Motor Road, by District (2005) ...... 13 Table 2-3: Percentage of Population with Access to Electricity, Telephone, Improved Water and Sanitation, by Poverty Status and Area (2007)...... 15 Table 2-4: Poverty Incidence and Electricity Use as Main Source of Lightening...... 15 Table 2-5: Literacy Rate of the Population Ages Six years and Above, by Area, Poverty Status and Sex (2007)...... 16 Table 2-6: Net Enrollment Rates in Primary School, by Area, Poverty Status and Sex (2007) ...... 17 Table 2-7: Credit Sources Available for Households, by Area and Poverty Status (2007).. 17 Table 3-1: Capital Expenditure by Ministry (9th Fiver Year Plan 2003-2007) ...... 19 Table 3-2: GDP Share and Growth by the Sector in Bhutan (2000–2007) ...... 22 Table 5-1: MDGs Progress in Bhutan ...... 37

[Figure] Figure 1-1: Rural Poverty Map of Bhutan (Gewog Level) ...... 5 Figure 1-2: Rural Poverty Map of Bhutan (District Level)...... 5 Figure 1-3: Lorenz Curve of Bhutan...... 8 Figure 2-1 Vulnerability to Food Security by Gewog...... 10 Figure 2-2: Calorie Intake by District ...... 11 Figure 2-3: Food Insufficiency and Undernourishment by District ...... 12 Figure 3-1: Capital Expenditure and Budget by District (9th and 10th Five Year Plan) ...... 20 Figure 3-2: Agriculture Productivity by Gewog...... 21 Figure 3-3: Employment Status (2009)...... 23 Figure 3-4: Trade between Bhutan and India ...... 25 List of Abbreviations and Acronyms

ADB : Asian Development Bank BDFC : Bhutan Development Finance Corporation Ltd. BHU : Basic Health Unit BLSS : Bhutan Living Standard Survey BoB : Bank of Bhutan CBS : Center for Bhutan Studies CSO : Civil Society Organizaiton DANIDA : Danish International Development Agency DOTS : Directly Observed Treatment Short Course FAO : Food and Agriculture Organization of the United Nations FDI : Foreign Direct Investment GDP : Gross Domestic Products GGLS : Group Guarantee and Lending Scheme GNH : Gross National Happiness HIV/AIDS : Human Immunodeficiency Virus / Acquired Immune Deficiency Syndrome IFAD : International Fund for Agricultural Development MDGs : Millennium Development Goals NGO : Non-Governmental Organization NMES : Framework of National Monitoring and Evaluation System NPPF : National Pension & Provident Fund NSB : National Statistics Bureau NWAB : National Women’s Association of Bhutan OGTP : One Gewog Three Products PAR : Poverty Analysis Report PHCB : Population and Housing Census of Bhutan PlaMS : Planning and Monitoring System RGoB : Royal Government of Bhutan REAP : Rural Economic Advance Program RICB : Royal Insurance Corporation of Bhutan Ltd. RLI : Rural Life Insurance Scheme RMA : Royal Monetary Authority SAARC : South Asian Association for Regional Cooperation SDGs : SAARC Development Goals UNCDF : United Nations Capital Development Fund UNDAF : United Nations Development Assistance Framework UNDP : United Nations Development Programme UNICEF : United Nations Children’s Fund VAM : Vulnerability Analysis Mapping WB : World Bank WFP : United Nations World Food Programme Chapter 1 Income Poverty Analysis 1.1 Measurement of Income Poverty 1.1.1 Source of Data for Poverty Analysis The National Statistics Bureau (NSB) of Bhutan calculated and analyzed the poverty indicators two times based on the Bhutan Living Standard Survey (BLSS) in 2003 and 2007. NBS compiles the Poverty Analysis Reports based on the data obtained by BLSS of 2003 and 2007. The most recent poverty analysis is the Poverty Analysis Report (PAR) in 2007. The next BLSS is scheduled in 2011, and a release of the next PAR is planned in 2013 after poverty analysis based on the upcoming BLSS data in 2012.

Poverty indicators in PAR (2007) are not fully comparable to that of PAR (2004), due to differences in sampling methodology (size and covered area) and other conditions in date in BLSS (2003) and BLSS (2007). By BLSS (2007), data on more food items were collected with a doubled sample size covering wider areas in comparison to the one in 2004.

1.1.2 Poverty Line In 2007, the subsistent poverty line1 is estimated based on the minimum nutritional requirement of 2,124 kcal per person per day2, which is equivalent to the money value of 688.96 Ngultrum (equivalent to 16.67 US dollars)3 per person per month.

The absolute poverty line4 in 2007 is estimated as 1,096.94 Ngultrum per person per month, with the non-food allowance estimated as 407.98 Ngultrum (37% of the total consumption). For estimation of poverty at regional level (by urban/rural and by province), the poverty lines were adjusted reflecting price difference by region.

Absolute Poverty Line = Minimum food consumption (Subsistent Poverty Line) + Minimum non-food consumption

1.2 Income Poverty Indicators 1.2.1 Poverty Trends at National Level According to the common perception of the Royal Government of Bhutan (RGoB) and the donor agencies, the poverty situation in Bhutan during the last decade has been improved in general.

The absolute poverty head count ratios (hereinafter referred to as “poverty incidence”)5 by population were 31.7% in 2003 and 23.2% in 2007 while poverty incidences by household were 24.7% in 2003 and 16.9% in 2007. Although the indicators derived by the two different BLSS

1 PAR (2004) and (2007) use a term of “subsistence poverty” instead of “food poverty”. In this report, “subsistence poverty” is used. 2 According to PAR 2007, NSB applied Nepal’s nutritional norm for the Bhutanese population since no specific food energy requirement is available. 3 Reference exchange rate (period average) is 1USD = 41.349 Ngultrum. 4 PAR 2004 and 2007 use the term of “total poverty line” for the poverty line composed of the minimum requirement of food and non-food consumption together. 5 In this report, “poverty incidence” and “the poor” mean “the absolute poverty headcount ratio” or “the poor population below the absolute poverty line” unless otherwise stated.

1 are not fully comparable, the income poverty may be reduced for the period between 2003 and 2007.

The incidences of subsistent poverty by population were 3.8% in 2003 and 5.9% in 2007 while the poverty headcount ratio by household 2.6% in 2003 and 3.8% in 2007. The increase in subsistent poverty from 2003 to 2007 may attribute to the difference in methodology to measure food expenditure as mentioned above6. However, considering the substantial prevalence of undernourishment in the country as mentioned in 2.2.2, the subsistent poverty line may not reflect higher food price which cannot be afforded by lower income households.

The large difference in the incidence of subsistence poverty and absolute poverty can be attributed to the expensive costs for education, transportation, housing and other living cost which are not affordable for the lower income households. However, as mentioned above, the further analysis may be necessary to assess the current level of subsistent poverty line whether accurately reflect the real minimum requirement of food expenditure for surviving.

Table 1-1: Poverty Incidence and Number of Poor in Bhutan

Indicators 2003 (Reference) 2007 % of Population % of Households % of Population % of Households Subsistent Poverty (%) 3.8 2.6 5.9 3.8 Poverty (%) 31.7 24.7 23.2 16.9 No. of Poor by total Poverty line 173,462 - 146,100 Total Population of Bhutan, 547,179 - 629,700 (extrapolated from sample) (Source) National Statistics Bureau, “Poverty Analysis Report 2007” (2007), p.13, Table 2, and p.16, Table 5 and National Statistics Bureau, “Poverty Analysis Report 2004” (2004), p.5, Table 2

In Table 1-2, the poverty gap in 2007, which shows the disparity of average consumptions of the poor from the poverty line, is lower than the ones in 2003. Also, the poverty severity in 2007, which indicates the distribution of consumption among the poor, is lower than the ones in 2003. Although the indicators in 2003 and 2007 are not statistically comparable, it can be indicated that the poverty gap and poverty severity did not worsened at least. In terms of subsistent poverty, the poverty gap and poverty severity, however, appears to have increased as shown in Table 1-2, although it is safe to have further evidences to reach this conclusion due to the constraints in comparability between 2003 and 2007 data.

Table 1-2: Poverty Gap and Severity (%) 2003 (Reference) 2007 Area Subsistent Poverty Poverty Subsistent Poverty Poverty Poverty Gap 0.4 8.6 1.1 6.1 Poverty Severity 0.07 3.1 0.34 2.3 (Source) National Statistics Bureau, “Poverty Analysis Report 2007” (2007), p.42, Table A-3 and National Statistics Bureau, “Poverty Analysis Report 2004” (2004), p.6, Table 5

6 The Government of Bhutan considers the increase in the food poverty incidence in the Tenth Five Year Plan without any explanation of reasons for it.

2 1.2.2 Poverty Trends in Urban and Rural Areas According to the Population and Housing Census of Bhutan 2005 (PHCB, herein after referred to as “the Census 2005”), the urban population was approximately 30% of the total population while the rural population accounted for nearly 70%. This means that the population is concentrated in rural areas; however, rural households are scattered in remote areas. In Bhutan, center towns7 in each district8 are defined as “urban areas” in the country and the rest areas besides center towns are classified as “rural areas”.

Poverty incidences concentrated in the rural area, accounting for 98.1 % of the total poor population. In terms of subsistence poor, almost all of the poor population resides in rural areas. Therefore, rural development is a key to poverty reduction.

There are also disparities in poverty gap and poverty severity indices between urban and rural area. Higher gap and severity measures are observed in rural areas. The poverty gap in rural areas is 8.1% and poverty severity is 3% while in urban areas these are 0.4% and 0.1% respectively (Table 1-4). This means that the depth and severity of poverty in rural areas is more serious.

On the other hand, although the phenomena of poverty is often seen in rural area, urban poverty cannot be ignored amid the increase in migration from rural to urban population.

Table 1-3: Poverty Incidence by Area

2003 (Reference) 2007 Area Indicators Subsistent Subsistent Poverty Poverty Poverty Poverty Number of the poor n.a. n.a. 2,800 300 Urban Poverty Incidence (%) 0.031 4.2 0.16 1.7 Number of the poor n.a. n.a. 143,000 37,000 Rural Poverty Incidence (%) 4.7 38.3 㧤㧚㧜 39.9 (Source) National Statistics Bureau, “Poverty Analysis Report 2007” (2007), p.13, Table 2, p.42 A-5, A-6 Statistics Bureau, “Poverty Analysis Report 2004” (2004), p.5, Table 2 (Note) Figures for number of the poor were rounded to the nearest hundred.

Table 1-4: Poverty gap and severity by Area (%) 2003 (Reference) 2007 Area Indicators Subsistent Subsistent Poverty Poverty Poverty Poverty Poverty gap 0.001 0.684 0.02 0.4 Urban Poverty severity 0.000 0.164 0.01 0.1 Poverty gap 0.508 10.47 1.5 8.1 Rural Poverty severity 0.087 3.78 0.5 3.0 (Source) National Statistics Bureau, “Poverty Analysis Report 2007” (2007), p.42, Table A-3 and National Statistics Bureau, “Poverty Analysis Report 2004” (2004), p.6, Table 5

7 Definition of urban towns is stipulated in “The Thromde Act of Bhutan” 2007. This definition is currently being reviewed for changes. 8 “District” is the translation of Bhutanese term “Dzongkhag”. As it is common to be called “district” in English, “district” is used throughout this report.

3 1.2.3 Poverty Trends by Region The Eastern region9 has many districts with higher poverty rates. PAR (2004) also showed the same tendency: poverty incidence (as a percentage of population) was relatively high in the Eastern region (48.8%), compared to Central (29.5%) and Western (18.7%).

Table 1-5: Poverty Incidence by District (2007) (%) Headcount Ratio Distribution of Poor Population Region District Subsistent Poverty Poverty Subsistent Poverty Poverty Western Chhukha 4.5 20.3 8.1 9.4 Gasa 1.0 4.1 0.1 0.1 Haa 5.1 13.2 1.7 1.1 Paro 0.6 3.9 0.5 1.0 Punakha 1.9 15.6 1.3 2.7 Samtse 17.6 46.8 26.3 17.8 Thimphu 0.1 2.4 0.2 1.4 Central Bumthang, 0.9 10.9 0.4 1.2 Dagana 9.7 31.1 4.9 4.0 Sarpang 3.3 19.4 3.6 5.3 Trongsa 4.8 22.2 1.9 2,2 Tsirang, 2.5 13.9 1.3 1.8 Wangdue Phodrang 1.9 15.8 1.8 3.9 Zhemgang 17.8 52.9 9.4 7.1 Eastern Lhuntse 11.2 43.0 4.7 4.6 Mongar 10.2 44.4 10.4 11.6 Pemagatshel 4.5 26.2 2.9 4.2 Samdrup Jongkhar 12.2 38.0 11.4 9.1 Trashi Yangste 7.0 14.3 8.9 9.6 Trashigang, 0.5 29.3 0.3 1.8 Bhutan 5.9 23.2 100 100 (Source) National Statistics Bureau, “Poverty Analysis Report 2007” (2007), p.14, Table 4, and p.16, Table 5.

By districts, the higher poverty incidences are observed in districts such as Zhemgang, Samtse, Mongar, Lhuntse, and Samdrup Jongkhar. In those districts, poverty incidences were around 40%. Zhemgang had the highest poverty incidence with more than half of the population living below the poverty line.

Samtse had the largest share of the poor population (17.8%) and the subsistent poor population (26.3%) in the country. It is because the population is relatively large in this district. Districts with high poverty incidence in the Eastern region have lower absolute numbers of the poor population due to the smaller population in the districts.

Poverty headcount ratio was calculated at block or “gewog” in Bhutanese (hereinafter referred to as “gewog”10) level by NSB with technical assistance by the World Bank (WB). It was calculated based on both BLSS (2007) and the Census 2005 for statistically reliable estimates at the gewog level. Figure 1-1 shows a tendency for districts with higher poverty incidence to have highly impoverished gewogs.

9 Following demarcations in the statistics in NSB, three regions, Western, Central, and Eastern, are utilized in this section. Four regional zones, namely, Western, Central, Southern, and Eastern, are also sometimes referred to in other papers; however, there is no official demarcation of the zone as of June 2010. 10 In this report, “gewog” is used instead of an English translation ‘block’.

4 Within each district, however, there are differences in poverty incidence across gewogs. For example, though not among the five districts with the highest poverty incidences, Dagana and Trashigan nonetheless have gewogs with poverty incidence of more than 50%. This is because intra-district disparity is large in some districts. As “Draft Poverty Maps of Bhutan” notes in the Figure 1-1, there are “pockets of poverty” in even the richest district due to the existence of isolated remote areas in the landlocked geography.

(Source) National Statistics Bureau and The World Bank, “Draft Poverty Maps of Bhutan: Key findings” (2010), p.7 Figure 1-1: Rural Poverty Map of Bhutan (Gewog Level)

(Source) National Statistics Bureau and The World Bank, “Draft Poverty Maps of Bhutan: Key findings” (2010), p.7 Figure 1-2: Rural Poverty Map of Bhutan (District Level)

5 The districts in the Western region have relatively low poverty gap and severity while most districts in the Central and the Eastern region have higher poverty gap and severity. Poverty gap and poverty severity are more serious in the districts with a high poverty incidence, such as Zhemgang, Samtse, Mongar, Lhuntse, and Samdrup Jongkhar. Those districts had larger poverty gap of more than 10% as well as larger poverty severity.

Table 1-6: Poverty Gap and Poverty Squared Gap by District (2007) (%) Poverty Gap Poverty Severity Zone District Subsistent Subsistent Poverty Poverty Poverty Poverty Western Chhukha 0.8 4.9 0.2 1.7 Gasa 0.1 0.7 0.0 0.2 Haa 1.3 3.5 0.4 1.6 Paro 0.1 0.7 0.0 0.2 Punakha 0.3 3.2 0.1 1.0 Samtse 3.8 14.7 1.3 6.2 Thimphu 0.0 0.5 0.0 0.1 Central Bumthang, 0.1 1.9 0.0 0.5 Dagana 2.2 8.8 0.8 3.6 Sarpang 0.3 4.8 0.1 1.5 Trongsa 1.1 6.2 0.3 2.3 Tsirang, 0.4 2.8 0.1 0.9 Wangdue Phodrang 0.3 3.0 0.1 0.9 Zhemgang 2.8 15.2 0.8 5.7 Eastern Lhuntse 2.5 11.9 0.7 4.6 Mongar 1.5 11.8 0.3 4.1 Pemagatshel 0.7 5.8 0.1 1.8 Samdrup Jongkhar 2.9 11.0 1.1 4.6 Trashi Yangste 1.3 7.1 0.4 2.6 Trashigang, 0.0 2.2 0.0 0.5 Bhutan 6.1 2.3 1.1 0.34 (Source) National Statistics Bureau, “Poverty Analysis Report 2007” (2007), p.14, Table 4, and p.16, Table 5.

1.2.4 Poverty Trends by Socio-economic Characteristics As in other developing countries, in Bhutan, higher dependency ratio leads higher poverty incidence. The poverty incidence of the households headed by married and with children is relatively higher than the household headed by single or whom without a child. However, the poverty incidence by gender in Bhutan shows a different pattern from developing countries with man-dominated society. The poverty incidence for female-headed households is lower than the poverty incidence for male-headed households.

The reason for this is that Bhutanese women have relatively better status and legal rights in comparison to its neighboring countries. In Bhutan, there remains the matrilineal inheritance system. Therefore, the land is inherited through the mother and more than 60% of the rural women hold land registration titles11. It can be observed especially in the western, central and some parts of eastern region.

11 Black, M and Stalker. P, UNICEF “A situation Analysis of Children & Women in Bhutan” (2006), p.10.

6 Table 1-7: Poverty and Food Poverty Rates by Area and Sex of Household Heads (2007) (%) Area Sex of Household Head Subsistent Poverty Poverty Male 0.1 1.3 Urban Female - 0.8 Total 0.1 1.1 Male 6.4 26.6 Rural Female 3.5 18.5 Total 5.4 23.8 Male 4.3 17.9 Bhutan Female 2.8 4.8 Total 3.8 16.9 (Source) National Statistics Bureau, “Poverty Analysis Report 2007” (2007), p.21, Table 11

Table 1-8 indicates that 29.5% of household heads without education are in poverty, and 90% of the total poor population fall into this category. Only 1.2% of household heads with secondary education attainment are in poverty, and less than 1% of the total poor population is placed here. These facts indicate that a low education level is significantly pervasive among the poor. The PAR (2007) stated that returns of education are quite large. If the household head completes the secondary level education, the risk of poverty for the household considerably reduces. On the other hand, it also can be said the children cannot go to the secondary school because their households are poor. There may be vicious cycle that it is difficult for some household with lower educational attainment not to move out of the poverty.

Table 1-8: Poverty Measures of the Population Three Years and Above by Educational Attainment of the Household Head (2007) (%)

Education Attainment Poverty Incidence Share in the Poor Population

None 29.5 90.3 Primary 15.0 9.1 Secondary 1.2 0.6 Beyond Secondary 0.0 0.0 Bhutan 23.2 100.0 (Source) National Statistics Bureau, “Poverty Analysis Report 2007” (2007), p.31, Figure 11 (i)

1.3 Inequality Indicators The Lorenz curves 12 in Figure 1-3 represent 2004 and 2007 data on the inequality of consumption distribution in Bhutan, from the lowest quintile to the highest quintile group. 45 degree line stands for “complete equality” status that expenditure among those groups shows complete equal distribution and deviation of the lines from 45 degree line shows the degree of inequality. The figures for the two years are not fully comparable; however, the data seems to suggest that inequality levels have improved. The PAR (2007) pointed out that the consumption gap between the richest 20% and the poorest 20% of the population decreased between 2003 and 2007.

12 See the Appendix 1 for details.

7 Gini coefficients13 in Table 1-9 show the level of inequality of income distribution. The Gini coefficient can range from 0 to 1, with 0 indicating complete equality (every person receiving the same percentage of the total), and 1 indicating complete inequality. As per Table 1-9, the Gini coefficient in Bhutan is 0.352 in 2007. Compared to neighboring countries, for example Nepal (0.473) and Bangladesh (0.31), Bhutan is in the middle between the two neighbors.

Gini Coefficients for urban and rural areas were 0.315 and 0.317, respectively. Therefore, there is no significant difference in inequality between urban and rural areas. The data of BLSS 2003 shows the same tendency. The higher Gini Coefficient at national level, which indicated the higher inequality in expenditure distribution, may be attributed to a large economic disparity between urban and rural areas.

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Figure 1-3: Lorenz Curve of Bhutan

Table 1-9: Gini Coefficient by Area

Area 2003 (Reference) 2007 Bhutan 0.416 0.352 Urban 0.374 0.315 Rural 0.381 0.317 (Source) National Statistics Bureau, “Poverty Analysis Report 2007” (2007), p.28, Figure 7 and National Statistics Bureau, “Poverty Analysis Report 2004” (2004), p.9, Table 11

13 ditto.

8 Chapter 2 Non-Income Poverty Analysis 2.1 Government-Designated Poor Areas and Socially Vulnerable Groups In terms of poverty targeting, there are neither officially designated areas nor designated ethnicities14 in Bhutan.

Currently, however, there are direct intervention activities targeting the poor by the RGoB. The Tenth Five Plan (2008-2013) states that more targeted intervention for the poor is necessary in order to promote poverty reduction effectively. Under the Tenth Five Plan, annual grants for local government are calculated based on a formula including the poverty rate together with population and the size of each local administrative area. Since the NSB, with WB technical support, estimated poverty rate at the gewog level, from fiscal year 2010, annual grant allocation to the gewog level is based on the poverty rate at the gewog level15.

Currently, there is an only one government program which clearly targets the extreme poor. That is “the Rural Economic Advance Program (REAP)” which started in 2008. The REAP is a strategic framework to significantly reduce the extreme poverty through targeted poverty interventions guaranteeing food security and contributing to a higher level of Gross National Happiness (GNH) in Bhutan by the end of the Tenth Five Year Plan. The REAP targets the poorest of the poor at the household level and attempts to formulate development plans at the village level through participatory planning. The GNH Commission has been leading the REAP under the cooperation with other governmental agencies.

Although 10 villages were targeted for the first phase of the program16, pilot activities are implemented in only two villages out of the targeted villages, due to the budgetary constraints. Under the second phase of the REAP, the targeting and monitoring system will be reformed to the ones based on a objectively verifiable poverty index composed of 11 socio-economic indicators17.

For more effective and efficient poverty intervention at village level, the village development plans are formulated for those selected villages through consultation with communities, the central and local government offices after a survey is conducted. The village development plan is approved by the relevant authorities after a series of consultations with the relevant government offices. The plan is submitted to the GNH Commission in order to mobilize funds and to check implementation arrangements. Then, it is handed over to the local entities for implementation such as district and gewog officers, local staff in charge of a sector program, community, and Civil Society Organizations (CSOs).

The RGoB also attempts to mainstream the poverty and environment issues in the planning, budgeting, and monitoring process in the plans and programs of each governmental agency, with support by UNDP and the Government of Denmark (DANIDA: Danish International Development Agency). The guideline18 has been prepared, and currently capacity building is

14 Three major ethnic groups exist in Bhutan, namely, the Ngalops (Tibetian origin), Sharchops (indigenous Bhutanese) and the Lhotshampas (Nepalese origin); among them, 19 languages are spoken. 15 GNH Commission “ Tenth Five Year Plan 2008-2013” p. 75 in “Box 5.1 Resource Allocation Mechanism” 16 According to officers in research and evaluation division of GNH, for initial targeting of the poor villages and households, they referred to the information by His Majesty’s Welfare Secretariat Office through experience of the “Kidu” system, the traditional assistance system for the poorest of the poor (for details, refer to 4.1.3). 17 Village selection for REAP intervention started with the shortlisted 100 villages, namely 5 villages in each district. Among them, 20 villages were selected based on the following 11 indicators: a. land, b. access to road, c. distance to market, d. extension services, e. education, f. health, g. access to safe drinking water, h. electricity, i. environment, j. disaster vulnerability, k. population. 18 Royal Government of Bhutan “Environment for Development POVERTY-ENVIRONMENT: Mainstreaming

9 being conducted for the personnel in each governmental agency, the GNH commission as a coordinator with the National Environment Commission, the Ministry of Agriculture, the Ministry of Economic Affairs, the Ministry of Works and Human Settlements, the Ministry of Finance, the Ministry of Home and Cultural Affairs, and also local governments units and Civil Society Organizations (CSOs).

2.2 Vulnerability Analysis 2.2.1 Vulnerability Analysis Mapping19 Although subsistent poverty is limited at the national level, it should be noted that it concentrates in some specific areas. The United Nations World Food Program (WFP) conducted Vulnerability Analysis Mapping (VAM) by utilizing the food indicator aspects of availability, accessibility, utilization, and indicators on hazards (ex. extreme weather shocks). As a conclusion of VAM, all these factors interacted negatively and caused both chronic and transitory food security issues in the Southern and Eastern areas of the country where there are many of the most vulnerable gewogs.

Figure 2-1 shows the result of VAM, that is, the degree of food security vulnerability by gewog. Comparing these with the gewog level rural poverty indicators in Figure 1-1 in Chapter 1, while many of most vulnerable gewogs coincide with the ones with the highest rural poverty incidence (in such districts as Samtes, Shemgang, Mongar, and Samdrup Jongkhar), high food security vulnerability is also observed in districts with relatively low poverty rates such as Gasa and Wandue Phodrang.

(Source) Ministry of Agriculture & World Food Programme Bhutan, “Vulnerability Analysis and Mapping 2005” (2005), p.45. Figure 2-1 Vulnerability to Food Security by Gewog

Guideline for the Planning Purposes of the Royal Government of Bhutan” January 2010 (Draft) 19 The Ministry of Agriculture was about to finalize the report on reassessment of vulnerability analysis mapping with recent indicators, however, this most recent report was not available at the time of drafting this report (as of June, 2010). Accordingly, the information here was only based on the report in year 2005.

10 Seasonal food insecurity and hunger is usually observed in Lhuentse and Pemagatsel in Eastern Bhutan. Shortage of grain occurs in these areas from May to July. The MDG Report in 2005 20 already stated that there was no physical indication of widespread hunger but occurrences of food insecurity and seasonal hunger were still common in certain areas of the country.

2.2.2 Nutrition According to a report issued by the Food and Agriculture Organization of the United Nations (FAO) 21 , on average, 26.6% of Bhutanese households cannot meet the minimum daily requirement of 2,124kcal per person per day. In particular, 28.8% of rural households cannot satisfy this minimum nutritional requirement while the undernourishment rate in urban areas is 21.5%.

The prevalence of undernourishment (Source) Food and Agriculture Organization of the United measured by actual calorie intake in Nations, “Fighting Hunger: The Right to Food Way, the country is much higher than the Right to Food Assistance in Bhutan: Looking at policies, legal frameworks and institutions” (2008), p.21, Figure 1 incidence of subsistent poverty. It (Note) Red areas: the worst ranking, light orange areas: average implies that the higher food prices ranking, yellow areas: above average prevent the people from sufficient food consumption. Also, the food Figure 2-2: Calorie Intake by District poverty line may be underestimated or not reflect actual food prices.

Figure 2-2 shows the level of calorie intake by district. The map indicates high food insecurity in the Southern areas of each region of the country, the Eastern, the East-Central, the West Central and the Western.

The incidence of undernourishment by region shows the same patterns of the level of calorie intake: the rural households of the East-Central and the West Districts have the highest share of undernourishment and the lowest calorie intake.

Table 2-1: Undernourishment by Region (%) East East-Central West-Central West Urban 22.2 22.8 22.4 21.0 Rural 22.7 31.8 31.0 32.8 Total 22.6 29.5 29.9 27.2 (Source) Food and Agriculture Organization of the United Nations, “Fighting Hunger: The Right to Food Way, Right to Food Assistance in Bhutan: Looking at policies, legal frameworks and institutions” (2008), p.23, Table 4

20 Department of Planning,, Ministry of Finance “Millennium Development Goals Progress Report 2005 Bhutan” (2005), p25. 21 Food and Agriculture Organization of the United Nations, “Fighting Hunger: The Right to Food Way, Right to Food Assistance in Bhutan: Looking at policies, legal frameworks and institutions” (2008).

11 Looking at Districts, approximately 40% of the population suffers from undernourishment in Wangdue Phodrang (West Central) and Zhemgang (East Central).

(Source) Food and Agriculture Organization of the United Nations, “Fighting Hunger: The Right to Food Way, Right to Food Assistance in Bhutan: Looking at policies, legal frameworks and institutions” (2008), p.24, Figure 3 Figure 2-3: Food Insufficiency and Undernourishment by District

2.3 Gross National Happiness “Gross National Happiness (GNH)” is a concept propounded by the Fourth King of Bhutan, His Majesty The King Jigme Singye Wangchuck, in 1974. This concept suggests that the living standard would not be measured only by monetary and material affluence such as Gross Domestic Product (GDP), but also by mental affluence which is aggregated “happiness”, suggesting the alternative term “Gross National Happiness (GNH)”. GNH is an important principle of state policy under the Article 9 of the Constitution and is a basic concept for the national policy and planning.

There are four foundational pillars of GNH: a. sustainable and equitable socio-economic development; b. environmental conservation; c. preservation and promotion of culture; and d. good governance. In order to develop a Bhutan-specific development measure, the GNH index was established with nine domains: 1. Psychological well-being, 2. Cultural diversity and resilience, 3. Education, 4. Health, 5. Time use, 6. Good governance, 7. Community vitality, 8. Ecological diversity and resilience, and 9. Living Standards.

The Tenth Five Year Plan (2008-2013) discusses the GNH concept as a guiding principle and notes that the GNH index is to be further developed and pursued as a development strategy framework. The Center for Bhutan Studies (CBS) attempts to set up GNH indicators and conducted pilot surveys in 2006 and 2008. According to a CBS study paper in 200822, preliminary indicators consist of 58 indicators in 9 dimensions (refer to Appendix 2: Table

22 Alkire. S, Santos. M.E., Ura.K. “Gross National Happiness and Poverty in Bhutan: Preliminary Explorations using Pilot Data” (2008), Center for Bhutan Studies.

12 A2-1). These dimensions include education, health, ecology and so on, which are similar to MDG goal indicators; however at the same time, the emphasis is put on the mental status and intangible human values such as mental wellbeing, culture, time use, and community. Indicators for those dimensions are characterized as many qualitative questions.

In the Census 2005, there was a question about happiness. The result showed that more than 90% of the nation answered “very happy” or “happy”. Answer to the simple question “Are you happy?” may show the one aspect of how the Bhutanese feel about their way of life. However, the question of “Are you happy?” is too simple to measure quality and quantity of “happiness of the economy”. Further development of methodology to measure “happiness” is inevitable to assess poverty in Bhutan from qualitative dimensions as well as mental well-being.

2.4 Poverty in Socio-Economic Dimensions 2.4.1 Roads Access to roads, especially with a view to better access to social service facilities and the market, generally has a correlation with poverty in Bhutan as in other countries. In particular, given the physical terrain, the mountainous and landlocked characteristics in Bhutan, improvement of road access is considered to be critical for rural people to expand their economic opportunities and to have better education and health services.

Table 2-2: Time to Nearest Motor Road, by District (2005) (%) 30 minutes - 1 less than Region District < 30 minutes 2 - 3 hours 3 hours < 1 hour 2 hours Western Chhukha 76.8 5.3 2.7 2.2 13.0 Gasa 18.4 4.0 2.6 1.9 72.8 Haa 80.7 4.0 3.9 0.4 10.9 Paro 83.0 8.6 3.4 3.7 1.0 Punakha 68.4 11.5 7.9 7.4 2.8 Samtse 48.1 9.4 8.3 6.8 26.2 Thimphu 93.9 2.5 1.3 0.6 1.8 Central Bumthang, 88.1 7.6 1.3 0.5 2.5 Dagana 43.6 15.2 12.1 8.0 16.8 Sarpang 73.8 9.1 4.7 1.8 9.9 Trongsa 59.9 11.6 7.3 7.7 11.2 Tsirang, 51.3 10.9 8.7 13.6 9.6 Wangdue Phodrang 61.2 9.6 10.0 5.6 10.9 Zhemgang 39.9 4.4 1.7 4.2 47.4 Eastern Lhuntse 30.2 7.3 12.1 9.9 31.9 Mongar 39.3 8.8 7.7 9.8 29.3 Pemagatshel 38.3 6.7 6.8 6.3 35.4 Samdrup Jongkhar 44.9 4.1 4.2 5.4 38.6 Trashi Yangste 47.2 12.4 8.3 8.8 22.3 Trashigang, 40.0 11.7 12.8 15.0 14.8 Bhutan 63.0 7.6 5.7 5.2 48.5 (Source) Office of the Census Commissioner Royal Government of Bhutan “Results of Population & Housing Census of Bhutan 2005”, p.450.

13 In Table 2-2, it is evident that the share of households located far way from a motor road are the largest in districts with high poverty incidence such as Zhemgang, Samtse, and other districts in the Eastern region. On the other hand, districts with low poverty incidence in the Western region have more households near to a motor road.

A 2007 United Nations Development Programme (UNDP) report23 indicates that one of the reasons for the high poverty rate in Eastern area can be attributed to the lack of connectivity. It points out that the road network granting access to the centers of administration and commerce is especially underdeveloped in the Eastern region, while the West and South have the capital city and commercial centers. According to this report, greater proximity to roads may lead a lower incidence of poverty. That is, the households with income poverty are more likely to live in physically isolated area and to have constraints on not only economic activities but also on social service. Therefore, they have also higher risk to face poverty in the non-economic aspect.

A recent poverty map at gewog level by NSB and WB24 shows that the gewogs with less market accessibility and road networks tend to have a higher poverty rate. This tendency is typically seen in Zhemgang, where the poverty rate is the highest in the country. However, the report also indicates that there are some exceptions in the north, such as Gasa and northern Thimphu, where the poverty rate is low in those areas despite accessibility to markets is limited. In the case of Gasa, the majority of households are located far from a motor road. It takes three and more hours on the average to reach a road for more than 70% of the households there25.

2.4.2 Electricity, Telephone, Water, and Sanitation PAR (2007) analyses the percentage of population who have access to electricity and other infrastructures by poverty status and area. Among all type of infrastructure, Table 2-3 shows that access to electricity and telephone present the most remarkable differences between the poor and non-poor and also between urban and rural areas. On the other hand, access to improved water and sanitation is at more than 80% across the poor and non-poor population in both urban and rural areas. Generally, the poor in developing countries have limited access to safe water and improved sanitation facilities; however, access to these is relatively high in Bhutan.

Electrification can improve social life by improving facilities for education and health services. In some cases, economic activity can be expanded by improved access to electricity; therefore, limited access to electricity can inhibit the chance to have better social life and economic activity.

23 Osmani. S.R., Bajracharya, B.B.et.al. , UNDP “Macroeconomics of poverty reduction: The Case Study of Bhutan” (2007), Colombo. 24 National Statistic Bureau and the World Bank “Draft Poverty Maps of Bhutan: Key Findings” (2010). 25 According to the information provided by a local research assistant for this study, there are both settled population and nomad population. Although the nomad people had limited income opportunities before, now they have sufficient cash income because they are given the right to collect cordyceps (a medical herb) which fetch very good prices in government auctions (approximately USD 2,000 to USD 8,000) In addition, Gasa does not have much food insecurity because of a very low population density, good agriculture land, and the larger land holding area per capita than other regions.. Access to public infrastructure is, however, still very limited in Gasa and the road construction and the electrification has been progressed. It was not reviewed whether or not sampling method in BLSS was adequate, thus it is required to conduct further analysis on the relation of poverty and infrastructure indicators.

14 Table 2-3: Percentage of Population with Access to Electricity, Telephone, Improved Water and Sanitation, by Poverty Status and Area (2007) (%) Improved Improved Area Poverty Status Electricity Telephone Water Source Sanitation Urban Poor 96.9 45.1 97.2 89.7 Non-poor 98.7 88.3 99.5 99.0 Total 98.7 87.6 99.5 98.9 Rural Poor 41.4 39.3 82.3 94.5 Non-poor 66.1 56.5 90.2 95.9 Total 60.3 51.2 87.8 95.4 Bhutan Poor 42.4 39.4 82.6 94.4 Non-poor 77.8 67.3 93.4 96.9 Total 71.8 60.8 90.9 96.4 (Source) National Statistics Bureau, “Poverty Analysis Report 2007” (2007), p.36, Figure 15, P.51 Table A-20, A-21 (Note) “Access to Telephone” entails the ownership of a landline or mobile phone.

Reviewing the situation by region in Table 2-4, districts with a higher incidence of poverty tend to have less electricity use. There are, however, some exceptional cases where districts with a lower incidence of poverty nonetheless have lower electricity use (Gasa, Tsirang, and Trongsa).

Table 2-4: Poverty Incidence and Electricity Use as Main Source of Lightening (%) Household Poverty Percentage of Electricity Region District Incidence (2007) Use (2005) Western Chhukha 14.3 71.3 Gasa 2.1 0.0 Haa 10.5 78.1 Paro 3.1 81.4 Punakha 9.8 64.9 Samtse 36.0 40.5 Thimphu 1.4 95.5 Central Bumthang, 6.6 60.1 Dagana 21.9 18.1 Sarpang 11.8 54.0 Trongsa 14.4 26.8 Tsirang, 9.7 14.1 Wangdue Phodrang 9.6 50.2 Zhemgang 43.6 25.4 Eastern Lhuntse 32.2 29.4 Mongar 34.4 40.0 Pemagatshel 18.5 47.1 Samdrup Jongkhar 31.7 36.9 Trashi Yangste 21.8 59.5 Trashigang, 9.7 44.9 Bhutan 16.9 57.1 (Source) National Statistics Bureau, “Poverty Analysis Report 2007” (2007), p.21, Table 11; Office of the Census Commissioner Royal Government of Bhutan “Results of Population & Housing Census of Bhutan 2005”, p.458.

15 2.4.3 Education and Health Service The level of education is generally regarded as another important factor in poverty incidence. As examined in Chapter 1, the level of education of household head is closely linked to poverty rate. In particular, less educational attainment of the household head tends to bring about a higher poverty rate. On the other hand, the poor cannot have the necessary and sufficient education required for obtaining better employment and economic opportunities. Although the RGoB has made great efforts in allocating a budget to increase access to basic education, the challenge still remains in some impoverished remote areas where the households are scattered.

As shown in Table 2-5, PAR (2007) analyzed the literacy rate between the poor and non poor and found considerable disparities. The literacy rate of the poor is always 10 to 20 points less than that of the non-poor. Focusing on the comparison between the poor and non-poor by area, it is notable that the literacy rate of the rural poor is less than 50%. In terms of gender, the female poor population has the lower literacy rate, especially in rural areas (32.3%).

It is noted that there are more gaps within urban areas than in rural areas. There is also a serious gap between the poor (except for the subsistent poor) and the subsistent poor in urban areas. The literacy rate of the subsistent poor population was only 21.1%, while the literacy rate of the rest of the urban poor population was 55.5%.

Table 2-5: Literacy Rate of the Population Ages Six years and Above, by Area, Poverty Status and Sex (2007) (%) Poor Area Sex Non-poor Subsistent Poor Poor (Except for Subsistent Poor) Male 23.6 62.0 84.6 Urban Female - 46.2 65.2 Total 21.1 55.5 74.5 Male 43.5 55.2 63.4 Rural Female 25.3 32.3 42.8 Total 34.3 42.1 52.8 Male 43.2 52.4 70.4 Bhutan Female 25.3 32.6 50.2 Total 34.2 42.4 60.0 (Source) National Statistics Bureau, “Poverty Analysis Report 2007” (2007), p.44, Table A-8

Examining the net enrollment rate in primary school in Table 2-6, the rural poor have the lower enrollment rate. This illustrates that in rural areas the lower net enrollment rate in primary school can cause a lower literacy rate. There are some constraints in access to primary school, and this can be one of the causes of a lower literacy rate.

16 Table 2-6: Net Enrollment Rates in Primary School, by Area, Poverty Status and Sex (2007) (%) Poor Area Sex Non-poor Subsistent Poor Poor (Except for Subsistent Poor) Male 59.0 74.6 84.5 Rural Female 51.6 72.7 84.0 Total 55.3 73.6 84.3 Male 59.3 74.9 87.2 Bhutan Female 51.8 72.7 86 Total 55.6 73.8 86.6 (Source) National Statistics Bureau, “Poverty Analysis Report 2007” (2007), p.45-46, Table A-11 (Note) Net enrollment rates in urban areas by poverty status are not available.

Regarding the health services, in the PAR (2007), unlike the education indicators above, there are no significant difference in health-related indicators, such as access between the poor and non-poor. More than 90% of both the poor and non-poor have access to the hospital and a Basic Health Unit (BHU). However, it is observed that there are significant differences in average time to reach BHU between urban and rural areas, and between the poor and non-poor.

In urban areas, both poor and non-poor population can reach to the nearest BHU or hospital by around 20 minutes. On the other hand, in rural areas, it takes 76 minutes for the non-poor and 111 minutes for the poor in order to go to the nearest BHU. In addition, according to BLSS (2007), 30% of the rural population did not consult any health service provider because of no transport or too long distance to access while only 3.5% of the urban population have no access for the same reason. These data suggest that the rural poor in remote areas may be limited to access to health service.

2.4.4 Financial Services PAR (2007) found that access to formal financial services for the poor was limited to approximately 20 to 30% of the total poor, in both urban and rural areas. Table 2-7 indicates that many people still depend on the relatives or friends as the main source of credit in Bhutan. Credit provides a chance for the development of economic activities, and can be one of the constraints on the poor enhancing their income.

Table 2-7: Credit Sources Available for Households, by Area and Poverty Status (2007) (%) Classification of Poor Area Credit Source Non-poor Subsistent Poor Poor (Except for Subsistent Poor) Bank 33.4 25.0 53.1 BDFC/RICB 33.4 18.7 36.2 Relatives/ Friends 33.4 82.2 60.6 Urban Other - 33.0 28.1 No Access - 7.6 9.4 Don’t Know - 32.9 12.4 Bank 16.8 21.9 27.3 BDFC/RICB 17.1 28.6 42.3 Relatives/ Friends 80.3 78.2 66.2 Rural Other 35.3 31.0 20.7 No Access 22.2 18.5 13.7 Don’t Know 2.3 16.6 11.9

17 Classification of Poor Area Credit Source Non-poor Subsistent Poor Poor (Except for Subsistent Poor) Bank 16.9 22.0 36.6 BDFC/RICB 17.2 28.4 25.9 Relatives/ Friends 79.9 78.3 78.6 Bhutan Other 35.0 31.0 31.9 No Access 22.0 18.2 19.1 Don’t Know 22.9 16.9 18.3 (Source) National Statistics Bureau, “Poverty Analysis Report 2007” (2007), p.55, Table A-28 (Note) BDFC: Bhutan Development Finance Corporation Ltd., RICB: Royal Insurance Corporation of Bhutan

18 Chapter 3 Explanatory Factors of Poverty in Bhutan 3.1 Domestic Factors 3.1.1 National Development and Public Expenditure The Ninth Fiver Year Plan (2003 – 2007) had the five overall goals: improving quality of the life and income, especially of the poor; ensuring good governance; promoting private sector growth and employment generation; preserving and promoting cultural heritage and environment conservation; and achieving rapid economic growth and transformation.

For the Ninth Five Year Plan, the total capital expenditure by ministries amounted 27.96 billion Ngultrum (676.29 million US dollars)26. The actual capital expenditure was lower than the budget amount of 34.87 billion Ngultrum

Since the Ninth Five Year Plan put high priority to improve and expand the road network, in particular, feeder roads to improve rural access, the largest share of budget allocation went to the Ministry of Works and Human Settlement. The amount of 10.32 billion Ngultrum, which accounted for 36.9% in the total capital expenditure, was spent for development of infrastructure and housing. These public investments in rural infrastructure improved accessibility of the rural areas where the projects implemented.

The Ninth Five Year Plan placed priority to improve rural road infrastructure combined with multi-sectoral plan for the modernization of agriculture, including enhancement of agricultural productivity and improvement of farmers’ access to the markets. Also it emphasized on improvement of access to primary education, primary health care and improved water and sanitation. For the agriculture sector, 8.8% was spent by the Ministry of Agriculture. For the social sector, 8.9% of the capital expenditure went to the Ministry of Health and 7.8% was allocated to the Ministry of Education (Table 3-1).

Table 3-1: Capital Expenditure by Ministry (9th Fiver Year Plan 2003-2007) (Million Ngultrum) 2003/04 2004/05 2005/06 2006/07 2007/08 Total Share Agriculture 605.3 348.2588.6 408.9 511.4 2,462.3 8.8% Education 342.2 298.5 476.8 527.8 539.8 2,185.2 7.8% Finance 318.5 2,219.6 510.3 543.1 1,974.9 5,566.4 19.9% Foreign Affairs 72.4 5.8 19.2 16.1 38.7 152.1 0.5% Health 255.8 321.8 687.3 539.6 695.8 2,500.4 8.9% Home Affairs 109.8 118.0 130.4 200.5 241.9 800.5 2.9% Information & 33.6 64.4 279.9 161.8 141.9 681.6 2.4% Communication Labour & Human 100.3 90.7 125.2 150.9 110.8 577.9 2.1% Resources Trade & Industry 827.4 246.5 543.1 503.8 595.4 2,716.2 9.7% Works & Human 1,205.1 1,824.8 2,011.2 2,312.6 2,968.0 10,321.7 36.9% Settlement Total 3,870.3 5,538.2 5,372.1 5,365.1 7,818.6 27,964.3 100.0% (Source) National Statistics Bureau, “Statistical Yearbook of Bhutan 2009” (2009), p.154, Table 12.2

26 Reference exchange rate (period average): 1 USD = 41.349 Ngultrum (IMF, “International Financial Statistics Yearbook 2009”)

19 However, a UNDP report (2007)27 pointed out three factors in fiscal expenditure that were not so favorable to the poor. First, regional distribution of government expenditure has not been allocated in favor of the poor districts. There was no spatial approach or targeting mechanism of budget allocation to reduce poverty (Figure 3-1).

The second point is declining expenditure on the agriculture sector. The agriculture activities in Bhutan used to be supported by the government agriculture corporations. But the on-going privatization of the corporations and the reduction of subsidies for agricultural inputs have been discouraging the agriculture activities in which the majority of the rural poor are engaged. Therefore, a sluggish growth of the agriculture sector only limitedly brought about poverty reduction in rural areas.

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Figure 3-1: Capital Expenditure and Budget by District (9th and 10th Five Year Plan)

Third, the additional budget, which generated by the increases in both export volume and the export tariff of electricity, was not necessarily used for poverty reduction activities. More than half amount of the additional budget was allocated to the government administration, in particular for a raise in salary of civil servant28. Although the limited portion of the additional revenue was allocated to the social expenditure, the increase in the revenue from electricity export did not much benefited to the poor.

On the other hand, the socio-economic development under the Ninth Fiver Year Plan contributed to poverty reduction in certain extent. In particular, public investment in infrastructure improved accessibility of rural areas to the market as well as social services. In

27 Osmani. S.R., Bajracharya, B.B.et.al. , UNDP “Macroeconomics of poverty reduction: The Case Study of Bhutan” (2007), Colombo. 28 The UNDP report mentioned above points out that the pay scale for civil servants of the country was kept frozen for long periods but they are paid reasonably well in comparison with other countries in South Asia.

20 this context, the Tenth Five Year Plan (2008-2013) put more emphasis on development of industry and the agricultural sector, including cottage industries and small enterprises and rural development based on “One Gewog Three Products (OGTP)”29.

3.1.2 Agriculture, Land Distribution, Natural Resource Management Subsistent agriculture is prevalent in Bhutan and poor farmers are highly dependent on subsistence agriculture activities. The low agricultural productivity of subsistence farming is often discussed as a cause for rural poverty. In addition, according to a UNDP report (2009)30, there are compounding factors such as small land holdings, crop loss by wildlife or disaster, under-employment and lack of off-farm employment, inaccessibility of markets, and so on.

The Poverty Map (2010), prepared by NSB and WB, clearly shows the relationship between rural poverty and low agricultural productivity in case of rice yields (Figure 3-2). Gewogs where rice yield is low tend to be within the higher poverty rate districts such as Samtsue and Zhemgang. On the other hand, gewogs in Paro, Thimphu, Bumthang, where rice yields are higher, have a lower poverty rate. Low agricultural productivity together with a decline in agriculture investment resulted the slow growth in the agriculture sector. It is also one of the reasons for the food insecurity for the poor.

ᵷᶇᶃᶊᶂᴾᵆᶒᶍᶌᶃᶑᴾᶎᶃᶐᴾᶆᶃᶁᶒᵿᶐᶃᵇᴾ

(Source) National Statistics Bureau and The World Bank, “Draft Poverty Maps of Bhutan: Key findings” (2010), p.15 Figure 3-2: Agriculture Productivity by Gewog

Unavailability and shortage of agricultural land prevailes in rural areas and poor farmers do not have sufficient land, livestock holdings, and so on. In Bhutan, the most of the poorest farmers often fall in the category of the landless. Poor farmers spend most of their income on food consumptions, and normally do not have much cash income due to the limited opportunities for producing and selling cash crops and off-farm economic activities. Small landholding and

29 “One Gewog Three Products (OGTP)” , implemented under the Ministry of Agriculture, seeks to identify at least one to three products to be emphasized by each gewog through analysis of , potential production and market availability. This approach involves linking between the central plans; harmonizing local and national policies, and aligning central program resources and inputs with local plans, in order to allocate the resource efficiently. 30 Subedi, U and Nepal, S, UNDP “Study on Poverty-Sustainable Land Management Linkages in Bhutan” (2009).

21 subsistence farmers in rural areas tend to have temporary food insecurity due to seasonal availability of food.

Mixed mountain agriculture is typical in Bhutan. According to the UNDP report (2009)31, decreasing land holdings are described as stemming from natural conditions such as constant soil erosion, landslides, floods and forest encroachment on steep slopes. Migration from rural to urban areas has caused a shortage of agricultural labors, particularly young labors, and also caused the feminization of rural villages. Accordingly, the migration from rural areas results in decreasing agricultural production. Extensive commercial farming is one way to increase agricultural production and income; however, in the Eastern area, because of the lack of access to roads to markets, this is not conducted. The UNDP report (2009) also indicates that possessing livestock improves food security by allowing bartering for food; however, it is limited in the West because of the limited availability of pasturelands.

When land for cultivation is limited, it is necessary to implement proper utilization of land ,natural resource management and enhanced agricultural productivity. Such countermeasures may contributed to the alleviation of poverty and also the demand for food.

3.1.3 Industrial Structure and Employment Since 2000, the GDP share of the agriculture sector has decreased from 28.4 % to 19.2% and GDP growth in the agriculture sector has declined from 4.6% to 0.4% in 2007. Particularly during the period of the Ninth Five Year Plan (2003-2007), the GDP growth in the agriculture sector was sluggish due to the stagnated activities caused by the shrinking supports by the public sector through the government corporation and the subsidies.

Table 3-2: GDP Share and Growth by the Sector in Bhutan (2000–2007) (%) Indicator 2000 2001 2002 2003 2004 2005 2006 2007 GDP Share 100 100 100 100 100 100 100 100 Agriculture 28.4 27.0 26.0 25.8 25.4 23.6 22.8 19.2 Industry 35.5 37.538.3 39.1 37.6 37.1 38.0 46.5 Service 36.2 35.534.8 35.1 37.0 39.2 39.2 34.3 GDP Growth 7.2 6.8 10.9 7.2 6.8 6.5 6.3 21.4 Agriculture 4.6 5.0 2.7 2.2 1.8 0.4 1.9 0.4 Industry 7.4 10.217.7 4.4 4.1 2.9 8.0 51.4 Service 7.4 4.67.1 9.3 11.2 15.1 8.2 6.4 (Source) ADB “Key Indicators for Asia and the Pacific 2009” (Note) GDP growth is annual change.

In Bhutan, as mentioned above, the agriculture sector is the key economic sector for poverty reduction. However, the GDP share of agriculture has been continuously decreasing and its growth has been stagnant for the last decade. In 2007, the GDP share of agriculture dropped to less than 20% and the growth rate was only 0.4% though 70% of the labor force, in particular in rural areas is still engaged in the agricultural activities. It suggests that the low labor productivity in the agriculture sector causes the rural poverty.

On the other hand, the industry sector has been leading the national economy. In 2007, the

31 Ministry of Agriculture and United Nations Development Programme, “Study on Poverty-Sustainable Land Management Linkages in Bhutan” (2009).

22 growth rate of the industry sector was more than 50% and the GDP share expanded to 46.5%. The astonishingly high growth of the sector was attributed to the growth of electricity. The outputs of the utility sector, including electricity doubled from 4,387.7 million US dollars in 2006 to 9,686 million US dollars in 2007 32 . However, its growth could not expand employment in the electricity sector which is a highly capital intensive industry.

According to the Labour Market Information Bulletin 2009, the unemployment33 rate in Bhutan increased from 1.8% in 2003 to 4.0% in 2009. The total number of the unemployed in 2009 was 12,90034. The unemployment rate in urban areas is much higher than that in rural areas: 3.0% in rural areas and 7.5% in urban areas respectively, in 2009. The higher unemployment rate in urban areas may be attributed to underestimation of the unemployment rate in rural areas which may not include underemployed persons in the agriculture sector. Also the migration from rural to urban areas may contribute to the larger number of the unemployed in urban areas.

The majority of the workforces are casual paid employees or unpaid family workers, representing nearly 60% of the total labor population. The unemployment among youth accounts for a major portion of total unemployment, which has been growing steadily. In 2009, the 15 to 19 year-old age group had the largest number of unemployed (5,200), and the second largest number of the unemployed was in the 20- 24 age group (3,800). More than 70% of the unemployed population is below age 24. It suggests that unemployment of young people became a serious problem. The young unemployed population is observed both in rural and urban areas.

㪉㪉㪅㪋㩼 㪇㪅㪊㩼

㪉㪇㪅㪋㩼

㪌㪅㪈㩼

㪌㪈㪅㪏㩼

㪩㪼㪾㫌㫃㪸㫉㩷㪧㪸㫀㪻㩷㪜㫄㫇㫃㫆㫐㪼㪼㩷 㪚㪸㫊㫌㪸㫃㩷㪧㪸㫀㪻㩷㪜㫄㫇㫃㫆㫐㪼㪼 㪬㫅㫇㪸㫀㪻㩷㪝㪸㫄㫀㫃㫐㩷㪮㫆㫉㫂㪼㫉 㪦㫎㫅㩷㪘㪺㪺㫆㫌㫅㫋㩷㪮㫆㫉㫂㪼㫉 㪜㫄㫇㫃㫆㫐㪼㫉 (Source) Ministry of Labour and Human Resources, “Labour Market Information Bulletin, 2009” (2009), p.14, Table 2.3 Figure 3-3: Employment Status (2009)

32 Asian Development Bank, “Key Indicators for Asia and the Pacific 2009” 33 According to the Labor Force Survey in Bhutan, “Unemployed” are those people who did not have a job or business or were not employed and performed one of the following: - Either who have looked for work during the last one month prior to the date of interview - Or they did not look for work during the last one month but they were available for work - They did not look for work because they though that no work was available, or they were waiting for the results, or waiting to start work. 34 According to the Census 2005, the economically active population in 2005 was 256,895.

23 The Tenth Five Year Plan (2008-2013) states that one of the major reasons for slow growth in employment opportunities has been the country’s growth led by capital intensive sectors such as hydropower generations that have lower employment elasticity compared to the traditionally labor intensive sectors such as agriculture. The increase of rural-urban migration can cause a rise in youth unemployment and the poverty in urban areas; however, effective countermeasures were not taken up to the present. Employment opportunities are constrained because of limited employment absorption capacity in the public sector and an under-developed private sector. In addition, it is often argued that there is a mismatch between job seekers’ skills and expected qualification in employment opportunities in the Bhutanese economy.

It is essential to provide employment opportunities for poor families to alleviate inter-generational poverty. Increasing employment and expanding economic opportunities in both rural and urban areas is a major challenge for the RGoB during the period of the Tenth Five Year Plan

3.2 Geopolitical Factors Since Bhutan is a landlocked country surrounded by the very steep mountainous areas, the economic and trade relationships of the country have been limited to those with India, which borders the Southern region of the country. Also bordering with China, Bhutan does not have any official economic relationship with China because Tibet is located between Bhutan and the rest of China. In the 1960’s when the country took the closed economic policy, Bhutan had barter trade of agricultural products with Tibet. However, there has been no official economic relationship with Tibet since China closed the border between Tibet and Bhutan.

The geopolitical relationship between Bhutan and India has been historically essential for Bhutan. The two countries have a bilateral free trade agreement and guarantee currency convertibility between the Ngultrum and the Rupee. Since the Bhutanese economy depends on external economies, India is the most important and the largest partner for the country. Imports in Bhutan account for around 40% of GDP, and more than 30% of the imports come from India. In particular, food consumption has been covered by imports from India because of the limited food production in Bhutan and the similarity of food culture and vegetation with India. In other words, the food security of Bhutan significantly depends on India. Also, the 30% of export goes to India. The major export product to India is electricity generated through hydropower, and this is actually the driving force of the Bhutanese economy.

In terms of current balance, Bhutan also has been heavily relying on foreign aid, in particular grant aid from India35.

The UNDP report (2007)36 argues that the completely open trading policy with India has had a favorable impact on the poor in terms of imports of rice and other essential foods from India. On the other hand, increasing specialization promoted by the open trade did not help the poor because the comparative advantage of Bhutan is in natural-resource-intensive activities such as hydropower generation which are not labor intensive but capital intensive. In addition, in Bhutan, for physical works such as road construction, companies employ labors from India in

35 According to the UNDP report (2007), the share of grants from India in the total grant expanded to around 80% in the late 1990’s. In the fiscal year of 2003/04, the amount of grant from India was 6,954 million Ngultrum which accounted for 76% in the total amount of grant to Bhutan. (United Nations Development Program, “Macroeconomics of Poverty Reduction: the Case Study of Bhutan” (2007), p.91, Table 6.2 ) 36 United Nations Development Programme, “Macroeconomics of Poverty Reduction: The Case Study of Bhutan”, (2007)

24 many cases37, thus growing demand for these works does not necessarily result in increasing the employment opportunities for the Bhutanese labor population including the poor. The number of immigrants to Bhutan from outside of the country is 9,775 as of 2005, which accounted for only 0.5% of the total population in the country.

On the other hand, the number of emigrants from Bhutan to abroad is more than 39,000 as of 2005, which accounted for 1.8% of the total population in the country. The main destination countries are: Nepal, India, European countries, such as Germany and France, the United States, Australia and Japan. No detailed information about emigrants, including their background as well as their purpose to emigrate, is available. Also, data on remittance is not available38.

㪈㪏㪇㪅㪇 㪋㪌㩼

㪈㪍㪇㪅㪇 㪋㪇㩼

㪈㪋㪇㪅㪇 㪊㪌㩼

㪈㪉㪇㪅㪇 㪊㪇㩼

㪈㪇㪇㪅㪇 㪉㪌㩼

㪏㪇㪅㪇 㪉㪇㩼

㪍㪇㪅㪇 㪈㪌㩼 㪫㫉㪸㪻㪼㩷㪘㫄㫆㫌㫅㫋㩷㩿㪬㪪㪛㩷㫄㫀㫃㫃㫀㫆㫅㪀 㪪㪿㪸㫉㪼㩷㫆㪽㩷㪫㫉㪸㪻㪼㩷㫎㫀㫋㪿㩷㪠㫅㪻㫀㪸㩷㩿㩼㪀 㪋㪇㪅㪇 㪈㪇㩼

㪉㪇㪅㪇 㪌㩼

㪇㪅㪇 㪇㩼 㪉㪇㪇㪊 㪉㪇㪇㪋 㪉㪇㪇㪌 㪉㪇㪇㪍 㪉㪇㪇㪎 㪉㪇㪇㪏 㪰㪼㪸㫉 㪜㫏㫇㫆㫉㫋㩷㫋㫆㩷㪠㫅㪻㫀㪸 㪠㫄㫇㫆㫉㫋㩷㪽㫉㫆㫄㩷㪠㫅㪻㫀㪸 㩼㩷㫆㪽㩷㪜㫏㫇㫆㫉㫋㩷㫋㫆㩷㪠㫅㪻㫀㪸 㩼㩷㫆㪽㩷㪠㫄㫇㫆㫉㫋㩷㪽㫉㫆㫄㩷㪠㫅㪻㫀㪸 (Source) Asian Development Bank, “Key Indicators for Asia and the Pacific 2009: Bhutan” (2009)

Figure 3-4: Trade between Bhutan and India

3.3 Factors related to Globalization Bhutan does not have close economic relationships with countries other than India, despite the trade liberalization policy. Therefore, globalization movements in the international economy, such as regional trade integration, have affected neither the Bhutanese economy nor the poverty reduction in the country.

Bhutan envisages receiving the Foreign Direct Investment (FDI) in near future, however, due to the major relationship with India and location of the country, economic partnership has not extended to other countries yet.

37 There are some discussion about relation between employment and values of job in the Bhutanese society. Some donors point out that the Bhutanese people do not prefer lower skill and physical work such as construction workers. Therefore, they do not want to be employed in physical work even though such employment opportunities are available. 38 World Bank, “Migration and Remittances Factbook 2009” (website: www.worldbank.org/prospects/migrationandremittance as of July 2010)

25 Although the economic and trade relationship between Bhutan and the global market has been limited yet, the global economic crisis in 2008 affected a part of the Bhutanese economy. The tourism sector, one of sectors which link to the external economies, was hit by the crisis. According to the WB’s report (2010)39, the tourism revenue sharply fell in 2009. The provisional figure for the final months of 2009 reveal a decline of 7 million US dollars in annual revenue compared to the figures of approximately 39 million US dollars in 2008. Since the tourism sector has potential to create employment opportunities, it is necessary to carefully monitor a recover of the sector and impacts on employments in the country.

39 World Bank, “Bhutan Economic Update” (2010)

26 Chapter 4 Mechanism of Social Protection 4.1 Formal Public Social Security System In Bhutan, there are the insurance schemes provided by the public sector target the lower income households, including the poor, while the pension and provident fund does not the majority of the population except civil servants. In addition, the King’s Welfare Secretariat provides social assistance to the poor households. However, it is still necessary to examine further the targeting mechanism of those social protection schemes in terms of the effectiveness of outreaching all the poor who need support.

4.1.1 Pension and Provident Fund In Bhutan, the national pension and provident scheme has not developed. Therefore, the majority of the population, including lower-income people, is not covered by such public system.

The National Pension and Provident Fund (NPPF) targets only civil servants; personnel of state-owned corporations, and military personnel. The coverage ratio is 12.98% of the total labor force. NPPF was established in March 2000 and institutionalized by restructuring the former Government Employees Provident Fund (GEPF) in July 2002, with a mission “provide a sustainable old-age retirement security system promoting Gross National Happiness.” It plays a significant role in post retirement security, income security in the event of permanent disability of a member, and social support of the surviving family members of a deceased member.

The Labour Act of 2007 mandates extensions to pension or provident fund coverage. Thus, NPPF currently plans for the old age retirement schemes to be gradually expanded to include sectors other than the civil servants and the government corporations. At present, the vast majority of the Bhutanese labor population, who is casual or self-employed workers, is out of the pension/provident scheme. The upcoming “National Pension Policy of the Kingdom of Bhutan 2010 (1st Draft)” states “to promote old age poverty alleviation as per GNH policy” as one of the policy objectives. This paper states that NPPF attempts to broaden the coverage of the national pension scheme to the self-employed population by promoting their saving to the fund. Tax exemption for saving is also considered as a potential scheme.

For the private sector, there are provident fund schemes under the Royal Insurance Corporation of Bhutan (RICB) which was established in 1975 under the charter of His Majesty the Fourth King Jigme Dorji Wangchuck. RICB covers private sector worker which accounts for only around 2% of the total labor force.

4.1.2 Insurance Scheme (1) Rural House Insurance The RGoB recognized the necessity for compensation of rural people whose houses are damaged by fire, flood, landslides, earthquake and storm, since rural people live in locations which are often influenced by natural disaster due to geographical factors such as steep slopes. As an insurance scheme including such vulnerable people in rural areas, RICB has provided insurance for rural people since 1985. This scheme is intended to cover all the houses in rural areas of all districts in the country.

Under this scheme, compensation for rural households is delivered depending on the type of the

27 housing structure: permanent or semi-permanent house. Annual premium contribution per household is 60 Ngultrum for a semi-permanent house and 150 Ngultrum for permanent houses. The total maximum sum insured under this scheme is 100,000 Ngultrum for loss of a permanent house and 40,000 Ngultrum for that of a semi-permanent house. The households covered by the insurance can claims possible on partial losses to about five different parts: the roof, and the four sides of the house.

In fiscal year 2009/10, there were subscribers of 66,306 rural houses (permanent and semi-permanent) under the RICB scheme. This represents coverage of about 75% of the total number of rural houses, which were 87,804 in the Census 2005. In 2009/10, the total insurance premium paid amounted 7.38 million Ngultrum. The total amount of benefit paid was 117.9 million Ngultrum. RICB receives reimbursement from the Ministry of Finance to compensate the shortfall not covered by the insurance premium.

In September 2009, earthquake with a 6.1 magnitude hit Bhutan, followed by several aftershocks continuing until March 2010. The epicenters were mostly concentrated in the Eastern regions, such as, a Mongar and Tashigang districts, where the poverty rate is high. RICB compensated about 7,000 rural houses a total of 130 million Ngultrum.

(2) Rural Life Insurance As life insurance for rural people, there is the Rural Life Insurance Scheme (RLIs) under the Department of Local Governance, in turn under the Ministry of Home and Cultural Affairs. RLIs was launched in the 1980’s by the Royal Decree and is intended to cover all people in rural households, including children who are eight or more years old. Subscription of the RLIs is not compulsory.

The Gup (Gewog Head elected by the people) manages the scheme. Annual premium contribution per person in the village is 45 Ngultrum. Upon death of the person, the family of the deceased receives a compensation of 15,000 Ngultrum. The contribution and compensation amounts were increased in April 2009 from 30 Ngultrum and 10,000 Ngultrum, respectively40.

4.1.3 Social Support by the His Majesty the King’s Welfare Secretariat His Majesty the King’s Welfare Secretariat has a scheme to support the most vulnerable people in rural areas by granting land and cash endowments. This scheme is called “Kidu”, which is a unique Bhutanese form of state welfare. Kidu targets people who qualify through the criteria (i) disabled, (ii) landless, (iii) destitute and needy with zero income, or (iv) unfortunate children with no source of income to attend school.

The Kidu provides monthly cash (800 Ngultrum) for target people to purchase immediate necessities such as food, land to the landless for long-term sustainability, and educational endowment for destitute children.

In the past, Kidu was a major form of free allotment of land to the landless, informal livelihood security grants in the form of cash, provision of subsidized or free timbers for house construction for the most vulnerable people41.

40 The number of people covered by the RLIs and coverage ratio were not available. 41 The Kidu system has also an important role in implementing disaster relief and rehabilitation as a component of the National Disaster Management Committee under the Department of Local Government, the Ministry of Home and Cultural Affairs.

28 According to an interview with the director of the Royal Office for Media (ROM) in March 201042, His Majesty grants a monthly living allowance of 800 Ngultrum for more than 400 destitute individuals and households, and supports over 4,000 children across the country in their education. Furthermore, a total 7,947 households have been granted land amounting to 9,287 acres.

The Kidu system was specialized to provide assistance for the poorest of the poor. At present, the traditional kidu system has been reformed and extended to urban areas. Since it is difficult to reach to all corners of the country, His Majesty’s office has established a strong network of people, including 20 districts Kidu coordinators, 205 gups (gewog heads selected by the residents) and 205 gewog administrative officers. Two offices of His Majesty’s representatives were opened in Bumtang and Mongor in addition to that in Thimphu. They also work closely with the National Land Commission and relevant Ministries.

4.2 Quasi-formal Social Security System 4.2.1 Microfinance Institution The Bank of Bhutan (BoB), which is the oldest and the largest commercial bank, started to deliver microfinance services including rural credit in 1980. The BoB had a mandate to provide 20% of their loan portfolio as rural credit; however, they did not lend even 1%. This is because that BoB loans are highly secured and the farmers who needed these loans were not able to meet BoB’s requirements of collateral and personal guarantor. Later, the RGoB decided to separate credit facilities for rural development in the Fifth Five Year Development Plan (1981-1987).

Then, the Bhutan Development Finance Corporation Ltd. (BDFC) was initiated in 1982 and was formally established in 1988 as a financial institution. The RGoB mandated BDFC to cater to the financial needs of micro, small, and medium enterprises with a special focus on agricultural development. The former Agricultural Credit Division in the Royal Monetary Authority (RMA)43 was transformed into the BDFC, which is the only financial institution with a rural focus and is the only major financial institution mandated by the government to alleviate rural poverty. Under this mandate, rural clients represent 88% of the total borrowers in BDFC operation. With a nationwide network of 3 regional offices, total 22 branch offices covering all the 20 districts, and also Gewog Field Assistants. BDFC administrates loans extensively through the country. There are currently no other financial institutions which have such an extensive network in Bhutan.

Among the several loan schemes run by the BDFC, two of them target towards rural poor farmers. The first is the Group Guarantee and Lending Scheme (GGLS), which is a replica of Grameen Bank, Bangladesh. GGLS mainly targets income-generating activities such as vegetable vending, micro-enterprises and so on, on a demand-driven basis. Under this scheme, group guarantee is required instead of collateral. Each group should have 3 to 7 people and the minimum credit amount is 50,000 Ngultrum. Interest rate for this loan is 10%. According to BFDC, operational costs for this scheme is 19%, thus it is not covered by the GGLS interest rate of 10%. This gap is filled by revenue from BDFC’s other commercial loan operations and deposits in urban area, not by government subsidy; therefore, it can be said that BDFC is self-sustainable. Recently, BDFC has made efforts for more deposit mobilization.

42 Web-site of Bhutan Observer, http//www.bhutanobserver.bt/2010/Bhutan-news/03/kidu-system-reformed.html (as of May 2010). 43 RAM has function of a central bank in the country.

29 The other scheme is resettlement loans for those who obtained land as a grant (Kidu) from the government or the His Majesty’s Welfare Office. They are usually poor people in a village. The amount of loan is only 10,000 Ngultrum, and the interest rate of loan is 12%.

Some portion of other loans can also include relatively poor people among the borrowers; for example, Small Scale Industrial Loans, Seasonal Loans, or Agriculture/Livestock Loans. The Small Individual Loans are allowed for amounts up to 100,000 Ngultrum, with an interest rate of 12 to 14%. This scheme requires possessing an asset such as house.

According to the UNDP report (2007), BDFC has reached coverage of about 60% of the rural population since its establishment. The total amount of loan outstanding in 2008 were about 2.14 million Ngultrum, so the poor household inclusive loan schemes account for 15.6% to the total BDFC loan outstanding. There were 16,515 rural clients in BDFC in 2008, compared to the total of more than 87,000 houses in rural areas noted in the Census 2005. It can be inferred that the coverage ratio could be increased by reaching out to more clients.

With regard to regional distribution, according to the UNDP report (2007), the loan disbursement amount by BDFC since 1982 was imbalanced with its social mandate. More disbursements were allocated in the Western region (47.4% of total disbursement) rather than the Eastern region (26.1%) or the Central region (16.8%). In other words, the most of their operations covered not the poorer region but the better off regions with lower poverty incidence. Most recent figures were not verified; however, this should be noted for further analysis.

There are no other financing institutions which operate on a similar scale in rural areas to BDCF. In Bhutan, unlike other countries in Asia, Civil Society Organizations (CSOs) or Non-Governmental Organizations (NGOs) are not major sources of micro finance in Bhutan. There are only a few CSOs providing micro finance for rural farmers, and these on a very limited scale in country.

4.2.2 CSO’s Activities Targeting the Poor CSOs have existed for a long time in Bhutan. These are community-based self-help schemes based on collective action such as laboring for housing construction or farming, foot path clearing, and management of common resources such as water, and so on. Additionally, formal non-governmental organizations have been formed in association with religion, business community interests, welfare, or advocacy. Some of those are governed by royal charters.

Recently, the RGoB has taken on the process of institutionalizing, coordinating, and monitoring the CSOs. The CSO Act was stipulated in 2007 and The CSO Authority has just been established under the Cabinet and started in February 2010. Prior to circulation of the CSO rules and regulations, there were 46 agencies who had registered. However, after the endorsement of the CSO rules and regulations, registration of CSOs was reviewed again, and this is still in process. As of May 2010, only nine proposals from different agencies were submitted to register as a CSO, and only four have been officially approved. The Tenth Five Year Plan states CSOs and NGOs play a crucial role to support the RGoB and people to achieve the poverty reduction targets.

The following CSOs provide direct or indirect support for the poor: the Tarayana Foundation, the National Women’s Association of Bhutan (NWAB), Respect Educate Nurture and Empower Women (RENEW), the Loden Foundation, and the Bhutan Association of Women Entrepreneurs (BAWE). At present, among these CSO, the Tarayana Foundation and NWAB operate

30 activities targeting the poor more directly with their policies clearly addressing poverty alleviation.

The Tarayana Foundation was established in 2003 by Her Majesty the Queen Ashi Dorji Wangmo, with a view to working to uplift and enhance the lives of vulnerable communities in rural Bhutan (refer to box below). NWAB, one of the first non-governmental organizations in Bhutan, was established in 1981 for the promotion of economic opportunities for disadvantaged women.

NWAB has engaged in supporting rural women throughout the country by activities such as non-formal education, lending, and training for weaving and handicraft production. NWAB received international funds from such as the United Nations Children’s Fund (UNCEF), the United Nations Capital Development Fund (UNCDF), and the International Fund for Agricultural Development (IFAD), and has implemented a group loan scheme and delivering training on business

Box: Activities Targeting the Poor; the Case of the Tarayana Foundation

„ Overview of activities The Tarayana Foundation has been operating for the last 7 years and mainly devoting rural activities. Their programs are supporting vulnerable individuals, sponsoring disadvantaged students, supporting needy patients to receive medical care, promoting artisan skills and improving the socio-economic security of rural communities by housing improvement. Currently Tarayana targets 36 villages in Mongar, Samtse, Zhemgang, Trongsa and Wangdue Phodrang, for their activities. They have the support of over 4000 volunteers who are in charge of identifying target groups for community based activities and 87 school clubs. These volunteers are spread over the country so they are more accessible to the communities. They visit the communities to help with various rural activities which may range from rebuilding a house to collecting firewood for old people. They also conduct advocacy programs for health and hygiene.

„ Support for income generation activities of the poor rural village Tarayana gives support to many communities in terms of income-generation in order to make these communities self-sufficient. Activities may differ from community to community according to the necessity of the target village as a result of frequent consultation. One case is that the village people needed a new house, therefore they were given some traditional house-building skills with the intention that they help each other for the common goal. Tarayana provides the roof and pays for the head carpenter. Then, the head carpenter trained the villagers on housing construction skills. Villagers learned skills through on-the-job training. Later it became a source of income as some of them were hired as carpenters in other places. Tarayama also supports villages in enhancing agricultural productivity, by repairing the irrigation channels, promoting organic farming, producing handicrafts, and so on. Tarayana is also an implementing agency of the Rural Economy Advancement Program (REAP) for the GNH Commission. Under this program, Tarayana helps build communities through social mobilizing, economic activities, improving household food security, nutrition, hygiene, diet, child care, child rights, and women’s rights.

(Source) Interview with Ms. Chime P.Wangdi, Secretary General of Tarayana Foundation, May 2010, Tarayana Foundation Annual Report 2008-2009, Web-site http://www.tarayanafoundation.org/index.php, as of July, 2010

31 4.3 Informal Social Security System 4.3.1 Informal Finance (1) Money Lenders It is estimated that informal finance by money lenders covers 30% of the financial needs of the rural communities. Their average interest rate is around 50%44. Credits provided by money lenders are generally easy to access. People can utilize it when they are in an urgent situation, such as sickness, death, crop loss, buying agricultural inputs for production, and so on.

(2) Traditional Mutual Support As discussed in the Chapter 3, a major source of fund for households is still “friends/relatives”, not only in rural areas but also in urban areas. In both urban and rural areas, a traditional mutual help and informal financing has been functioning instead of a formal financial system. It is popularly known as “Tsogpa”. It involves a group of local people who come together on mutual grounds to help each other when any group member face hardship. Thus the tsogpa can be considered as a kind of welfare association. Each member of the tsogpa contributes to the fund on a periodical basis.

4.3.2 Role of the Monastic Bodies In Bhutan, traditionally the Monastic institutions have had a role of providing support for vulnerable people all over the country. Monastic bodies and other religious institutions also provide financial support for people in need.

Another aspect of monastic bodies is that institutions like monastic schools are serving more or less as orphanages, allowing disadvantaged children to receive education and improved well being. In tradition, a son from each family was used to join a monastic body, but in recent years, this practice has decreased. Nowadays monks are normally from more economically disadvantaged background. The most disadvantaged families prefer to place their sons in the monastic body since everything is provided free. In this sense, monastic bodies have a role to foster children from economically disadvantaged families, many of whom are orphans or children of single parents or coming from broken families. By 2005, the number of monks and nuns belonging to the Central and District Monastic bodies increased to 9,287 from about 5,000 in 1989.

44 UNDP “Macroeconomics of poverty reduction: The Case of Bhutan” (2007), p270. Original source: Chetri. S “Micro Finance Expansion in Bhutan: Toward Poverty Alleviation” (2005), Thimphu.

32 Chapter 5 Poverty Monitoring 5.1 MDGs Progress The Tenth Five Year Development Plan (2008-2013) of the RGoB states that national development goals and targets are in essence fully compatible and in alignment with the MDGs. The RGoB mainstreamed the MDG indicators in the process of creating a national development planning framework together with other long-term national goals (A Vision of Bhutan in the Year 2020), GNH, and also other development indicators. Particularly, a prime objective of the Tenth Five Year Development is “Poverty Reduction”, thus the current development plan was prepared in line with this concept. The RGoB set targets in national development goals at higher level than the targets of the MDGs goals.

The most recent progress of MDGs in Bhutan was reported by “Bhutan's Progress--Midway to the MDG (2008)” (hereafter referred to as “MDGs Progress Report 2008”), which was jointly prepared by the RGoB and the United Nations agencies. In “UNDP annual report 2008-2009: Towards Gross National Happiness: A Journey with UNDP” (hereafter referred to as “UNDP annual report 2008-2009”), MDGs status in Bhutan is updated with some indicators for 2009. In this section, the progress of MDGs is reviewed through MDGs Progress Report, UNDP annual report 2008-2009, and the MDGs country table prepared by WB.

5.1.1 MDG 1: Eradicate Extreme Poverty and Hunger Poverty reduction is the main agenda of the Tenth Five Year Development Plan; the RGoB of Bhutan has been devoted to its achievement. The target to achieve by 2015 is the poverty incidence of 20%, for the MDG 1 of “Halve by 2015 the proportion of people living below the national poverty line”. The national development target under the Tenth Five Year Development Plan is to reduce poverty incidence to 15% by the end of year 2013, which requires a greater reduction than the MDG target. The proportion of the population living below the national poverty line has been reduced to 23.2% in 2007 from 36.3% in 2000. Therefore, the progress is on track.

As for Target 2, “Halve by 2015 the proportion of people who suffer from hunger”, there is a concern on the progress. The percentage of underweight under-five children has already been reduced to the target. Actually, even before 2000, during the 1990s, the nutrition status of children generally improved considerably. However, regional differences still remain. The food poverty rate may not have improved and the prevalence of stunting under-five children has not decreased very much. As discussed in Chapter 2, although widespread hunger is not seen, food insecurity and seasonal hunger occurs in some particular areas. The 2009 Annual Health Bulletin (AHB) of the Ministry of Health shows the percentage of under-height under-five children is 44% in the eastern region, while the same indicator in the west is 33.8%. Food insecurity cannot be easily solved without multi-dimensional countermeasures such as enhancing agriculture productivity and improving market access roads.

5.1.2 MDG 2: Achieve Universal Primary Education Indicators of Target 3 “Ensure by 2015, children everywhere, boys & girls alike, will be able to complete a full course of primary schooling” are set as a prime issue by the RGoB. The gross primary enrollment ratio in 2009 was 116%, and is considered as achieved at 100% or above. The net enrollment ratio was 92% in 2009, which is slightly below the target; however, it is considerably improved from the figure of 62% in 2000. Therefore, it can be said that access to the primary schools improved for the last decade. This is because the RGoB has recognized

33 education to be a significant indicator to achieve socio-economic development and has attempted to extend the education system to all over the country despite difficulties in providing proper facilities for a scattered population. All Bhutanese over the age of six can receive basic education with free of charge.

The targets of the survival ratios, which are proportion of pupils starting grade 1 who reach grade 5 and who reach grade 7, are 100% by 2015, respectively. The survival ratio to reach grade 5 improved from 81% in 2000 to 91%. For the same period, the survival ratio to reach grade 7 also increased 85.4% to 92.4%. Therefore, those indicators are on track toward the target. However, to achieve the target by 2015, it is necessary to take further specific and targeted countermeasures. All of these figures have some difference between urban and rural areas, and the poor and the non-poor. Figures for the poor and rural people are always lower than the ones for non-poor and urban people. In order to achieve the target, further efforts should be made focusing both on poor people and underdeveloped areas.

In terms of youth literacy rates (ages 15 to 24), the specific target is not set and the most recent figures are not yet confirmed. As shown in Table 5-1, female youth literacy rate in 2005 was 68%, lower than the male youth literacy rate of 80%. Instead of youth literacy rate, a target for adult literacy rate is set as 70% under the Tenth Five Year Plan. As discussed in the Chapter 3, the literacy rate of the population age 6 years and above in 2007 showed a huge disparity between male and female and also between urban and rural. Therefore, targeted interventions by gender and area should be important part of the planning process.

5.1.3 MDG 3: Promote Gender Equality and Empower Women MDGs Progress Report 2008 focuses on the target of “Eliminate gender disparity in primary & secondary education preferably by 2005 and in all levels of education no later than 2015”. As shown in Table 5-1, the ratio of girls to boys in primary education was 100% in 2008. The UNDP annual report 2008-2009 also assesses the progress of the target is “on track” since the ratio attained 99.4% in 2009. Therefore, it can be considered that the target is almost achieved. The same ratio in secondary school is already achieved in 2009. The ratio in tertiary education was just 51% in 2008, assessed as “needs attention”. It is unlikely to achieve the target, considering that this indicator has not progressed in recent years (Table 5-1).

The proportion of seats held by women in the national parliament in 2008 was very limied, only 9% (UN data sources give the much lower figure of 2.7%).

5.1.4 MDG 4: Reduce Child Mortality Three indicators are set for this goal: under-five mortality ratio, infant mortality ratio, and proportion of children covered under immunization. All are assessed as “on track”.

In Table 5-1, the proportion of children covered under immunization programs have been more than 90%, near to the target of more than 95%. As indicated in Table 5-1, under-five mortality rate and infant mortality rate have continuously decreased, improving by around 20% to 30% from 2000 to 2008. However, the most recent indicators (for 2007) are 62 per 1,000 under-5 children and 40 per 1,000 live births respectively, while the targets by 2015 are 41 and 30 respectively. The Tenth Five Year Plan presents even more challenging target indicators, less than 30 per 1,000 for under-five mortality rate and 20 per 1,000 for infant mortality rate.

The increase in government expenditure on the health sector contributed to enhance the access to health facilities and improve child health care. Further efforts are, however, required to

34 accelerate the improvement of those indicators in order to achieve the both targets.

5.1.5 MDG 5: Improve Maternal Health In the MDGs Progress Report 2008, maternal mortality rate and births attended by skilled health personnel were set as indicators under the Target 6 of “Reduce by three quarters, between 1990 and 2015, the maternal mortality ratio”. The MDGs Progress Report 2008 assessed maternal mortality rate as “on track” and the proportion of births attended by skilled personnel as a “significant gap and needs attention”45.

The latest maternal mortality rate has not been confirmed; however, this assessment was based on the large improvement from 1990 to 2000 (from 560 to 25546 per 100,000 live births) and also the recent improvement on other relevant indicators such as access to critical reproductive health services. Under the Tenth Five Year Plan, the RGoB has a more ambitious target for maternal mortality ratio, which is 100 per 100,000 births.

The most recent ratio for births attended by skilled health personnel was 55.9%, which went up considerably from 24% in 2000. The increase in attendance by skilled health personnel can reduce maternal mortality. The MDGs Progress Report 2008 pointed out the large gap in this indicator between rural and urban areas. In particular, the ratios were very low level in some districts such as Trongsa (13.3%), Dagana (20%), Haa (24%), and Trashiyangtsue (24.7%). It is crucial to enhance the skills of health personnel and to increase the number of them in rural areas as well as districts with the lower ratio.

5.1.6 MDG 6: Combat HIV/AIDS, Malaria and Other Diseases Under this goal, the RGoB set the targets in terms of HIV cases detected and a contraception prevalence rate for the Target 7 of “Have halted by 2015 & begun to reverse the spread of HIV/AIDS”. The number of malaria cases & incidences and number of tuberculosis cases & incidences for target 8 “Have halted by 2015 & begun to reverse the incidence of malaria & other major diseases” are also targeted.

Although the prevalence of HIV/AIDs is very limited and estimated as 0.01% of total population (0.1% of the population ages 15 to 49 in Table 5-1), the MDGs Progress Report 2008 indicates that HIV/AIDs cases have increased from 38 in 2000 to 144 in 2008. It is therefore assessed as “needs attention”. This upward trend over the last few years is a serious concern. The prevalence of contraception use has been increasing. However, in 2007, it was 35.4% which was much lower than the target of 60% by 2015. Thus it was assessed as “needs attention” (Table 5-1).

The cases of malaria and tuberculosis have been reduced from 2000 to 2005. The cases of malaria decreased dramatically from 875 in 2000 to 115 in 2007. The cases of tuberculosis have also reduced from 168 in 2000 to 127 in 200747. According to the MDGs Progress Report 2008, the rapid reduction of malaria cases is attributable to several factors, especially prevention through the use of insecticide-treated bed nets, bio-environmental management, awareness dissemination, early diagnosis and effective treatment. The decrease in tuberculosis cases is greatly attributable to the introduction of DOTS (Directly Observed Treatment Short

45 UNDP annual report 2008-2009 assessed both indicators as “on track”. 46 As shown in Table 5-1, the WB data was 440 in year 2005, which was considerably higher than 255 in 2000. Since this figure was a modeled estimate, it is not further referred to in this paper. 47 WB data shows 340 in 2000 and 246 in 2009.

35 Course)48.

5.1.7 MDG 7: Ensure Environmental Sustainability There are four indicators for the Target 9 of the MDG 7 of “Integrate the principles of sustainable development into country policies and programs and reverse the loss of environmental resources”: proportion of land area covered by forest, ratio of protected area for maintaining biological diversity (percentage of surface area), CO2 emission, and proportion of population using solid fuels (wood, charcoal, dung). In addition, two indicators are set for the Target 10 of the MDG 7 “Halve, by 2015, the proportion of the population without sustainable access to an improved water source and the proportion of population without access to improved sanitation”.

Although there are no specific target for forest and protected area, the MDGs Progress Report 2008 assessed them as “on track” since the figure is maintained: forest area is 72.5% in 2000 and 200749 and protected area is 26% in 2000 and 29% in 200750. The proportion of the population using solid fuel has decreased from 75% in 2000 to 70% in 2005.

In respect of the population without access to improved water and sanitation, the MDGs Progress Report 2008 assessed that the targets have been already achieved. The RGoB set the targets to decrease the proportion of population without improved water to 27.5% and to decrease the proportion of population without access to improved sanitation to 17.5%. These targets are set for the entire country, not disaggregated for urban and rural areas as in Table 5-1. According to the MDGs Progress Report 2008 and the UNDP annual report 2008-2009, the targets have already been achieved. In 2005, the percentage of the population without access to improved water was 19%, and without access to improved sanitation was 10%. The Tenth Five Year Plan targets the population with sustainable access to safe drinking water of more than 95% and with sustainable access to improved sanitation of more than 96%.

5.1.8 MDG 8: Develop a Global Partnership for Development Youth unemployment rate is an indicator for the Target 14 of the MDG 8 “in cooperation with developing countries, develop and implement strategies for decent and productive work for youth”. Four indicators on telephone, computer use, and internet users are monitored for the Target 15 of the MDG 8 “in cooperation with the private sector, make available the benefits of new technologies, especially information and communications technologies”.

The youth unemployment rate has increased from 2.6% in 2000 to 12.9% in 2009 and it was assessed as “needs attention”. Other indicators related to communication, including the number of fixed line users, telephone density, the number of computers in use have been improved. Thus, the progress of those targets are assessed as “on track”. Due to the lack of recent data, the number of internet users is assessed as “insufficient data”.

48 DOTS is a recommended prevention strategy for tuberculosis by WHO. 49 In Table 5-1, WB data is 67% in 2000 and 68% in 2005. 50 In Table 5-1, WB data is 26.4% in both 2005 and 2008.

36 Table 5-1: MDGs Progress in Bhutan

Target 2015 Progress MDG Indicator 2000 2005 2006 2007 2008 (National) (National) Goal 1: Eradicate extreme poverty and hunger 1.1 Employment to population ratio, 15+, total (%) 51 59 59.6" 58.4" 58 no target

1.2 Employment to population ratio, ages 15-24, total (%) 39 46 .. .. 43 no target 1.3 GDP per person employed (annual % growth) 0 0 4 18 -2 no target 1.4 Income share held by lowest 20% ...... no target 1.5 Malnutrition prevalence, weight for age (% of children 14.1 ...... 19 achieved under 5) 19' 9.8' 1.6 Poverty gap at $1.25 a day (PPP) (%) ...... no target 1.7 Poverty headcount ratio at $1.25 a day (PPP) (% of ...... no target population) 1.8 Poverty gap at national poverty line (%) no target 1.9 Poverty headcount ratio below national poverty line 36.3' .. .. 23.2' .. 20.0 on track (% of population) 1.10 Prevalence of undernourishment (% of population) 3.8 … .. 5.9 .. 1.9 needs attention 1.11 Vulnerable employment, total (% of total employment) .. 52.0 ...... no target Goal 2: Achieve universal primary education 2.1 Literacy rate, youth female (% of females ages 15-24) .. 68 ...... no target 2.2 Literacy rate, youth male (% of males ages 15-24) .. 80 ...... no target 2.3 Persistence to last grade of primary, total (% of cohort) 81 84' .. .. 85 100 on track 89.5" 2.4 Primary completion rate, total (% of relevant age 52 65 73 .. 83 no target group) 2.5 Total enrollment, primary (% net) 59 75 79.9" .. 88 100 on track 62' 73' 83.7' Goal 3: Promote gender equality and empower women 3.1 Proportion of seats held by women in national 29 9 no target parliaments (%) 9.3" 2.7" 2.7" 3.2 Ratio of female to male enrollments in tertiary 52 59 .. 51 100 needs attention education 41' 54' 3.3 Ratio of female to male primary enrollment 87 97 .. 99.5' 100 100 achieved 82' 3.4 Ratio of female to male secondary enrollment 82 88 .. 93 100 on track 78' 97.2' 3.5 Share of women employed in the nonagricultural 19 16.6" ...... no target sector (% of total nonagricultural employment) Goal 4: Reduce child mortality 4.1 Immunization, measles (% of children ages 12-23 76 93 90 95 >95 on track months) 85' 90' 4.2 Mortality rate, infant (per 1,000 live births) 68 60 .. 56 30 on track 60.5' 40' 4.3 Mortality rate, under-5 (per 1,000) 106 90 .. 84 .. 41 on track 84' 62' Goal 5: Improve maternal health 5.1 Adolescent fertility rate (births per 1,000 women ages 67 48 43 38 .. no target 15-19) 61.7" 46.3" 5.2 Births attended by skilled health staff (% of total) 24 ...... 100 on track 55.9' 5.3 Contraceptive prevalence (% of women ages 15-49) 31 .. .. 35.4 .. 60 needs attention 5.4 Maternal mortality ratio (modeled estimate, per 440 ...... 140 on track 100,000 live births) 255' 5.5 Pregnant women receiving prenatal care (%) 51 88 .. .. 88 no target 5.6 Unmet need for contraception (% of married women ...... no target ages 15-49)

37 Target 2015 Progress MDG Indicator 2000 2005 2006 2007 2008 (National) (National) Goal 6: Combat HIV/AIDS, malaria, and other diseases 6.1 Children with fever receiving antimalarial drugs (% of ...... 0.2 .. no target children under age 5 with fever) 6.2 Condom use, population ages 15-24, female (% of ...... no target females ages 15-24) 6.3 Condom use, population ages 15-24, male (% of males ...... no target ages 15-24) 6.4 Incidence of tuberculosis (per 100,000 people) 340 270 .. 246 no target on track 168' 127' 6.5 Prevalence of HIV, female (% ages 15-24) .. 0.1 .. 0 0.1 no target 6.6 Prevalence of HIV, male (% ages 15-24) .. 0 .. 0 0 no target 6.7 Prevalence of HIV, total (% of population ages 15-49) .. 0 0 0.1 .. no target needs attention 6.8 Tuberculosis cases detected under DOTS (%) 41 40 .. .. 45 no target Goal 7: Ensure environmental sustainability 7.1 CO2 emissions (kg per PPP $ of GDP) 0.24" 0.16" 0.12" .. .. no target 7.2 CO2 emissions (metric tons per capita) 0.7 0.6 .. .. no target insufficient data 0.58" 7.3 Forest area (% of land area) 67 68 .. .. no target on track 72.5' 72.5' 7.4 Improved sanitation facilities (% of rural population 50" .. 50" .. combined target achieved with access) 7.5 Improved sanitation facilities (% of urban population 71" .. 71" .. .. 82.5 with access) 7.6 Improved water source (% of rural population with 79" .. 79" .. combined target achieved access) 7.7 Improved water source (% of urban population with 98" .. 98" .. .. 72.5 access) 7.8 Marine protected areas, (% of surface area) ...... not applicable 7.9 Nationally protected areas (% of total land area) 26.4 .. 26.4 no target on track 26' 29' Goal 8: Develop a global partnership for development 8.1 Aid per capita (current US$) 95 138 .. .. 132 no target 8.2 Debt service (PPG and IMF only, % of exports, ...... no target excluding workers' remittances) 8.3 Internet users (per 100 people) 0.4 3.8 5.0 6.0 5.8 no target insufficient data 1.2' 8.4 Mobile cellular subscriptions (per 100 people) 0 6 12 22 37 no target 1.6" 9.7" 17.2" 8.5 Telephone lines (per 100 people) 3 5....4 no target on track 2.4' 15.6' (Source) World Bank, “Country Table”, (http://ddp-ext.worldbank.org/ext/ddpreports/ViewSharedReport?REPORT_ID=1336&REQUEST_TYPE= VIEWADVANCED, as of July 2010), and “World Development Indicators data base”, (http://databank.worldbank.org/ddp/ as of June 2010) (Note) ' Data source: GNH Commission and the United Nations: “Bhutan's Progress--Midway to the MDG” (2008) " Data source: United Nations Statistics Division, “MDG Info 2009” (http://www.devinfo.info/mdginfo2009/ and http://mdgs.un.org/unsd/mdg/Data.aspx, as of June 2010)

38 5.2 Monitoring Indicators in the National Plan The Nation’s long term development goal is maximization of GNH. A long-term development strategy, “Bhutan Vision 2020” articulates this concept. The Tenth Five Year Plan pursues this basic concept and the MDGs were integrated into the Tenth Five Year Plan.

The MDGs Progress Report 2008 presents four pillars and nine domains of GNH that have synergy linkages with MDGs51. Only three domains (good governance, cultural diversity and resilience, and community vitality) do not directly correspond to the MDG monitoring indicators; however, good governance and culture can contribute to the achievement of MDGs.

The Tenth Five Year Plan also addresses the SAARC52 development goals (SDGs) which aim at fighting poverty regionally in South Asia. SDGs consist of four broad areas with 22 priority goals: Livelihood, Health, Education and Environment. The SDGs are regional strategies to meet the urgent imperatives of ridding South Asia of poverty and to achieve MDGs for the period of 5 years from 2007 to 2012. In fact, SDGs envisages achieving its targets faster than the target year of MDGs. The targets of SDGs are also more ambitious than the ones of MDGs. Regarding poverty, under the livelihood goal, SDGs targets eradication of hunger poverty, ensuring adequate nutrition and dietary improvement of the poor, ensuring a robust pro-poor growth process, strengthening connectivity of poorer regions and of poor as social groups, and so on.

5.3 Poverty Monitoring 5.3.1 Monitoring Mechanism The Tenth Five Year Plan states that the RGoB conducts result-oriented monitoring and evaluation. In order to realize efficient monitoring and evaluation activities, the Framework of National Monitoring and Evaluation System (NMES) was established by the GNH Commission. NMES has two main components. The first one runs the Monitoring and Evaluation (M&E) institutional set-up and procedures, setting M&E Committees involving each level of governmental agencies and preparing M&E manuals. The other one is a web-based computerized system, “the Planning and Monitoring System (PlaMS)”. PlaMS is a centralized data collection and management system that enables real time data entry, analysis, data storage, and report production on the governmental programs. All governmental agencies including local governments including district and gewog level administration have access to this system so that they can report and update the progress of programs in their charge.

The GNH Commission plans to conduct mid-term and terminal reviews based on the information collected by PlaMS. In addition, the Gross National Happiness Index and other various targets will be reviewed on a periodic basis. Mid-term review on the Tenth Five Year Plan is to be conducted around the end of 2010. A MDGs review, which will be jointly conducted by the RGoB and the donor agencies is planned for the beginning of 2011. Donors’ round table meetings to review the progress of MDGs are supposed to be conducted every two years.

The data collection activities for the MDGs monitoring are implemented by the National Statistics Bureau (NSB) as well as the line ministries, such as the Ministry of Education, the Ministry of Health and the Ministry of Labour and Human Resources. NSB conducts the

51 GNH Commission and UN “Bhutan’s Progress Midway to the Millennium Development Goals” (2008), p13, Table 1.2 52 South Asia Association for Regional Cooperation (SAARC)

39 Bhutan Living Standards Surveys (BLSS) every 5 years. The Ministry of Education and the Ministry of Health compile statistics related to education or health every year. The Ministry of Labour and Human Resource has been conducting the Labour Force Surveys (LFS) since 1998, and the latest one is the 7th LSF released in 2009. In addition, the Office of the Census Commissioner conducts the Population and Housing Census every 10 years.

5.3.2 BhutanInfo NSB and the UN system in Bhutan officially inaugurated the BhutanInfo system at the end of 2009. BhutanInfo is a socio-economic database system which covers the indicators of MDGs, the Tenth Five Year Plan, and other sectoral goals for monitoring purposes. Technical and financial support was provided mainly by UNICEF.

The current data encompasses the framework for Tenth Five Year Plan, Vision 2020, the UN Development Assistance Framework (UNDAF), the SDGs, and the MDGs. Data on 620 indicators are available currently and those indicators are further disaggregated to 1,626 in total. This system is the first comprehensive national database in Bhutan, and entails the latest district-level data and gewog-level maps. By using the database system, users can process tables and graphs as well as maps for planning, monitoring, and evaluation.

NSB will maintain and periodically update this national database53, and the district statistical officers are supposed to be responsible for maintaining their respective district databases.

53 As of the beginning of July 2010, upon inquiring to NSB regarding the availability on the Bhutan Info on the website, it was not available but supposed to be available soon.

40 Appendices Appendix 1: Poverty and Inequality Indicator

(1) Poverty Indicator

Term Explanation

Poverty Line 䂓 Relative poverty lines These are defined in relation to the overall distribution of income or consumption in a country. The relative poverty indicates the people who are relatively poor compared to the majority of the population. The relative poverty lines, for example, could be set at 50% of the country’s mean income or consumption. Then, the people, who have income or consumption below the relative poverty line, can be classified as “the relative poor”.

䂓 Absolute poverty lines These are anchored in some absolute standard of what households should be absolute to count on in order to meet their basic needs. For monetary measures, the absolute poverty lines are often based on estimates of the cost of basic food needs, that is the cost of a nutritional basket considered minimal for the health of a typical family, to which a provision is added for nonfood needs. The minimal requirement of calorie intake is adjusted by age, gender, weight and temperature.

P0: Proportion of the population living below the poverty line. The most widely used Poverty Headcount Index/ measure to show the size of poverty. It is simple to construct and easy to Poverty Incidence understand but it does not take and the living standard of the poor population and the intensity of poverty into account. q HCI N

q: Number of Poor N: Total Population P1: The average income or consumption shortfall compared to the poverty line across Poverty Gap Index/ Poverty the whole population. It is obtained by adding up all the shortfalls of the poor Depth (assuming that the non-poor have a shortfall of zero) and dividing by the total population. In the case that the poverty line is constant, the increase in the shortfall of the poor leads the higher poverty gap index. The index can be considered as the minimum cost of eliminating poverty because it shows how much would have to be transferred to the poor to bring their income or expenditure to the poverty line. 1 q  yz PGI ¦ i )( N i 1 z N: Total Population z: Poverty Line y: Individual Income or Consumption

P2: A weighted sum of poverty gaps (as a proportion of the poverty line), where the Squared Poverty Gap Index/ weights are the proportionate poverty gaps themselves. The index shows poverty Poverty Severity) severity which is inequality among the poor because a higher weight is placed on those households further away from the poverty line. In the case that the poverty line is constant, more unequal income or consumption distribution among the poor 1 q  yz SPI ¦ i )( 2 leads the higher poverty severity. N i 1 z N: Total Population z: Poverty Line y: Individual Income or Consumption

A1-1 (2) Inequality Indicator

Term Explanation Gini coefficient and Lorenz Curve Gini Coefficient shows the disparity of income or consumption distribution from the completely equal distribution in a economy. It is based on the Lorenz curve, a cumulative frequency curve the compares the distribution a specific variable (for example, income) with the uniform distribution that represents equality. Gini Coefficient varies between 0, which reflects complete equality , and 1 , which indicates complete inequality (one person or one household has all the income or consumption; all others have none)

Theil index The index is obtained by the proportion of the individual income to the mean income per person and the proportion of the individual income to the total income. The index varies between 0, which represents an equal distribution among the total population, and 1, which represents complete unequally distribution among the total population. 1 n y y Z 1 ¦ i log i n i1 y y n: Total Population yi: Individual Income y : The Mean Income per capita

The Theil Index has the advantage of being additive across different subgroups or regions in the country, then enables to understand attribution of each subgroup to the total inequality in the country.  I (Total Inequality)㧩Iw (Inequality within subgroup) 㧗Ib (Inequality among the subgroups)

(Reference) World Bank, “Poverty Reduction Strategy Paper (PRSP) Sourcebook”, (2004) World Bank, “Handbook on Poverty + Inequality”, (2009)

A1-2 Appendix 2: Gross National Happiness Indicators (Pilot)

Dimension Indicators

1. Psychological wellbeing 䂓 Index of Mental Distress 䂓 Consider committing suicide 䂓 Frequency with which they experienced good or bad emotions 䂓 Recite prayers 䂓 Meditation 䂓 Consider Karma

2. Culture 䂓 Knowledge about traditional dance 䂓 Knowledge about local legends 54 䂓 Understand lozey change 䂓 Importance of reciprocity 䂓 If killing can be justified 䂓 If stealing can be justified 䂓 If lying can be justified 䂓 How important it is that children are encouraged to learn discipline at home 䂓 How important it is that children are encouraged to learn impartiality towards rich, poor, different status at home 䂓 If religious figures influenced your values 䂓 How often played traditional sports? 䂓 Days spent in a year attending social and cultural activities? 䂓 How well can you speak your first language?

3. Time Use 䂓 How often socialize with friends? 䂓 Enough time

4. Governance 䂓 Government performance at reducing the gap between rich and poor 䂓 Government performance fighting corruption 䂓 Do you feel freedom of speech and opinion 䂓 Do you feel free from discrimination based on race, sex, religion, language, politics, or other status 䂓 Trust central ministries 䂓 Trust districts admin 䂓 Trust Media

5. Community 䂓 How safe do you feel walking alone at night in your neighborhood after dark? 䂓 How often do you have support to do the daily chores? 䂓 How many relatives live in the same community? 䂓 Is this a neighborhood where help each other 䂓 Amount of money donated to different institutions 䂓 Number of days spent in volunteer work per year 䂓 Have you been victim of crime in the last 12 months? 䂓 Level of agreement with different types of assertion on family 䂓 How much do you trust your neighbor? 䂓 Are there tensions in your community between different groups, or dispute between different neighbors?

54 Lozey exchange is a Bhutanese cultural activity, which involves something like poetry recitation to one another.

A2-1 Dimension Indicators 6. Living Standard 䂓 How well does your total income meet your everyday needs for food, shelter and clothing? 䂓 Household income including in kind transfers 䂓 People per room 䂓 Household tenure 䂓 In the last 12 months, did you cut the size of your meals or skip them because there wasn’t enough food or money for food? 䂓 In the last 12 months, bought 2nd hand cloths to keep costs down 䂓 Could not contribute to community festivals? 䂓 Postponed urgent repairs and maintenance of your house

7. Ecology 䂓 Number of issues (from 1 to 5) that are NOT ecological problems in the area: Cover land degradation, quality of water, air pollution, climate change and lost of biodiversity 䂓 How do you dispose your household waster?

8. Health 䂓 Self reported health 䂓 Number of healthy days in a month 䂓 Body Mass Index (BMI) 䂓 Do you know how HIV/AIDS is transmitted? 䂓 During the past 12 month, have you received any education or read any material about how to prevent HIV / AIDS or other sexually transmitted diseases? 䂓 Do you have any long term disability, health problem or mental problem? 䂓 How long does it take you to walk to the nearest health center?

9. Education 䂓 Literacy 䂓 Years of Education 䂓 Number of traditional arts the person knows (Source) Alkire. S, Santos. M.E., Ura.K. “Gross National Happiness and Poverty in Bhutan: Preliminary Explorations using Pilot Data” (2008), Center for Bhutan Studies.

A2-2 Annex (1) List of Major Policy Documents

File No. Name of Document Publisher Year Source 1 Tenth Five Year Plan GNH Commission, 2008/02 http://planipolis.iiep.unesco.or 2008-2013. Vol I: Main RGoB g/upload/Bhutan/Bhutan_Tenth Document Plan_Vol1_Web.pdf

Tenth Five Year Plan GNH Commission, 2009 http://planipolis.iiep.unesco.or 2008-2013. Vol II: Programme RGoB g/upload/Bhutan/Bhutan_Tenth Profile Plan_Vol2_Web.pdf 2 Macroeconomics of Poverty UNDP 2007/08 http://www.undp.org.bt/assets/f Reduction: The Case Study of iles/publication/Macroeco_cs_f Bhutan or_Bhutan.pdf 3 Poverty Reduction Strategy Department of 2004 http://www.pc.gov.bt/publicati Paper (PRSP) Planning, Ministry of ons.asp?PageIndex=3 Finance, RGoB 4 The Ninth Five Year Plan Planning Commision, 2003 http://www.pc.gov.bt/fyp.asp 2003-2008 RGoB 5 Bhutan 2020: A Vision for Planning 2000 http://www.pc.gov.bt/publicati Peace, Prosperity and Commission, RGoB ons.asp?PageIndex=1 Happiness 6 Strategic Framework For GNH Commission, - Digital Data (Word) Targeted Poverty Interventions RGoB (obtained from GNH (TPI) Commission)

'Securing sustainable Livelihoods' (incl. Village Development Plans)

Rural Economic Advancement Program (REAP): Village selection and impact 'study methodology' 7 The Thromde Act of Bhutan - 2007 Digital Data 2007 8 Economic Development Policy Ministry of Economic 2010 http://www.mti.gov.bt/Tender/ of The kingdom of Bhutan, Affairs,Royal edp-2010.pdf 2010 Government of Bhutan 9 The Civil Society Royal Court of enacted http://www.judiciary.gov.bt/ht Organizations Act of Bhutan Justice ? from 20th ml/act/Civil%20Society%20Or June, 2007 g%20Act.pdf 10 Poverty-Environment Royal Government of 2010/01 http://www.unpei.org/PDF/Bhu Mainstreaming Guideline for Bhutan tanPEMGuidelines_Jan2010.p the Planning Purposes of the df Royal Government of Bhutan (Draft) 11 Annual Health Bulletin 2009, Ministry of Health, 2009 Hard copy (obtained from 10th Five Year Plan: A Royal Government of Ministry of Health) different Approach Bhutan 12 RNR Sector Tenth Plan Ministry of 2009/10 Hard copy (obtained from 2008-2013, Vol.3: One Geog Agriculture Ministry of Agriculture) Three Products (OGTP) Plan (Bridging Central and Local Plans)

Annex-1 File No. Name of Document Publisher Year Source 13 National Pension Policy of The Pension Working 2010/05 Hard copy (obtained from Kingdom of Bhutan, 2010 (1st Committee, Ministry National Pension and draft) of Finance Provident Fund) 14 Millennium Development Department of 2005 http://www.undp.org.bt/MDG- Goals :Progress Report 2005 Planning, Ministry of Progress-Report-2005.htm Bhutan Finance 15 AG Ceiling for Dzongkhags Internal Data of GNH 2009 Digital Data and Gewogs (FY 2010-11) Commission, RGoB 2010

AG Ceilings for FY 2009-10

Annex-2 (2) List of Major Statistical Surveys

File No. Name of Survey Publisher Year Survey Cycle Source 1 Statistical Yearbook of National Statistics 2009/10 Yearly basis http://www.nsb.gov. Bhutan 2009 Bureau (NSB), Royal bt/index.php?id=13 Government of Bhutan (RGoB) 2 Bhutan Living NSB, RGoB 2007/12 Previously HIES http://www.nsb.gov. Standard Survey 2000 and BLSS bt/pub/surveys/blss/ (BLSS) 2007 Report 2003, 2007 were blss2003.pdf conducted by NSB. Next BLSS is planned in year 2011. Raw data of BLSS Raw data of BLSS Obtained from NSB 2007 (SPSS) 2007 3 Poverty Analysis NSB, RGoB 2007/12 The 2nd PAR http://www.nsb.gov. Report (PAR) 2007 survey. The 1st bt/pub/surveys/par/p survey was ar2007.pdf conducted in 2004. Next PAR is planned in year 2012. 4 Population and Office of the Census 2006 For the first time. http://www.bhutance Housing Census of Commisioner, RGoB Next Census is nsus.gov.bt Bhutan (PHCB) 2005 planned in year 2015. Raw data of PHCB Raw data Obtained from the 2005 (SPSS) Office of the Census Commissioner, RGoB 5 Statistical Yearbook of NSB, RGoB 2005/12 Yearly basis http://www.nsb.gov. Bhutan 2005 bt/index.php?id=13

6 Poverty Analysis NSB, RGoB 2004/12 The 1st PAR study http://www.nsb.gov. Report (PAR) 2004 bt/pub/surveys/par/p ar2004.pdf

7 BLSS 2003 NSB, RGoB 2003/12 BLSS 2003 is an http://www.nsb.gov. improved version of bt/pub/surveys/blss/ the Pilot Household blss2003.pdf Income and Expenditure Survey (HIES) 2000. Annual Education Policy and Planning 2009 Yearly basis http://www.educatio Statsitics, 2009 Division, Ministry of n.gov.bt/Publication 8 Education, RGoB s/annual%20educati on%20statistics%20 2009.pdf 2009 - http://www.rnrstat.bt /csbhutan/index.asp? Ministry of Agriculture 9 RNR Census 2009 cont=ShowItems.asp and Forests &catid=8&type=doc

Food and Nutrition 2009/04 - Hard copy National Nutrition, Program, Department 10 Infant and Young of Public Health, Child Feeding Survey Ministry of Health

Annex-3 File No. Name of Survey Publisher Year Survey Cycle Source National Accounts 2009/10 Yearly basis since Hard copy 11 NSB, RGoB Statistics 2000-2008 1987 Gross National 2009 - Hard copy The Centre for Bhutan 12 Happiness Survey Studies Findings 2007-2008 Dzongkhag Level - - Hard copy Population and Office of the Census 13 Housing Census Commisioner, RGoB Indicator Maps of Bhutan 2005 Infrastructure Mapping 2009/07 - Hard copy 14 NSB, RGoB of Bhutan 2008 Annual Information Ministry of Works and 2008 - Hard copy 15 Bulletin 2008 Humand Settlement Statistical Yearbook NSB, RGoB 2006/12 Yearly basis http://www.nsb.gov. 16 2006 bt/index.php?id=13 Statistical Yearbook NSB, RGoB 2007/12 Yearly basis http://www.nsb.gov. 17 2007 bt/index.php?id=13 National Land - -- Obtained from NSB 18 GIS Data, Bhutan Commission

Annex-4 (3) List of Major Microfinance Institutions

Contact Contact No. Name of MFI Address Email Address Homepage Activitiy summary Remarks Number Person 1 Bhutan P.O Box 256 Tel: (00975) Fax:+00975-2 bdfc@druknet. http://www.bdf Launched several rural credit Formally established in 1988, BDFC Develoment Thimphu -2-323428; -323428 bt cl.com.bt/ products such as the Small is the newest and smallest of Bhtan`s Finance Bhutan (00975)-2-322 Individual (SIL) and Commercial financial institutions, and the only Corporation 579; 323425 Agricultural Loan (CAL) schemes at one with the a rural focus. Only Limited interest rates of 13 percent, starting major financial institution mandated BDFCL from Nu 30,001 to Nu 50,001. by the government to alleviate rural Another scheme was the Group poverty. Guarantee Lending and Saving (GGLS), a replica of Grameen Bank, Bangladesh, at an interest rate of 10 percent, amounting from Nu 7,500 to Nu 50,000. It mainly provides seasonal, small and medium term loans to small farmers. It had also commenced Industrial Lending operations providing term finance and working capital for industrial and agro-based ventures. It also supports rural lending through its branch offices in all the 20 districts in the country. 2 Food - - - - - Rural credit scheme under FCB was - Corporation of commenced in 1980 and could not Bhutan (FCB) managed for more than to years because of its high interest rates and manpower. 3 Royal Post Box No. Tel: - insure@drukne http://www.ricb Offers various schemes of services Not only provides insurance, but also Insurance 315, Thimphu, 975-2-323677 t.bt .com.bt/ such as housing, transport, personal, finances for the overall development Corporation of Bhutan 975-2-322426/ business, consumer, industrial, PPF of the nation. The Credit & Bhutan Limited 328308/321036 and RICBL card loan and Investment department pools /321037 preferential financial scheme, resources from insurance related contractor`s revolving credit cum businesses and invests through the insurance and loan against shares. various loan schemes.

Annex-5 Contact Contact No. Name of MFI Address Email Address Homepage Activitiy summary Remarks Number Person 4 Tarayana P.O. Box 2003, Tel: Ms. Chimmi http://www.tara Programs are to support vulnerable A non-profit organization, Foundation Thimphu, 975-2-329-333 Payden, yanafoundation individuals to achieve greater wholeheartedly working to uplift and Bhutan Fax: Secretary .org/ socio-economic security, sponsor enhance the lives of people in rural 975-2-331-433 General students in disadvantaged communities in Bhutan. circumstances: endowment fund for education, support needy patients to receive medical care: facilitate access to medical services and promote relevant artisan skills to enhance rural income: promotion of artisan skills and crafts, Improve socio-economic security of rural communities: housing improvement programme etc. The Foundation is in the process of developing a micro finance scheme. 5 National Thimphu, - - - - They function with womens group one of the first local NGO to Women Bhutan and support the establishement of function in Bhutan. Association of cottage industries and providing Bhutan income generating activities in various Districts.

Annex-6 (4) List of Major NGOs (international and national) and CSOs

Name of NGO / Address Contact Number Contact Person Email Address Activitiy summary Remarks CSO Bhutan Trust P.O Box 520 Tel: 975-2-323846 Tobgye www.bhutantru Support conservation programme in the entire green - Fund Thimphu, Fax: 975-2-324214 S.Namgyal, stfund.org sector including sustainable utilization. Bhutan Director Helvetas Bhutan Helvetas Tel: 975-2-322870 Saamdu Chetri, www.helvetes.o The objective is to contribute The area of focus is livelihood Bhutan, Fax: 975-2-323210 Dy. Programme rg.bt towards sustainable food production increase, crop & environment education. P.O. Box 157 Director diversification, more efficient utilization of natural Thimphu, resources, improved incomes and promotion of Bhutan organizational capacities at farmer, Dzongkhag and ministerial levels. National P.O Box 379 Tel: 975-2-322910 Dasho Daw - The focus of activities include a number of activities for The area of focus is to bring Women`s Thimphu, Fax: 975-2-323732 Dem, Secretary rural women, including income generating activities, women into the mainstream of Association of Bhutan credit schemes, vocational training in development and Bhutan weaving, tailoring and knitting, conservation extension nation building through activities. The projects and programmes, are aimed livelihood education. towards improving women’s empowerment. The Association has 20 local chapters in all the districts of the country. Save the P.O Box 281 Tel: 975-2-323419 Tashi Pem, [email protected] ‘Save the Children’ project helped the 500-member Area of focus is child centered Children USA, Thimphu, Fax: 975-2-322290 Programme et.bt. community open and staff a 44 helped the 500-member approach to development. Bhutan Program Bhutan Officer community open and staff a preschool and construct infrastructure--including a health post, a 15-kilometer mule track, a suspension bridge, irrigation canals, drinking water systems, and a community center that now houses the health post and primary school.

Singye Karm Sherubtse Tel: 975-4-535142 Mr. S.R. shercol@drukn Its activities have been promoted in colleges using It has been implementing College, Fax: 975-4-535129 Bhattarai, et.net.bt participatory approaches. It empowers its members to environmental activities and Kanglung, Staff Advisor identify local environmental issues and investigate members have been Trashigang, them using various learning processes and life skills. implementing Bhutan Involving members in such activities not only provide several innovative projects. experiential learning them but also enable local people These include cleaning to be critically reflective to issues that impact them campaigns, trekking and directly. camping, and crane count at Bomdeling annually.

Annex-7 Name of NGO / Address Contact Number Contact Person Email Address Activitiy summary Remarks CSO SNV Bhutan Thimphu, Tel: 975-2-322900 Kencho Wangdi, www.snv.org.bt Currently, SNV Bhutan contributes to economic Focus area is to strengthen the Bhutan Fax: 975-2-322649F Programme marketing research, decentralisation of people's organizational and institutional Assistant participation practices & community based natural capacity for local governance, resource management policies. economic development and natural resource management activities in rural areas. RSPN Post Box No. Tel: 975-2-326130 Lam Dorji, [email protected] In respect to livelihood education, it conducts short term Program areas are (Royal Society 325, Fax: 975-2-323189 Executive et.bt course on environment for tourist guides occasionally. environmental education, For Protection Thimphu , Director www.rspn-bhut Conducts seminars on environmental issues. Train conservation, development of Nature) Bhutan an.org people in weaving and environmentally sound energy program, fund rising and use like solar, smokeless stoves. communication, adminstration and finance. Pro Bhutan Carl-Keller Weg - Dr. Werner http://www.pro Projects are Construction of the Hospital at Punakha A private German philanthropic 1 79539 Haring , bhutan.com/e_h (phase I), Training Centre for Technical-Medical Staff, association Lörrach, Attorney tml/kontakte.ht Elaboration and execution of Master Plan for Germany m rehabilitation of National Institute for the Disabled (blind children) in Khaling, “School for Hearing-impaired (deaf-mute), Children with Hostels, Re-construction of the roofed Cantilever Bridge at Punakha etc. Tarayana P.O. Box 2003, Tel: 975-2-329-333 - http://www.tara Programs are to support vulnerable individuals to A non-profit organization, Foundation Thimphu, Fax: 975-2-331-433 yanafoundation. achieve greater socio-economic security, sponsor wholeheartedly working to Bhutan org/ students in disadvantaged circumstances: endowment uplift and enhance the lives of fund for education, support needy patients to receive people in rural communities in medical care: facilitate access to medical services and Bhutan. promote relevant artisan skills to enhance rural income: promotion of artisan skills and crafts, Improve socio-economic security of rural communities: housing improvement programme etc. Bhutan The Bhutan Tel: +975-2-335613 Ms. Ugyen http://bhutanfou Established to support non-governmental and other - Foundation Foundation Fax: +975-2-335614 Choden nd.org charitable organizations in Bhutan towards equitable Nazhoen Pelri development (education and youth, health care, Youth Center economic opportunity etc), preservation and promotion PO Box 255 of culture and art, good governance and the Thimphu, conservation of the natural environment. Bhutan

Annex-8 Name of NGO / Address Contact Number Contact Person Email Address Activitiy summary Remarks CSO Youth Post Box 255, Tel: +975 2 327483 - http://bhutanyo One of the first NGOs that works with the youth with a - Development Thimphu, Fax: +975 2 326730 uth.org/ special focus on disadvantaged youth. Fund Bhutan Loden P.O. Box: 131, Tel/fax: - http://www.lod One of the recent members of Civil Society in Bhutan - Foundation Thimphu: +975-2-337-389 en.org/ who work with children and young adults Bhutan

RENEW Thimphu, Tel:+957-2-332-158 - www.renew.org Respect, Educate, Nurture, Empower Women, and NGO - Bhutan Fax:+957-2-332-411 .bt established looking into domestic voilence and women empowerment.

Annex-9 (5) List of Major Socio-economic Research Institutions

Name of Research Email No. Address Contact Number Contact Person Activitiy summary Remarks Institutions Address 1 National Institute of Samste, Bhutan Tel: 975-5-365273 Mr. Nandu Giri, drinies@drukn Mainly promotes science & technology Area of focus is Education (O) Tel: Lecturer in et.net.bt literacy in students, formal and non-formal education sector. 975-5-365316 (R) Chemistry & environment education, and curriculum Fax: 975-5-365363 Science development teacher training. Education 2 National Institute for ------Disabled 3 National Environment Environment Sector Tel: 975-2-323384 / Lyonpo Nado rnrncc@drukn In respect to livelihood education it helps Area of focus is Commission Programme Section 325856 Rinchen, et.net.bt in pursing the middle path of development sustainable National Environment Fax: 975-2-323385 Deputy Minister thus ensuring that new industry, new development. Commission agricultural markets and new forestry P.O. Box 466 products are carefully developed with Thimphu, Bhutan respect to their broader environmental ramifications. 4 Centre for Bhutan Studies The Centre for Bhutan Tel: +975-2-321007 Dasho Karma dasho.k.ura@g The Centre for Bhutan Studies is a one of Area of focus is Studies Fax: 975-321001 Ura, President mail.com a kind autonomous research institute socio-economic P.O. Box 1111 within Bhutan that focues entirely on sectors Langjophakha research of various aspects of Thimphu, Bhutan socio-economic development 5 National Statistics Bureau National Statistics Tel: Kuenga ktshering@nsb The only national statistical organization Area of focus is Bureau +975-2-333296/3358 Tshering, .gov.bt in Bhutan that produced reports like the statistical analysis Near Indian Embassy 48 Fax: Director Bhutan Living Standard survey and the of socio economic P.o Box 338 +975-2-323069 first Poverty Analysis Report which sectors and Thimphu, Bhutan documented the various aspects of poverty conducting in Bhutan. periodic surveys of various kinds 6 Royal Monetary Authority Royal Monetary Tel: Daw Tenzin, [email protected] The central bank of Bhutan that analyses Area of focus is Authority Chhophel +975-2-323111/3231 Managing rg.bt the country’s economy and related aspects monetary policies, Lam, Kawajangsa 10 Fax: Director and publishes the results in periodic macro economic P.o Box 154 +975-2-322847 reports. policies and Thimphu Bhutan regulating of commercial banks

Annex-10 (6) List of Useful Websites and Other References

File No. Name of Document Publisher Year 1 Study on Poverty-Sustainable Land Ministry of Agriculture, RGoB and UNDP 2009/09 Management Linkages in Bhutan 2 Report on Public Environment Expenditure Department of Public Accounts, Ministry 2009 Analysis of the Royal Government of of Finance, RGoB with support from Bhutan for the 9th FYP Period UNDP/UNEP Poverty Environment Initiative 3 Bhutan's Progress: Midway to the RGoB and UNDP 2008/11 Millenium Development Goals 4 Socio-Economic and Demographic National Statistics Bureau (NSB), RGoB 2008/08 Indicators 2005 5 Bhutan MDG Needs Assessment and Planning Commission, RGoB 2007/11 Costing Report 2006-2015 6 Vulnerability Analysis Mapping (VAM) Ministry of Agriculture and UNWFP 2005/09 7 National Human Development Report RGoB 2005 (HDR) 2005: The Challenge of Youth Employment 8 Bhutan National HDR 2000 The Planning Commission Secretariat, 2000 RGoB 9 Labour Force Survey Report Ministry of Labour and Human Resources 2009 2009 10 National Pension and Provident Fund Annual Report 2009 A Situational analysis of Children and Maggie Black, Peter Stalker/ UNICEF 2006 11 Women in Bhutan 2006 Scaling Up of the Social Protection Index Asian Development Bank 2007/11 12 for Committed Poverty Reduction, Final Report Gross National Happiness and Poverty in Sabina Alkire, Maria Emma Santos, and - Bhutan; Preliminary Explorations using aKarma Ura/Centre for Bhutan Studies (Paper is 13 Pilot Data http://www.bhutanstudies.org.bt/main/inde available at x.php (as of June 2010) web-site) Fighting Hunger: The Right to Food Way, Sonam Tobgay, Frank Mischler, Katia 2008/10 Right to Food Assessment in Bhutan: Covarrubias, Alberto Zezza/ FAO 14 Looking at policies, legal frameworks and institutions SAARC Development Goals (SDGs); An GNH Commission - 15 Engagement with Hope 16 Bhutan Economic Update World Bank 2010/04 Inter-Regional Variations in the Inequality Sanjeev Mehta - 17 and Poverty in Bhutan (Journal of Bhutan http://www.bhutanstudies.org.bt/main/inde Studies) x.php (as of June 2010) 18 Understanding Civil Society in Bhutan The Centre for Bhutan Studies 2005 Poverty Maps of Bhutan, Rural poverty World Bank 2010 19 Map: Gewog Level (DRAFT) Towards Gross National Happiness: A UNDP 2009 20 Journey with UNDP , Annual Report 2008-2009 21 Annual Report 1 July 2008-30 June 2009 Royal Society for Protection of Nature 2009 22 Annual Report 2008-2009 Tarayana Foundation 2009 20th Annual Report 2008 Bhutan Development Finance Corporation 2008 23 Limited Bhutan National Human Resource Ministry of Labor and Human Resources 2007 24 Development Report 2007

Annex-11 File No. Name of Document Publisher Year 25 Human Development Report 2006 UNDP 2006 26 Labor Force Survey 2006 Ministry of Labor and Human Resources 2007 BHUTAN Millennium Development Goals Planning Commission 2007 NEEDS ASSESSMENT AND COSTING Royal Government of Bhutan 27 RepoRt (2006-2015) Millenium Development Goals, Progress Department of Planning 2005 28 Report 2005, Bhutan Ministry of Finance

Annex-12