India increased its budgetary allotment for the Maldives in 2023–2024 from Rs 400 crore to Rs 770 crore in order to provide aid to foreign governments. And it has set aside Rs 600 crore for the Maldives for 2024–25, the second largest allocation after Bhutan and Nepal.
Nepal is the only other nation that has received more grants from India. It received ₹ 785 cr, which is almost 15 cr more than the Maldives received. According to the budget estimates, Bhutan will receive ₹ 1079 cr in the upcoming year (2024–25), while Nepal will receive ₹ 700 cr.
When Finance Minister Nirmala Sitharaman presented the Interim Budget 2024, she revealed the spending on the Maldives. In her sixth Union Budget, Sitharaman had revealed a number of noteworthy investment strategies for the tourism industry in India. The new government that takes over after this year’s Lok Sabha elections will present the complete budget.
India Boosts Aid to Maldives Despite Strained Ties: What’s Behind the Move?
Unexpectedly, India is providing the Maldives with more financial support, reiterating its commitment to ongoing development initiatives despite difficulties in diplomatic relations.
The “Neighbourhood First” Policy: An Increase in Funds
India’s ‘Neighbourhood First’ policy has not allowed the current tensions to undermine its support for the Maldives. New Delhi raised the budgetary allotment for the Indian Ocean archipelago from ₹400 crore to ₹770 crore in the budget revision for 2023–24. A substantial ₹600 crore has been set aside for 2024–25, making it the largest allocation after Bhutan and Nepal.
Diplomatic Stress: A President Who Supports China
Assuming power in November of last year, Mohamed Muizzu—who is seen as a pro-China leader—damaged diplomatic ties between the two countries. Relations were further strained by his recent demand that all Indian military personnel leave the country by March 15.
The Maldives’ strategy changed when Muizzu defeated Ibrahim Mohamed Solih, who was friendly with India, in the presidential contest.
Project Greater Male Connectivity Wins
Notably, India has allowed these disparities to have no effect on the largest infrastructure project in the Maldives, the $500 million Greater Male Connectivity Project. It is imperative to emphasize that grants, not loans, are the mode of funding provided by India.
The ‘Neighbourhood First’ policy was reaffirmed by India on February 2, with Minister of State for External Affairs Rajkumar Ranjan Singh underscoring the policy’s importance in promoting regional connectivity, trade, and security.
Expert Views: Motives for the Aid Increase
India’s increased budget allocation is not surprising, says Aditya Gowdara Shivamurthy, an associate fellow at the Observer Research Foundation. He offers three potential explanations for this action.
Its primary goal is to aid the Maldives in overcoming their financial difficulties. Second, it conveys to China and the Maldives that India is a reliable friend regardless of political changes. Finally, it is an invitation to the Maldivian government and the Indian government to work together more closely.
Military Affairs: A Settlement Obtained
On February 2, India and the Maldives came to an agreement regarding the use of Indian aviation platforms in the Maldives, allaying worries about the presence of Indian military personnel there. As part of the agreement, military personnel will be gradually replaced by civilians who have experience running these platforms to facilitate a seamless transition.
Regional Allocative Ranking: Bhutan Is at the Top
Bhutan continues to receive the highest budgetary allocation from India, with ₹2,068 crore designated for Thimphu. Notably, ₹700 crore has been set aside for Nepal.
India is expected to provide ₹5,667 crore in total assistance to foreign governments in 2024–2025; a large amount of this assistance will be in the form of grants. The funding for Myanmar, which is ravaged by a civil war, has dropped from ₹370 crore to ₹250 crore.