New Delhi: The Union Budget 2025 has allocated Rs 5,483 crore in foreign aid for 2025-26, with Bhutan getting the lion’s share. The grants and loans, administered through the Ministry of External Affairs and the Ministry of Finance also witnessed an increase of 28 percent more assistance for Maldives.
The island nation will receive Rs 600 crore a substantial increase from Rs 470 crore allocated in the previous fiscal year. The development is significant as it came after a period of strained relations after Maldivian President Mohamed Muizzu’s “India Out” campaign and his administration’s growing ties with China.
The changing India-Maldives relations
The year 2024 saw an improved relationship between the nations with Muizzu visiting India twice. The countries signed a $400-million currency swap agreement and a discussion on a free trade pact was also discussed.
It is also important after India warned Male against entering into agreements with foreign govts that would result in a loss of revenue for the archipelago nation. Maldives after signing a free or preferential trade pact with China entered into an agreement with Turkey too.
“We remain in close touch with Maldivian authorities on the situation facing them. Recent agreements that are likely to result in revenue loss for the Maldives govt are, obviously, a matter of concern and do not bode well for the long-term fiscal stability of the country,” said MEA spokesperson Randhir Jaiswal.
Bhutan remains the top recipient
Bhutan remains the top recipient, with an allocation of Rs 2,150 crore. Afghanistan is set to receive Rs 100 crore. Earlier this year, senior diplomat Vikram Misri held talks with Taliban officials in Dubai. The discussions, reportedly, focused on trade relations and India’s strategic interest in Iran’s Chabahar Port, a vital alternative trade route that bypasses Pakistan.
Bangladesh and Sri Lanka will receive Rs 120 crore and Rs 300 crore respectively. Nepal will get Rs 700 crore.
Meanwhile, aid allocations for Mauritius and Seychelles have been reduced. Seychelles’ aid has been slashed by 48 percent to Rs 19 crore from Rs 37 crore in the previous fiscal year. Mauritius will receive Rs 500 crore, a 13 percent decrease from Rs 576 crore allocated earlier.
