India has reduced the development assistance allocation to the Maldives
India has raised development assistance to the Maldives by 50 per cent from Rs 400 crore to Rs 600 crore in this year's interim Budget, according to the demand for grants of the Ministry of External Affairs (MEA).
Though India allocated Rs 400 crore last year, it ended up spending Rs 770 crore, per the revised estimates.
This means India's development assistance for the Maldives this year is lower by 22 per cent than what was spent last year.
India follows a model of developmental cooperation which involves multiple instruments, including grant-in-aid, line of credit, capacity building, and technical assistance.
Depending on the priorities of partner countries, India's development cooperation ranges from commerce to culture, energy to engineering, health to housing, IT to infrastructure, sports to science, etc.
The Maldives is seen to be drifting apart from its long-time friend India under the archipelago's pro-China President Mohamed Muizzu.
A recent diplomatic row following derogatory comments posted by some Maldivian leaders on Prime Minister Narendra Modi's visit to the Union Territory Lakshadweep had drawn backlash from Indians. Mr Muizzu's visit to China after his election was also viewed as giving a signal of intent on how he plans to treat the Maldives' ties with India.
The government has since the row with the Maldives promoted Lakshadweep as an alternative tourist destination for Indians. The government will invest significantly in the tourism sector in the country, Finance Minister Nirmala Sitharaman said in her interim Budget 2024 speech today.
She said Lakshadweep will get undivided attention from the government to improve its tourist infrastructure. Many Indians have started looking at Lakshadweep as an alternative destination.
"To address the emerging fervour for domestic tourism, projects for port connectivity, tourism infrastructure, and amenities will be taken up on our islands, including Lakshadweep. This will help in generating employment also," Ms Sitharaman said.
She said the success of organising G20 meetings in 60 locations presented India's diversity to a global audience. "Our economic strength has made the country an attractive destination for business and conference tourism. Our middle class also now aspires to travel and explore. Tourism, including spiritual tourism, has tremendous opportunities for local entrepreneurship," Mr Sitharaman said.
The Ministry of External Affairs (MEA) was allocated a total of Rs 22,154 crore for 2024-25, as against last year's outlay of Rs 18,050 crore. In line with India's 'Neighbourhood First' policy, the largest share of aid portfolio has been granted to Bhutan, with an allocation of Rs 2,068 crore. The development outlay for the Himalayan nation in 2023-24 was Rs 2,400 crore.
The allocation for Chabahar Port has also been maintained at Rs 100 crore, underlining India's focus on connectivity projects with Iran.