India announced significant changes to its foreign aid distribution in the Union Budget presented for the fiscal year 2024-25. The overall allocation towards development assistance to other countries has seen a significant drop as compared to last year. Some key countries like the Maldives have faced sharp reductions in the financial aid given by India. However, there have also been increases in grants provided to certain important allies and neighborhood nations. 

Let us take a deeper look at the alterations made to India’s foreign aid portfolio:

• The total outlay earmarked for development assistance to foreign countries has been reduced to Rs. 4,883 crore from Rs. 5,426 crore allocated last year. This reflects a nearly 10% decrease in overall funds that will be disbursed as grants through various projects and initiatives overseas. 

• Among the major recipients facing cuts is the Maldives, India’s closest maritime neighbor in the Indian Ocean region. The island nation was given Rs. 770 crore in the previous budget but will only receive Rs. 600 crore this year – a reduction of 22% amounting to Rs. 170 crore less. 

• This reduction can be seen within the context of deteriorating diplomatic ties between India and Maldives in recent months. There turned into widespread anger in India after derogatory feedback had been made towards Prime Minister Modi using a few Maldivian politicians. Many Indians canceled their vacation, hurting its important tourism enterprise.

• Other countries with decreased aid allocations include Afghanistan, Bangladesh, and Myanmar. Latin American nations and the broader Eurasia region too saw downward revisions.

• However, in line with India’s ‘Neighborhood First’ policy, grants to the Himalayan kingdoms of Bhutan and Nepal have increased. Bhutan will receive Rs. 2,068 crore, slightly lower than last year’s Rs. 2,400 crore amount but still among the highest allotments. Nepal has been granted Rs. 700 crore compared to Rs. 600 crore earlier. 

• Sri Lanka, currently facing its worst economic crisis, will get enhanced aid of Rs. 75 crore. Indian Ocean allies like Mauritius and Seychelles also witnessed an uptick in development funds. African countries in total saw their allocation rise by 11%.

• India gives foreign aid for development work like infrastructure projects. It also provides aid for issues like disaster relief. The reduction in aid shows India is not happy with some countries. But it will continue helping neighboring countries like Bhutan and Nepal.

In short, due to current political issues, India has decreased the financial assistance given to Maldives and some other countries in its Budget 2024. But aid to its close allies like Bhutan and Nepal has been increased. This step indicates India’s foreign policy priorities.