India To Reduce Financial Aid To Maldives By 22%; Bhutan and Nepal Will Get Majority Share

India To Reduce Financial Aid To Maldives By 22%; Bhutan and Nepal Will Get Majority Share

In the latest budget document released by the government on Thursday, India proposed a reduction in aid to the Maldives to 22 percent for the financial year 2024-25. Maldives is set to receive INR 600 crore in development aid, making it the third largest recipient of government aid abroad. It was also highlighted that Bhutan and Nepal should be the two main sources of government revenue.

Bhutan receives INR 2,068.56 crore for development assistance, while Nepal receives INR 700 crore. Several other countries are also seeing cuts in their allocations for the 2024-25 budget, including Afghanistan, Bangladesh, Myanmar and Latin American countries. But it is surprising that the income for Sri Lanka, African countries, Mauritius and Seychelles have seen an increase. Back to Maldives, in the previous financial year (2023-24), Maldives received aid of INR 770.90 crores, an increase of over 300% from the INR 183.16 crores allocated in 2022-23.

Apparently, the initial provision for Maldives in Budget 2023 was INR 400 crore, but later it was revised to INR 770.90 crore. India has always been an ally in the Maldives, providing assistance in areas such as security, education, health and infrastructure. Official data shows that in 2018, the Maldives received 2.1% of foreign aid, a figure that increased to 6.8% in 2019 and 6.84% in the 2023-24 budget. The reduction in aid is not limited to the Maldives, as the government plans to cut foreign aid by 10% next year.

India has allocated INR 4,883.56 crore for foreign aid in 2024-25, a decrease from INR 5,426.78 crore allocated in the 2023-24 budget. India and the Maldives have found themselves in a political rift that has resulted in insulting remarks made by some Maldivian ministers about Indian Prime Minister Narendra Modi.

Things changed when PM Modi visited Lakshadweep and shared beautiful pictures from there. In the Maldives, this was interpreted as an attempt to promote Lakshadweep as another tourist destination, posing a threat to the country’s tourism-based economy.

The controversy led to massive cancellations of hotel reservations and airline tickets in the Maldives. For your information, government grants to foreign countries serve a variety of purposes, including assisting with cultural and heritage projects, as well as assisting with disaster relief.

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