Bhutan's pursuit of "Gross National Happiness" has brought it global fame as a model of alternative development, but its new prime minister believes the doctrine has distracted from tackling the country's problems.

Tshering Tobgay, the new 'lyonchhen' of Bhutan as prime ministers are known in the Land of the Thunder Dragon, won elections last month and settled into his new office in the capital on Monday.

Unquestioningly loyal like most Bhutanese to the royal family, he is prepared to voice views about GNH, another pillar of the Himalayan country, that would once have been sacrilegious.

The country's pursuit of "happiness" -- effectively economic development that takes into account the environment and people's psychological well-being -- was first proposed by Bhutan's former king in the 1970s.

While its promotion by prominent Western backers like economist Jeffrey Sachs have helped give Bhutan a prominence not normally accorded to such small and remote countries, the model faces increasing criticism at home.

Tobgay, 47, backs the principles and the notion that "economic growth is not the be all and end all of development", but he confesses to finding the complexities of modern-day GNH hard to grasp.

After years of development by policymakers, academics and consultants, it has become a fully fledged paradigm seeking to measure progress in nine distinct areas, with each of these appraised with 72 indices.

"I'm sceptical on how it has been overused by some people and how they have been distracted from the real business at hand," he told AFP in an interview over the phone from the capital Thimphu.

In a speech last year, the charismatic former civil servant called it "complicating stuff for me" and "very difficult".

The government of vanquished former prime minister Jigmi Thinley spent enormous efforts advocating GNH at home and abroad, and even sponsored a United Nations resolution promoting happiness.

While campaigning for the election, often on foot through remote villages, Tobgay focused on what he sees as "the business at hand" for Bhutan: chronic unemployment, poverty, corruption and a sense that politicians were too remote.

A balance of payments crisis last year has led to a severe shortage of Indian rupees, leading the government to tighten import controls that have sharply slowed the economy and restricted foreign goods.

"If the government of the day were to spend a disproportionate amount of time talking about GNH rather than delivering basic services then it is a distraction," Tobgay says.

Some critics have taken to referring to GNH as "Government Needs Help".

"There are four issues that can compound to make matters extremely bleak: our ballooning debt that if we're not careful will not be sustainable; the big rupee shortage; unemployment, in particular youth unemployment; and a perception of growing corruption," Tobgay explains.

"These four combined can make a lethal combination."

Tobgay's victory was a triumph for Bhutanese democracy in only the country's second national elections and was a remarkable personal feat for the Harvard-educated mountain-biking fan.

From only two seats in the previous parliament, his People's Democratic Party is now the biggest bloc in the assembly thanks to some canny political alliances and his pragmatic message of change that resonated with voters.

But he has inherited a tricky in-tray. As well as the rupee shortage and growing foreign indebtedness, he must smooth relations with India, the country's financial backer and patron.

New Delhi cut vital subsidies on cooking gas and kerosene last month shortly before the elections, which reports said was a rebuke to Bhutan over its overtures to China and cost overruns on joint hydropower projects.

Thimphu has no formal diplomatic relations with China, its other giant neighbour to the north, but the first meeting between former prime ministers Thinley and China's Wen Jiabao in June last year rang alarm bells in New Delhi.

Tobgay, in his first interview with a foreign media organisation, refused to be drawn on whether greater engagement with China would be part of his foreign policy.

"China is a reality, China is a neighbour and we cannot ignore that fact. We also have an unresolved border issue with China which needs attention... but we have to be sensitive to the geopolitical realities of the region," he said.

"Our principal trading partner and the government-to-government partner is India and as of now we look towards India," he added.

Addressing Bhutan's trade imbalance with India -- the source of raw materials, machinery and labour -- is foremost among his priorities because of the shortage of rupees.

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