Bhutan's economy, which had historically looked north to Tibet, reached a turning point in 1865, when the Sinchula Treaty was signed with British India. This reorientation from north to south was the result of repeated attempts by the British to use Bhutan as an intermediary for commercial and diplomatic ties with Tibet. Early British travellers to Bhutan have chronicled the cautiousness with which Bliutane.se society treated these approaches, but it was only a matter of time before it gave in.
Forty years of socioeconomic development in Bhutan have resulted in Indocentric trade and the emergence of a class of economic manipulators who have gained from the political problems of the south. Bhutan's development strategy must hinge on investing revenue from its hydroelectricity sales into education and health, while promoting economic interdependence with India.
The links forged by the Sinchula Treaty were reinforced during the visit to Thimphu in 1958 by Indian Prime Minister Jawaharlal Nehru. Cross-border relations with Tibet were broken the following year, and Bhutan´s integration into India´s economy began in earnest. Today, interaction with the Indian states of Assam and Bengal has become indispensable, India continues to provide large grants for development projects, and Indian companies have commercial ties with the major industrial projects.
Economic integration did have its opponents. Traditionalists who supported the Shabdrung theocracy were vehemently against falling under Indian influence. But the third king, Jigme Dorji Wangchuk, with advice from his prime minister, Jigme Palden Dorji, used the Chinese occupation of Tibet to convince the traditionalists of the need for Indian support to counterbalance the communist threat.