Bhutan, over the decades has taken great care to nurture and strengthen its relationship with India mainly due to India’s economic assistance to Bhutan.
The assistance started as aid in the early 1960’s that supported our five year plans.
However, starting with Chukha and Tala India started playing an equally if not more important role in Bhutan’s hydropower development, which helped meet revenue needs for our rapidly expanding current expenditure bills.
Initially hydropower was a result of our good relations with India but today it has become the main focus of our relationship. At least this is the case from Bhutan’s side.
The reason will be obvious if we look at the trade imbalance as we import much more from India and then we will ever export.
Our entire Tala revenue barely covers even our basic fuel imports. The rupee and credit crisis of 2012 brought this to a head when trade imbalance was at its height.
For Bhutan, hydropower is not a luxury anymore but a very real and basic necessity to pay for our growing imports and developmental needs that grants cannot cover any longer. It is also the only realistic path to self sufficiency.
This is why there is so much obsessive national focus on the 10,000 MW commitment. There is also benefit for India in getting relatively cheap power and enjoying an influential position as the sole customer of Bhutan’s power.
It is important that Bhutan watchers in the Indian establishment recognize this and provide further impetus to hydropower development for stronger relations between the two countries.
One of the most beautiful qualities of true friendship is to understand and to be understood.
Lucius Annaeus Seneca