The Government of India (GoI) has released more than 83 percent of its Nu 15 billion commitment to Bhutan’s Economic Stimulus Programme (ESP). With the latest fifth tranche of Nu 2.5 billion (bn) handed over, the total disbursement under the programme has reached Nu 12.5bn.
Introduced to help Bhutan recover from the economic fallout of the COVID-19 pandemic, the ESP has evolved into one of the government’s principal instruments for economic revitalization. Beyond supporting businesses and employment, the programme is helping the country withstand external economic shocks while investing in long-term national priorities.
One of its largest interventions has been the allocation of Nu 2.5bn to Bhutan’s fuel price smoothening mechanism, enabling the government to cushion households and businesses from sharp increases in global fuel prices and contain inflationary pressures.
Foreign Affairs and External Trade Minister D.N. Dhungyel said the initiative has significantly reduced the impact of the global fuel crisis on the domestic economy by helping stabilize transport costs, food prices, and the delivery of essential services.
“The programme is also making substantial investments in agriculture, education, and digital transformation,” the minister said.
A total of Nu 800 million (M) has been earmarked for crop and livestock insurance, strengthening financial protection for farmers against climate-related disasters and market uncertainties while improving the resilience of the agriculture sector.
According to the State of the Nation Report 2026, the insurance programme is expected to benefit at least 500 farmers during the 2026–27 fiscal year, alongside investments in commercial farming, chain-link fencing and expanded market access for agricultural products.
In addition, India handed over approximately Nu 464M in project assistance for education and skills development. The package includes Nu 337M for professional development and immersion programmes for teachers, Nu 67.4M for digital scaling program to support project Drukyul and Nu 59.7M to support the recruitment of Science, Technology, Engineering and Mathematics (STEM) teachers.
Indian Ambassador to Bhutan Sandeep Arya said the Nu 464M assistance forms part of India’s project support for Bhutan’s education sector and skills development under the India-Bhutan development partnership.
The minister said the investments will strengthen Bhutan’s human capital by improving teaching quality, expanding digital learning and preparing a skilled workforce capable of supporting the country’s future economic transformation.
The ESP is also supporting a broader package of economic recovery measures. According to the State of the Nation Report, about Nu 3.3bn has already been extended as concessional loans to tourism businesses, start-ups, cottage industries and small enterprises, helping businesses recover, preserve jobs and stimulate private-sector growth.
For the 2026–27 fiscal year alone, the programme has earmarked about Nu 3.39bn for business revitalization, tourism development, crop and livestock insurance, education loans, start-up incubation, creative industries and youth employment initiatives, reflecting its expanding role in driving sustainable economic recovery.
The ESP forms part of India’s broader Nu 100bn commitment to Bhutan’s 13th Five-Year Plan (FYP), comprising Nu 85bn in project-tied assistance and Nu 15bn dedicated specifically to the ESP.
According to the ambassador, India has already released Nu 34bn under the overall commitment.
“Thus far, we have released 34bn ngultrum to Bhutan out of the commitment of 100 billion ngultrum for the 13th FYP,” he said.
The scale of Indian assistance continues to underpin Bhutan’s development financing. In the 2026–27 fiscal year, grants from India account for more than 30 percent of Bhutan’s total capital expenditure and about 72 percent of all external development grants.
“The 2026–27 budget shows that grants from India comprise over 30 percent of Bhutan’s total capital expenditure and 72 percent of all external development grants. We are privileged to be Bhutan’s leading development partner and will continue to work dynamically to advance this exemplary relationship,” the ambassador said.
The minister said the rapid disbursement of the ESP reflects the close partnership and deep mutual trust between the two countries. He said the programme has already delivered tangible benefits by protecting the economy from inflationary pressures, supporting key productive sectors and investing in education, agriculture, entrepreneurship and digital transformation.
With more than four-fifths of the stimulus fund already released, implementation of major recovery initiatives is expected to gather pace.
The minister said the continued collaboration between Bhutan and India will help ensure that the programme not only supports immediate economic recovery but also lays the foundation for a more resilient, diversified and competitive economy capable of generating sustainable growth and greater opportunities for the Bhutanese people.
Nidup Lhamo, Thimphu
