Bhutanese economy is characterized by its small size given its small population size. With the majority of the Bhutanese people illiterate and residing in rural areas, about 31% of the population still lives under poverty line. However, in general all Bhutanese have a shelter and are self – sufficient to a large extent. With rapid modernization the living standard of the people has also stared to grow in the recent years and every village have now access to basic amenities such as Schools, Basic Health Units, feeder roads and electricity. And also connected with a good network of telecommunication and mobile phones even in the remotest villages.
Bhutan’s standard of living is growing faster than that of its neighbouring countries and is one of the highest in South Asia. Bhutan’s small economy is based on agriculture, forestry, and the sale of hydroelectric power to India. Agriculture provides the main livelihood for more than 80% of the population. The main crops are rice, maize, wheat and buckwheat while cash crops are predominantly potatoes, apples, and citrus such as oranges, cardamom, ginger, and chili. With the setting up of a fruit based industry in the capital, farmers from the nearby areas are able to market their fruit products and thereby earn additional revenue.
Agrarian practices consist largely of subsistence farming and animal husbandry. Handicrafts, particularly weaving and the manufacture of religious art for home altars are a small cottage industry and a source of income for some. A landscape that varies from hilly to ruggedly mountainous has made the building of roads, and other infrastructure, difficult and expensive. This, and a lack of access to the sea, has meant that Bhutan has never been able to benefit from significant trading of its produce. Bhutan currently does not have a railway system, though Indian Railways plans to link up southern Bhutan with its vast network under an agreement signed in January 2005. The historic trade routes over the high Himalayas, which connected India to Tibet, have been closed since the 1959 military takeover of Tibet (although smuggling activity still brings Chinese goods into Bhutan).
Another sector that contributes to the revenue is the contribution from the manufacturing sector. With the industrial sector established in Pasakha, some of the small scale industries that have cropped up are cement plants, calcium and carbide, steel and Ferro silicon, coca cola and also wood based industries.
As a result of the economic development, with US $ 1,321, today we have one of the highest per capita incomes in South Asia. The existing paper currency is being revised and new notes are developed to replace the existing old ones. As of now, denominations of Ngultrum one and Ngultrum five have been introduced. Coins are also very much in use in Bhutan.