The Bhutan We Think We Know

Bht 99

FAQ

Does Bhutan get paid for sharing a currency with India?

No — and that is the point the book raises. The ngultrum has been pegged 1:1 to the Indian rupee since 1974, yet Bhutan receives no explicit payment for it. Four other countries that share a currency with a larger neighbour — Lesotho, Eswatini and Namibia, pegged to South Africa's rand — receive a formula-driven seigniorage compensation, about R1.4 billion a year across the three. Bhutan, after fifty-plus years, receives zero. The book estimates a comparable claim might be worth roughly Nu 855 million a year — but stresses this is a constructed estimate, and frames it as making an implicit arrangement explicit, not as money India 'owes.'

The comparison is the Common Monetary Area in southern Africa, where the rand circulates across four states and the three smaller members are paid a formula-driven share of the seigniorage — the profit a central bank earns from issuing currency. Bhutan has run the same arrangement with India since 1974 and has never raised the question.

The book is careful here: the roughly Nu 855 million a year figure is a constructed estimate built on soft inputs, not an audited entitlement, and the argument is explicitly not that India owes Bhutan money. It is that an arrangement which is currently implicit could be made explicit and indexed — a diplomatic question Bhutan has not yet put on the table.

The full reasoning is in Paradox #61, with the related currency-peg cost examined in Paradox #62.

Primary sources