From Trongsa to Gelephu: A Brief History of Bhutan’s Political Economy

November 1, 2026 English, Essay, Khem Gautam, Year 18 - Issue 7

“Could we drive to Randers tomorrow to see the house where I was born?” my daughter asked one evening, half asleep, as I finished reading to her. We were visiting my father in Skjern, in western Denmark.

“I’ll think about it,” I said, gently running my fingers through her hair. “For now, close your eyes and sleep.”

The next day my wife pushed back. “It’s two and a half hours’ drive from here,” she said, “and there isn’t much to see.” Perhaps I wanted my daughter to have what I lack. For once, I won the argument.

In Randers, I pointed to an old apartment building at Pontoppidansgade 8, on a narrow street named after Henrik Pontoppidan, the Danish novelist and Nobel laureate of 1917. “A good street to begin a life on,” I told her, fitting for a girl called Kavya, whose name means poetry.

Earlier that week, she had sat listening as my father described Lamidara, the village in southern Bhutan where I was born: Suntala Bari, the orange orchard whose fruit was fit for royalty; Hari Balay, the rice fields that gave long, fragrant grains, the best in the world; Kanchi Gai, the family cow, whose milk was the creamiest in the village.

Three weeks later, in Norway, where we now live, she asked to see where I was born. I opened the map on my phone. I knew the names had changed, but I searched anyway, first for Lamidara, then for Chirang. Neither was there.

*Key dates in the essay, 1616 to 2023, grouped by the essay’s own sections. Not to scale.*

For most of its history, the eastern Himalaya was a land of corridors, its valleys and passes open to movement. Marriage, trade, herders moving their cattle between summer and winter pastures, and gifts to monasteries tied people across Nepal, Sikkim, Bhutan and Tibet together.¹ Bhutan’s founder, Zhabdrung Ngawang Namgyal, a high lama of the Drukpa school of Buddhism, arrived from Tibet as a refugee in 1616 and, over the next three decades, unified the western valleys. He left behind a dual system of government, with a religious head and a civil ruler governing side by side.² People paid their taxes in kind, in grain, butter and livestock, rather than in money.³

The richest land meant the richest rulers. For Bhutan, that land was the duars, the fertile plains along the southern foothills, which it lost to Britain in the Duar War of 1864–65 in return for an annual subsidy.⁴ The compensation was modest, but it gave Bhutan’s rulers a steady income from outside, one that did not depend on their own harvests.

Central and eastern Bhutan was under the governor of Trongsa, who by the nineteenth century had become more powerful than the civil ruler himself.² His fortress sat on the only route between east and west, and he taxed the trade that passed it.⁵ That revenue paid for the largest army in Bhutan.⁶ In 1885 its governor, Ugyen Wangchuck, won the last of the civil wars.

On 17 December 1907, in the great hall of Punakha Dzong, a fortress-monastery, the monks, the district governors and representatives of the people chose him as the first hereditary king. Three thrones stood at the head of the hall: one for Sir Ugyen Wangchuck, knighted by the British two years earlier, one for the religious head, and one for John Claude White, the British representative. Dozens of seals went onto the oath of allegiance, from lamas, officials and the subjects of each region, but none spoke for the people of the southern foothills.³

In the late nineteenth century the southern foothills were a thinly settled frontier. In 1887 the governor of Paro granted much of present-day Samtse to a settler leader, Garjaman Gurung, and his father, on condition that they found villages and pay tax.⁷ Over the following decades, Nepali-speaking farmers came in growing numbers from the hills of eastern Nepal.⁸ War taxes, forced labour and debt pushed many out,⁹ and British officials, White among them, encouraged Nepali settlement in Sikkim and Bhutan.¹⁰

In 1898 the right to settle Nepali farmers passed to the Dorji family, allies of Ugyen Wangchuck.² From Bhutan House in Kalimpong, across the border in India, they ran the south for decades, before and after 1907,¹¹ collecting its taxes in cash through village headmen and contractors.⁷ The Gurungs stayed on as their contractors; according to southern oral history, Garjaman, grown powerful, was later poisoned on the Paro governor’s orders, though Bhutan’s standard histories do not mention him.⁷

In 1927 Pashupati Adhikari, head of Lamidara and a distant relative of my mother’s, protested against land taxes; he was expelled and his land confiscated. According to my mother, it took two hours to cross on foot. Decades later, after my great-grandmother petitioned the third king, the family was granted five acres. Bhutan absorbed the south less by conquest than through revenue.

The third king, who reigned from 1952 to 1972, built a modern state out of these separately taxed regions. In the early 1950s southerners formed the Bhutan State Congress to demand an end to discrimination; exile accounts say one of its founders, Mahasur Chhetri, was killed and his body thrown into the Sunkosh river.¹² In 1953 he opened a National Assembly for the whole country,¹³ curbing the old power of the regional leaders and strengthening the centre.¹⁴ In 1958 he introduced Bhutan’s first Nationality Law, under which all who had settled in the kingdom and owned land became citizens, in the west, the east and the south alike.¹⁵

State building was not peaceful at every step. In April 1964 an assassin killed the Prime Minister, head of the Dorji family that had administered the south from Kalimpong; the motive remains unclear.¹⁴ After 1964, the government in Thimphu brought the south under direct administration.¹⁶

Every household had to send its members to work for the state without pay, a duty known as woola (begar in Nepali). This labour built and maintained the country’s roads, dzongs, water supplies and other communal works.¹⁷

The money came from outside. India funded Bhutan’s entire first and second Five-Year Plans, from 1961 to 1972,¹⁸ and has since provided more than eighty per cent of its grant aid.¹⁹ From 1962, aid also arrived from Japan, Australia and Europe.²⁰

Bhutan had become close to what political scientists call a rentier state, one that lives mainly on income it does not have to raise from its own people. In theory, a government that taxes its citizens must sooner or later bargain with them, because people who pay taxes tend to ask for a say in how their money is spent. A government funded from outside faces less of that pressure, and can offer its people services and prosperity in place of a voice.

The political scientist Leo Rose, who had access to the palace in the early 1970s, described these reforms as change introduced from above before demand for it could rise from below.² What Bhutan had not yet settled was who, culturally and legally, the nation was for.

The task of making a nation fell to the fourth king, who reigned from 1972 to 2006.

Every new nation chooses what to build on. The king’s vision was a common standard that every Bhutanese could hold. He built it on the heritage of the Ngalop of western Bhutan, the people around whom the state had first grown. Under the policy known as “One Nation, One People”, all Bhutanese were to learn the language and follow the dress and etiquette.

The Ngalop’s Drukpa Kagyu school had been funded by the state ever since the Zhabdrung founded its official order of monks in 1620,²¹ so making Buddhism the nation’s spiritual heritage was an easy and perhaps logical step, even though much of the east followed the older Nyingma tradition and much of the south was Hindu.

One language was harder to settle in a country of many peoples and local tongues. In the east most people spoke Tshangla, in its various dialects, and in the south Nepali, which already had a long written literature. These two served as the common languages between groups.²² Yet the state made Dzongkha, the Ngalop language, the national language,²³ though by linguists’ estimates only a minority of Bhutanese spoke it at home.²² In 1986 the king set up the Dzongkha Development Commission to make it a standard written language,²⁴ coining new words for a modern nation;²⁵ its first formal grammar appeared only in 1992.²⁶

In 1989 a royal decree made the gho for men and the kira for women compulsory in public, with fines for those who did not comply.²⁷ In the hot, humid south, a robe of wool or cotton was hard to wear for farm work.²⁸ The disagreement that grew in the south was about language, dress and the everyday traditions of the hills, which many southerners felt they were being asked to give up.

One Nation, One People sat uneasily in the east too, though it never boiled over as it would in the south. In 1994 an eastern businessman founded the Druk National Congress in exile, citing the neglect of eastern Bhutan,²⁹ and in 1997 Amnesty International reported a crackdown on its suspected supporters in the east.³⁰ Several hundred eastern Bhutanese fled into India,³¹ and the children of some of those arrested were expelled from school.³²

Why insist on one standard at all? Part of the answer may lie next door. In 1975 India absorbed Sikkim, where the Nepali-speaking majority had played a central role. Two years later, Rose noted the fear in Thimphu that the Lhotshampa, the Nepali-speaking southerners, might do the same.² The scholar Line Kikkenborg Christensen concludes that this fear partly shaped the policies of the 1980s.³³

The Citizenship Act of 1985 tied citizenship to residence by 1958, the year the first Nationality Law had settled who was Bhutanese.³⁴ The trouble lay in how a 1988 census enforced it in the south.³⁵ Long-settled families without a 1958 land-tax receipt could be listed as non-nationals, and a marriage across the border, the kind of tie that had once bound the eastern Himalaya together, could now make a spouse and children foreigners.²⁷ Tek Nath Rizal, a former National Assembly member from Lamidara, petitioned the King against the census in 1988 and spent most of the next decade in prison.³⁶

In 1989 Nepali was dropped from the schools.²⁷ When the south rose in protest in 1990 and some protests turned violent, the state called it an anti-national, terrorist movement that threatened Bhutan’s “survival as a nation”.³⁵ Mass arrests, abuse in detention and pressure to sign “voluntary migration” forms followed,²⁷ and within two years more than 80,000 people, about one in seven of the population, had left.³³ My family was among them; I was two. The government’s position is that those who left were not genuine citizens or left of their own accord;²⁷ critics, including Amnesty International, call it one of the largest ethnic expulsions in modern history.³⁷

*The eastern Himalaya: corridors of movement from eastern Nepal and Tibet, the duars lost to Britain, Bhutan’s southern foothills and the refugee camps. Schematic, not to scale.*

The exodus ended the open, moving world that had made Bhutan. A century earlier, a family that lost its land in eastern Nepal could walk east into the foothills and start again. By 1990 that corridor had become a set of states with fixed borders, citizenship laws and censuses. Those who left moved as their grandparents had, crossing India into eastern Nepal, the land many of their ancestors had come from. But the world had closed behind them, and they lived there for years as refugees, recognised by neither country.³⁸

Schools and health services in the south had been suspended after the protests.²⁷ In 1997 the National Assembly barred “Nepalese nationals” from employment in the south,³⁹ and from 1998 the government resettled landless families from the north on land left behind.⁴⁰

Before 1990 estimates put the south at a third or more of the population;⁴¹ recent estimates put it at about 20 per cent.³³ The south went into the first elections, in 2008, with fewer voters. Inside Bhutan, the events of 1990 to 1992 are largely absent from public life.³³

The throne began the move to democracy. In 2001 the fourth king ordered a constitution drafted, and power passed to elected institutions without a coup, while the state was well funded, something rentier theory does not explain.⁴² Elections since have been competitive.⁴³ Yet the King stands above the courts and can be removed only by parliament and a referendum,⁴⁴ and a 1992 security law that Freedom House says bars criticism of him is still in force.⁴⁵

Gross National Happiness (GNH), the idea that a country should measure success by its people’s wellbeing as well as its wealth, became the national mantra, written into the Constitution as a duty of the state. In 2011 Bhutan led a UN General Assembly resolution⁴⁶ on happiness and development.⁴⁷

GNH also became the language in which the state explained its closed doors, from a single protected national culture to forests guarded by the Constitution⁴⁸ and tourists rationed by price. Some of these choices served Bhutan well: “high value, low volume” tourism⁴⁹ brought in about six per cent of GDP by 2019⁵⁰ without the country ever opening to mass tourism.

Poverty fell from 23 per cent in 2007 to 8 per cent in 2017,⁵¹ but growth created few jobs. Youth unemployment peaked at 28 per cent in 2022.⁵²

The monarchy rested its standing on performance,² and for three decades it delivered enough prosperity, at the cost of other identities and of open contest for power.

That bargain is now under strain. According to the government, more than 71,000 citizens, about nine per cent of the population, have left the country, many of them for Australia;⁵³ the figure does not include the refugees resettled from Nepal, whom Bhutan does not count as citizens.

Economic growth of a projected 7.4 per cent in 2025/26,⁵⁴ driven by hydropower sold to India⁵⁵ and money sent home by emigrants, is not producing the jobs or the better lives that would keep people at home. The state now also earns from Bitcoin, mined with the country’s hydropower.⁵⁶

Indian aid and loans still carry much of the rest.¹⁹ India has pledged Rs 100 billion for the current five-year plan, double the last,⁵⁷ and public debt, much of it owed on hydropower projects, stood at 118 per cent of GDP in 2024/25.⁵⁴

Under the third king, every household sent its members to build the roads and dzongs without pay; today about 90 per cent of construction workers are foreign, most of them from India.⁵⁸

The south’s flat, fertile foothills are where Bhutan can build what its mountains cannot, from customs depots in the border towns⁵⁹ to industrial estates, and Gelephu has become the centre of that hope.

Gelephu Mindfulness City (GMC), the special economic zone the King announced in 2023,⁶⁰ follows the oldest pattern in this story. It looks for new money from outside, this time from foreign investors, in the same southern foothills where the duars once gave the state its richest revenue. Like Trongsa long ago, it also sits on a trade route, between South and Southeast Asia, two regions whose trade with each other grew ninefold between 2000 and 2018.⁶⁰

The zone covers a tenth of the country⁶¹ and is projected to cost about USD 100 billion, some thirty times Bhutan’s GDP.⁶²

Inside the zone, Bhutan is opening itself to the world. A country that allowed television only in 1999⁶³ now lets GMC run on foreign law, adapted from Singapore and from a financial centre in Abu Dhabi.⁶⁴

The land carries layers of history. Some refugees from the Gelephu area still hold deeds for land now earmarked for the city.⁶⁵ One of them, Bhanu Adhikari, now 76 and living in Adelaide, says seven acres were taken from his family through forged documents, and that he will seek compensation from any foreign investors involved.⁶⁶ Inside Bhutan, current owners face their own pressures, from a freeze on land sales⁶⁷ to an airport expansion affecting 552 landowners.⁶⁶

Not everyone who stayed fared as well. A cousin of mine lived in Bhutan for eighteen years after we left, married to a citizen, yet neither he nor his sons were ever granted citizenship. A few years ago they left for the West as refugees and stayed with me on the way. They were bright, warm, capable people, and they were afraid of authority, of being overheard, of saying anything at all. In Aesop’s fable, the wolf envies the dog its full belly until he sees the mark of the collar. Watching them, I knew I would not have traded my childhood in the camps for theirs.

An international index still finds policy toward the Lhotshampa discriminatory, with police security clearances limiting access to jobs, schools and travel.³⁴ At least 28 political prisoners remain,⁶⁸ four of them eastern Bhutanese accused of supporting the Druk National Congress,⁶⁹ and one, Sha Bahadur Gurung, died in custody in 2025 after 35 years.⁷⁰

In the south, schools and hospitals are running again, Dashain is a national holiday, and the King has gifted the Shivalaya Mahadev Mandir to Hindu citizens.⁷¹ Lhotshampa have served as ministers in elected governments since 2008.⁷² Recently, with Gelephu under way, a relative told me over the phone that life for those who stayed has improved, that Nepali speakers can now get government jobs and security clearances are easier to obtain.

Whether these gestures reflect reconciliation, necessity, both or neither is hard to say. Many in exile, and some inside Bhutan, see them as a way to keep the south content while grievance grows in the east, which in the 2024 election voted sharply apart from the rest of the country.⁷³ A voter in Mongar asked why the east was accused of regionalism when the west and south had never given an eastern leader a chance.⁷⁴

Repatriation for those who left in the 1990s never happened. In the refugee camp school, I began each morning with a pledge that Bhutan was my only country, one I could not remember. From 2007, after some sixteen years in camps, most of the refugees were resettled in the United States, Canada and Australia,³⁸ the same countries to which Bhutan’s own young have been emigrating.⁷⁵ The divide followed them there. When the King visited Australia in October 2024 to meet the Bhutanese diaspora, former refugees could not register for the audiences because registration required Bhutanese citizenship documents.⁷⁶

From exile, political parties, rights groups and refugee writers carry their cause,⁷⁷ at United Nations meetings,⁷⁸ outside GNH conferences⁷⁹ and in the pages of international newspapers.⁸⁰ In Beldangi camp in Nepal, where close to 7,000 refugees remain, Tilak Rai of the refugees’ repatriation committee calls GMC “a high-tech façade designed to erase our history”.⁶⁶ Wherever Bhutan presents its happiness to the world, its exiles are occasionally outside the door.

If GMC succeeds, it may bring the jobs that growth has not. But it would renew the old bargain rather than end it, prosperity at the cost of a fuller voice.

If it stalls, a state already deep in debt will face unmet expectations, in a country where criticism of the King still carries risk.

Either way, the unfinished business of nation-building remains. GMC is rising in the south, yet its official story does not mention what happened there. Can a nation grow while leaving that past unacknowledged, or will prosperity, in the end, require a reckoning?

My parents’ Bhutanese citizenship cards, from Lamidara, Chirang, no longer valid anywhere. My mother’s, on the right, was issued at Lamidara in November 1989, when she came of age, less than a year before the protests began. My father keeps them more carefully than anything else he owns; it took him an hour to unwrap them for this essay.

My parents had been citizens since 1958. I grew up in the camps, where I learned Bhutan’s history and geography, even some Dzongkha. When colleagues tell me Bhutan must be the happiest country on earth, or the last Shangri-La, I no longer bristle; I show them photos of my brother-in-law setting a world record running a marathon in his gho.⁸¹ I bear no grudge, and I have made my peace with never going back. My father wants to return and cannot. My daughter may never want to. In Randers I could show her where she was born; in Lamidara I cannot even show her where to look.

Even if Gelephu’s door stays closed to me, why should it be closed to my daughter, when investors from elsewhere are invited in? A country may get away with its history. It should not get away with it because no one knew.

Cite as: Gautam, K. (2026). From Trongsa to Gelephu: A Brief History of Bhutan’s Political Economy. Zenodo. https://doi.org/10.5281/zenodo.23840671

References

Tags: Bhutan Bhutanese Refugees Gelephu Mindfulness City Gross National Happiness Lhotshampa Political economy

From Trongsa to Gelephu: A Brief History of Bhutan’s Political Economy

Read also

References

Leave a Reply Cancel reply

Read also

References

Share this:

Leave a Reply Cancel reply