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“India Slashes Aid to Maldives by 22%; Bhutan and Nepal Secure Larger Share”

Image Source:- Hindustan Times

In the recent release of the government’s budget document, India has proposed a 22% reduction in aid to the Maldives for the 2024-25 financial year, allocating INR 600 crore for developmental assistance. This places the Maldives as the third-highest recipient of aid from India for foreign countries. Meanwhile, Bhutan and Nepal are set to receive the highest allocations, with Bhutan receiving INR 2068.56 crore and Nepal INR 700 crore in developmental assistance. Other countries such as Afghanistan, Bangladesh, Myanmar, and Latin American nations are also experiencing decreases in their aid allocations, while Sri Lanka, African countries, Mauritius, and the Seychelles have seen increases.

In the previous fiscal year (2023-24), the Maldives received INR 770.90 crore in aid, marking a significant increase from the INR 183.16 crore allocated in 2022-23. Notably, the initial allocation for the Maldives in the 2023 Budget was INR 400 crore, but it was later revised to INR 770.90 crore.

India has historically been a significant aid and assistance partner to the Maldives, contributing to various sectors including defence, education, healthcare, and infrastructure. Government data indicates a rising trend in aid allocation to the Maldives, with the country receiving 2.1% of total foreign aid in 2018, 6.8% in 2019, and 6.84% in the fiscal year 2023-24.

The reduction in aid extends beyond the Maldives, as the government plans an overall 10% cut in aid to foreign countries for the upcoming fiscal year. India has earmarked INR 4883.56 crore for foreign aid in 2024-25, down from INR 5426.78 crore allocated in the 2023-24 budget.

However, amidst these budgetary changes, India and the Maldives have encountered a diplomatic dispute sparked by derogatory remarks made by certain Maldivian ministers towards Indian Prime Minister Narendra Modi. Tensions escalated further when PM Modi’s visit to Lakshadweep was interpreted in the Maldives as an attempt to promote Lakshadweep as a competing tourist destination, posing a potential threat to the Maldives’ tourism-dependent economy. Consequently, this dispute led to numerous cancellations of hotel bookings and flight tickets bound for the Maldives, reflecting the complexities of diplomatic relations intertwined with economic considerations.

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Author:- Apoorva Arora

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