The major problems confronting the state are rising unemployment and dropping percapita income because of internal resources that have not been exploited. The economy of the state essentially depends on the huge amout of Central grant that it gets. So far the State Government has been the major employer in the state and is now buckling under huge establishment costs. For a population of 5.5 lacs  the State Government directly employs 30,000 persons – the highest government employee to population ratio in the country – and the government can no longer continue to provide direct employment. The roads and building construction activity in the state, which got a considerable boost immediately after Sikkim became a part of India, till now was a good source of employment for the labourers and provided income for the local contractors. With roads and bridges constructed in almost every corner of the state, there is now a steady decline in employment from this source.

There is therefore an urgent need to exploit other sources of income as well as find way and means to generate internal resources to rejuvenate the Sikkimese economy. The Government of Sikkim has taken up an ambitious capacity building and skill development programme and local youth are now getting jobs in the private sector out of the state.  The key sectors of the economy and the related watershed events are discussed below

Agriculture and  Horticulture

The Nepali immigrants during the last century introduced terrace farming in the state. This gave a considerable boost to the agricultural yield. Paddy and maize are grown in the tropical and temperate regions of the state. Barley, millet and buck-wheat are grown in certain areas.

Cabbages grow in abundance in the Lachung area and its yield is sufficient

to meet the requirements of the state. Potatoes grow in abundance in the Ribdi area in Western Sikkim and are even exported out of the state. Cardamom (big variety) copiously grows in the humid areas of the state and Sikkim is a major supplier of this commodity to the Indian market. Apples grow in limited quantities in the Lachung valley whereas oranges are found in the southern areas of the state. The climate and soil also lends itself to the growth of ginger especially in South Sikkim. The Temi Tea Estate annually produces about 150 tons of high quality tea which carries a high premium in the international market. Vegetables are also grown in limited quantities but are not sufficient to meet the local demand and therefore have to be brought in from outside. In the upper reaches of North Sikkim Jatamasai plant grows in abundance and is exported out of the state for manufacturing incense.

Horticulture holds a very good promise for Sikkim. The climate of Sikkim is conducive to the growth of both apples and oranges. However, because of overgrowth, the yield of these fruits is almost non-existent. It can be revived for commercial exploitation through cross-breeding and use of appropriate manure. Peaches, plums and many other fruits can also be commercially viable if their cultivation is taken up scientifically. If Himachal Pradesh, which has a terrain and climate similar to Sikkim, has a  sizable income from horticulture there is no reason why this state also cannot. Orchids and cutflowers have a good market in the plains and this certainly requires to be exploited. Although there is a Fruit Preservation Factory at Singtam to can various fruits and produce squashes, but there is a further scope of this coming up in the private sector.  High yielding crops also need to be propagated amongst the marginal farmers in the state so that the state becomes self sufficient atleast in paddy.

High transportation costs and the lack of a proper marketing structure where farmers can easily sell their products has been a banein the development of horticulture in the state. Sikkim is now organic state and products grown here  fetch premium value.

Animal Husbandary

Most of the cattle in the state have been cross-bred with the Jersey and Holstein Fresians species and this has led to the milk yield increasing considerably. Sikkim is self-sufficient in milk more than 25 percent of which is pasteurized in the chilling plants and sold in polypacks. At the higher altitudes, yaks, goats and sheep are used to provide milk products, meat and skin. Yak cheese is exported out of the state to Darjeeling and Kalimpong. The few poultry farms are not able to meet the local demand and therefore eggs have to brought in from the plains.

Poultry can also be a good source of income. There is a great demand for Sikkimese Apso dogs and their breeding can be taken up on a large scale to provide good income.  The rearing of Angora rabbits for their wool has been taken up on an experimental basis: it should be taken up in a big way and and can come up as a big cottage industry. Yaks form the mainstay of the economy in the high altitudes; their rearing should be taken up commercially for milk products, meat  and skin. Sikkim Gouda Cheese is now marketed all across the country by Amul.


The first power plant in Sikkim was established below the Sichey Busty area in Gangtok in 1927. It worked on water power and had a capacity of only 120 KW and met the needs of the capital. In 1965 a 2 MW Hydroelectric was commissioned on the Rongnichu and was named the Jali Power House. In 1969, a hydel project with a capacity of 50 KW was established at Manaul near Mangan to cater to the power needs of North District. A year later a micro-hydel station was setup at Rothak near Jorethang in West Sikkim. In the early seventies a 200 KW hydroelectric station was commissioned at Rimbi near Yoksum. The first major hydroelectric project was established in the mid-seventies at Lower Lagyap near Ranipool by harnessing the three streams Roro chu, Yalichu and Takchemchu.

The National Hydroelectric Power Corporation (NHPC) in the year 2001 commissioned its 60 MW  hydroelectric project at Legship on the River Rangit. and Stage V on River Tista which is generating 510mMW.  Many other mega hydel projects are in the offiing. 95 percent of the villages in the state are electrified.

Rivers and streams criss-cross the topography of the state and the waters in these can be harnessed to provide almost limitless hydro-electric power. It is said that the state has a potential for generating more than 10,000 Megawatts of electricity. Even after a decade it is felt that Sikkim will not have a requirement of more than 100 MW. If properly tapped, hydroelectricy therefore can provide an attractive source of generating revenue by means of selling the surplus power to the neighbouring states.There is also a good scope for privatising generation of power especially in the micro-hydel segement.


The last few years have seen a considerable surge in the number of tourists visiting the state – perhaps because of unrest in other tourist spots in the country like Kashmir. However, tourism as a major source of income still remains unexploited. Sikkim has the most unparalleled beauty on earth – exotic lakes, verdant landscapes and breathtaking views. Unfortunately, most of these places are in the restricted areas and to visit them entails getting permission from various sources and this can take months together. Even most locals do not have easy access to the restricted areas making them feel like outsiders in their own state. A beginning has been made by opening Changu, Nathula and Yumthang to foreign visitors but this is not enough – definitely more requires to be done – if Sikkim has to earn a respectable revenue from tourism and make it the mainstay of its economy. The concerned Central Government agencies must  open up new areas to tourists considering the thaw in relations with China. Boating, rafting, angling, bird-watching and yak-rides are some other activities that can also be fruitfully developed to provide much required revenue. Cultural carnivals and Light and Sound Programme at the White Hall can be thought of as presently tourists do not how to spend their evening.

Conference tourism in which big companies organise their workshops and seminars is also making inroads in Sikkim.  Buddhism circuit tourism has also good prospects.

A boom in tourism in the state will result in concomitant rise in the demand for local handicrafts. Manufacture and sale of this commodity can be source of income for the locals.

Information Technology

Information Technololgy is in its nascent stage in the state and requires to be put on a firm footing. There is an engineering college that offers graduate level courses in computers.Many private institutes like APTECH, NIIT, ZEd are running Diploma and other short term courses at various places in Sikkim. Information Technology is well poised to become a service oriented industry on the lines of Tourism. Information Technology can help to introduce better governane through the use of information tools. It can aid in income and employment generation especially through Information Technology Enabled Services. It can empower the rural communities to reduce the digital divide.

Computerisation in the State Government began as early as 1988 with the Sikkim Police pioneering it. However computerisation has been limited to offifce automation in areas like paybilling. Computers are yet to be used for Management Information System and E-governance.

The high literacy rate, familarity with English, pleasant climate and absence of labour problems are conducive to the development of IT enabled technology. The Department is organising  an annual national Exhibition and Conference SIKITEX since 2009. Such a step would help in getting big companies to invest in Sikkim and contribute towards conference tourism.

As its commitment towards development of this sector, the Government created a new Department of Information Technology. It is presently involved in computerising various government departments and training government employees in the use of computers. It has set up a website for the government wherein the Sikkim Herald (the official mouthpiece of the Government), government Gazettes, rules and regulations etc have been hosted. Prices of agricultural commodities are also being hosted so that farmers can access these and are not fleeced by the middlemen. 45 Common Service Centres  have been established in places as remote as Lachen and Okhrey.  Each centre is equipped with 6 computers and a direct satellite link and would be accessible to the members of the public.   The Department is playing more of a role of a facilitator  and capacity builder to stimulate IT in the private sector.


Till the nineteen eighties, most of the telecommunication within the state was being catered to by the Sikkim Police through its wireless network. The scenario has changed considerably since then. The remotest areas of Sikkim have been connected on the telephone by the Bharat Sanchar Nigam Limited (BSNL).Optical Fibres have also been laid interconnecting all important towns and villages in the state- a boon for those who require wide bandwidth to work on the internet.

Roads and Bridges

The first roads in Sikkim were cart roads. These roads were later strengthened and broadened to take vehicular traffic. A cart road was built from Siliguri to Tista in 1860 and in 1861 another road was built from Darjeeling to Tista. A few years later the road was extended to Kalimpong. The border dispute between Tibet and British India prompted the construction of a cart road from Kalimpong via Pedong, Rongli to Jelepla in late seventies of the last century. In the early eighties a cart road was constructed between Gangtok and Tumlong, the then capital of Sikkim. The late eighteen eighties saw the construction of a cart road between Tista and Gangtok. Suspension bridges were also constructed at Tista, Rangpo and Singtam. In the early 1920s, motor vehicles arrived at Darjeeling and the road between Darjeeling and Tista was broadened to accommodate them. The road between Tista and Gangtok was also broadened in the mid 1920s. In the late thirties concrete bridges were constructed over river Tista at Sevoke and Tista, the latter of which was washed away in the floods of 1968. The road scenario in the state has undergone dramatic changes since then. Roads, the total length of which run to almost 1,600 kms, have been constructed to almost each and every corner of Sikkim bringing modern amenities to the doorsteps of the people of the state.

In the absence of any other means of communication, roads form the backbone for transporting men and material in the state. The economy of the state is very much dependent on roads. At many places the roads require to be improved by widenening them and replacing bridges with a low tonnage capacity. Roads in many areas are prone to landslides and alternate routes need to be developed.


The first motorised vehicles arrived at Gangtok in 1925 and were “Beetles” – very small in size just suited for the small roads of this area. In the early thirties a private taxi service using a Dodge car was started between Gangtok and Siliguri by a Bihari businessman. In 1944, the Government established the Sikkim State Transport with a couple of Dodge and Mercedes Benz trucks and a few Willy Jeeps. In 1955, the organisation was nationalised and called the Sikkim Nationalised Transport. Since then this Department has grown in size manifold and with its fleet of 150 buses and 200 trucks provides passenger and freight service to the remotest parts of Sikkim. It also runs bus services to Siliguri, Kalimpong and Darjeeling. Although Sikkim Nationalised Transport continues to monopolise most of the routes in Sikkim, private buses are permitted to operate between Gangtok and the important towns in North Bengal. Sikkim now has more than 40,000 vehicles including about 10,000 two wheelers. Till the late 1970s it use to take about 7 hours to do the distance between Gangtok and Siliguri by bus- a backbreaking odyssey but now due to good roads and faster vehicles the distance can be covered in about 3 hours.

A broad gauge railway line is being constructed till Rangpo.

Rural Development

Rural Development brings the economic benefits to the grassroot levels. Through the medium of the Panchayats, the government implements various schemes to provide employment and for the upliftment of the rural poor.

The Mahatma Gandhi National Rural Employment Gurantee Act provides for 100 days employment to all unemployed in Rural areas by engaging them in construction works related to various schemes. The Integrated Rural Development Programme (IRDP) and the Development of Women and Children in Rural Areas (DWCRA) are schemes that provide income generating assets through financial assistance to the rural poor. The Training of Rural Youth for self-employment (TRYSEM) is another scheme that offers courses in different trades like carpet weaving and other cottage industries.

Rural water supply schemes that provide potable water have been extensively implemented in the villages of Sikkim. Rural sanitation is another aspect that has received concerted attention. In order to permit easy inter-village communication, foot-bridges have been widely constructed over rivers and streams as a part of the programme to develop the rural scenario. Reconstruction of Earthquake Damaged Rural Houses (REDRH) and revival of springs are some innovative schemes taken up by the RMDD Department

Education and literacy

The first modern primary schools were opened in Sikkim by the missionaries. Finnish missionaries of the Scandinavian Mission Alliance established schools in 1880s at Khamdong, Sang, Dentam, Lachen, Chakung and Mangan. Later the Scottish missionaries also established many schools. The Government established a boarding school called the Bhutia school at Burtuk at Gangtok in 1895. This was followed by the opening of another school almost ten years later called the Nepali School in the Lal Bazar area of present day Gangtok. In 1925 these two schools were combined to form the present day Tashi Namgyal Academy. A Scottish missionary established the present day Paljor Namgyal Girls’ School in 1924. With the passage of time, more and more schools were opened and presently there are about 1,400 schools in the state including about 1,200 primary and pre-primary schools. There are approximately 7,000 teachers for a student population of 1.3 lacs the highest teacher-student ratio in the country. The percentage of literacy in the state stands at about 80 percent. There are also many Buddhist monastic schoools and Sanskrit Pathshalayas. A Government run Sheda (Monastic College) called teh Nyggmipa School of Higher Studies -from Class 9 to MA – exists at Gangtok for those interested in pursuing higher studies in Tibetan and Buddhism.  It is affliated to a University at Banaras. Two private Shedas also exist – one at Rumtek and the other near Tashi View Point in Gangtok.

Education can come up as a major service oriented industry in Sikkim in lines of places like Dehra Dun, Mussorie and Shimla. The Government should encourange the opening of schools and colleges of excellence. A welcome beginning has been made following the establishment of an Engineering College and a Medical College by the Manipal Group.


Early in this century when Sikkim was a rolling wilderness of forests and most of it hardly inhabited, the need was even then felt to preserve the forest and properly manage our natural resources. The Forest Department was established in 1905.

With a forest cover of almost 40% consisting of a wide spectrum of species of flora, the Forest Department faces the daunting task of preserving this natural heritage. It has adopted many schemes to prevent deforestation. Afforestation schemes, nurseries, environmental programmes have all contributed in preventing the loss of forest cover. The forest department is also involved in propagating sericulture by supplying mulberry saplings to interested silkworm rearers.

Sikkim is endowed with thick forests that cover almost 40 percent of the area. Forests can be exploited commercially for wood for construction, handicrafts and fuel. A saw-mill and a plywood factory somewhere down-stream on the Tista is a viable proposition. But cutting of trees can lead to an ecological imbalance and therefore has to be matched with a concerted reforestation programme.

Health and Family Welfare

The first modern hospital was establised in 1917 at Gangtok. The state now has 5 hospitals, 25 Primary Health centres and 150 Primary Health Sub Centres. A private medical college and a hospital has being established at Gangtok. This hospital has the most modern and sophisticated health care facilities and compares with the best in the country. The State Government has also launched  a scheme to provide free medical check up and treatment to all in the state  under the name of Comprehensive Annual and Total Checkup for Healthy Sikkim (CATCH)

Metals and Minerals

Exploration of minerals and oil has not yet been carried out in Sikkim in the real earnest. Extensive mining of copper was done during the last century by the Nepalis in South Sikkim and the Pachey Khani area. The mines were open pit ones and the lack of the necessary technology at that time prevented deep mining. There is a strong case to re-explore these areas to determine whether they contain commercially exploitable deposits of copper. If commercially viable deposits of minerals are found in Sikkim they can be a good source of revenue for the state.

Human Resources

Capacity Building aspect of the younger generation is the corner stone to the policy of the Government.  Unless the people are empowered through long-term training, any opportunity created in the State in government and non-governmental sectors will not translate into income generation of local people and augmenting local economy. Therefore, the Government have established a separate Directorate of Capacity Building in the State to spearhead various skill development training programmes in the State and also help in providing placement. Under the Directorate, a number of livelihood schools have been set up in the state that provide vocational training in trades like welding, plumbing, electrical fittings, driving, tailoring – all having immense demand in the job market. The Information Technology Department has been an integral part of this capacity building campaign to organize computer training and skill development programme for people over the last 10 years. Approximately over 20,000 people all across the state have been trained in various aspects of the usage of computers. The aim is to make Sikkim a completely computer literate State.

The country has a growing requirement of police and para-military forces to tackle the internal security problems and communal unrest. The Sikkimese are by and large physically strong and sturdy people and the Government should take steps to raise battalions that can be requisitioned by the Centre for deployment in other parts of the country for internal security purposes. Such battalions will constitute a good source of employment for the locals without any burden on the state exchequer as most of the expenditure would be met by the Central Government or the borrowing organisation. Sikkimese sportsmen are also doing well: Baichung Bhutia, footballer and Jaslall Pradhan, boxer are Arjuna award winners.

Industry and Trade

Althogh presently restricted to a few items, there is a every likelihood that full fledged trade between India and China will reopen through Sikkim in the near future and the state should seize this opportunity to bolster its economy. It should avoid being relegated to being just a corridor between the two countries. Traders in Sikkim should be permitted to directly carry out business with their Chinese counterparts as was done before 1962 and this would certainly bring in a considerable amount of foreign revenue.

What has inhibited the development of industries in the state are high transportation costs. Therefore products and services that have a good local demand or that can be transported out without incurring too much expenditure should be produced in the state. Electronics industries, software parks, educational institutions and hospitals of excellence should be encouraged to be established and can play an important role in the economic development of the state. With the ban on the use of plastic bags in the state, the need of an alternative immediately been felt. The manufacture of paper carry bags by recycling paper can come up as a major cottage industry in the state.

Non Resident Indians (NRIs) and foreign companies should be encouraged to invest in the state; they would definitely be forthcoming because of the political stability in the state, the absence of labour problems and cheap labour. When neighbouring West-Bengal which is by and large anti-capitalist can woo the NRIs to invest their money, there is no reason why Sikkim cannot follow suit. The Government has been holding meetings with prospective investors and also the Confederationof India Industries (CII).