New Delhi: India Proposes 22% Aid Cut to Maldives in 2024-25; Diplomatic Row Intensifies

NEW DELHI: In a significant move, the Indian government has proposed a 22% reduction in aid to the Maldives for the 2024-25 financial year, according to the Interim Budget document released on Thursday. The Maldives, previously the third-highest recipient, is allocated Rs 600 crore for developmental assistance. This marks a decrease from the Rs 770.90 crore provided in 2023-24, revealing a shifting trend in India's foreign aid priorities.

Over the past years, India has been a key aid partner for the Maldives, contributing to various sectors like defense, education, healthcare, and infrastructure. However, the proposed cut reflects broader changes, as India has decreased its overall aid allocation to foreign countries by 10% for the upcoming fiscal year.

The diplomatic rift between India and the Maldives escalated recently, triggered by derogatory comments from some Maldivian ministers against Prime Minister Narendra Modi. The tensions heightened after PM Modi's visit to Lakshadweep, where he showcased its scenic beauty, leading to perceptions in the Maldives of promoting it as an alternative tourist destination. This resulted in a wave of cancellations of hotel bookings and flight tickets to the Maldives.

The Budget also highlighted a special focus on developing tourism infrastructure in Lakshadweep, with Finance Minister Nirmala Sitharaman stating, "The Union Territory of Lakshadweep will get undivided attention from the government to improve its tourist infrastructure."

In terms of foreign aid, Bhutan and Nepal will be the top recipients, with Bhutan receiving Rs 2068.56 crore and Nepal Rs 700 crore for developmental assistance. Both nations, however, face reductions in their allocations compared to the previous fiscal year.

While allocations for countries like Afghanistan, Bangladesh, Myanmar, and some Latin American nations have been reduced, Sri Lanka, African countries, Mauritius, and the Seychelles see an increase in budget allocations. African and developing countries emerge as the primary beneficiaries, experiencing an 11.11% and 32% boost in aid, respectively.

The government's grants to foreign nations encompass cultural and heritage projects as well as disaster relief efforts. The budgetary adjustments reflect a nuanced realignment of India's foreign aid strategy amid evolving diplomatic dynamics.

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