India-Bhutan Power Cooperation: Between Policy Overtures and Local Debates
Since 80 per cent of Bhutan’s total trade is with India, the resulting macroeconomic environment makes it largely dependent on its southern neighbour. Hydro-power perpetuates this economic dependence as it constitutes 45 per cent of Bhutan’s total exports to India. Promising as this figure is for Bhutan’s national economic growth, India and Bhutan have embarked on a second phase of power cooperation, with the aim of generating 10,000 MW of power by 2020. The decision to expand power trade was originally announced after the first bilateral Empowered Joint Group of Ministers meeting which took place in March 2009 in New Delhi.
Will this second phase be as rewarding as the first one? With hydel cooperation emerging as an important pillar in India-Bhutan relationship, this Issue Brief examines the challenges and opportunities in this sector in the years to come. By highlighting the issue of hydel dams, this brief argues that development assistance and its impact on the local environment could become an important variable in shaping local perceptions towards India-Bhutan diplomatic engagement.
