Bhutan is to soon graduate from the Least Developed Countries and the Prime Minister assured that it is a proud moment for the country. The Prime Minister also said that Bhutan is ready to graduate after two consecutive assessments and that graduation from LDC will not impact its relationship with the Government of India.
As per the United Nations criteria, a country can graduate from LDC status if it meets three key criteria. First, the country must have a per capita income of above 1,230 US dollars for two consecutive years.
Furthermore, the country must have a Human Assets Index above 66, which assesses a country’s health, education, and adult literacy.
Another criterion is the economic vulnerability of a country. Factors such as population size, remoteness, and dependence on exports of goods and services are considered.
Bhutan fulfilled two of the three criteria in 2015 but did not meet the Economic Vulnerability Index. According to the prime minister, Bhutan fulfilled all three criteria in 2018.
The Prime Minister during the meet the press session yesterday said that Bhutan might face a few challenges but the relationship with the Government of India will not change.
“We might not get certain free aid and grants. Maybe a few million dollars here and there. We do not get large aid, the biggest grant by far is from GoI and it has nothing to do with Bhutan’s graduation from LDC. It is a time-tested relationship between the two governments and two countries.”
The development grants from the European Union will also not change despite graduation. However, tariffs will be levied based on the type of goods that Bhutan will export and import.
“There will be changes in doing business that is our goods will have to qualify to certain criteria, certain quality meaning it has to be of better quality and when it enters the first world market (EU market), they will put a small tax. Right now, going by LDC, we export without paying taxes. After graduation, depending on the goods that are being imported or exported, they will impose some amount of tax. Maybe 0.2 per cent 0.5 or one per cent depending on the goods,” added Prime Minister.
Although Bhutan is graduating from LDC, neighbouring countries like Nepal and Bangladesh have decided to postpone their graduation.