International Desk: After a tumultuous year marked by diplomatic tensions, India has significantly boosted its developmental aid to the Maldives in the Union Budget 2025.
The island nation, which experienced a sharp cut in funding in 2024 amid strained bilateral relations, now sees a nearly 28% increase in aid allocation.
The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, earmarked ₹600 crore in developmental aid for the Maldives, marking the highest percentage increase among South East Asian countries.
This is a substantial rise from ₹470 crores allocated in the 2024-25 fiscal year, signalling a thaw in diplomatic relations after a period of sharp discord.
In line with India’s ‘Neighbourhood First’ policy, Bhutan received the largest aid allocation at ₹2,150 crore, followed by Nepal with ₹700 crore. The Maldives secured the third-highest allocation, underscoring its strategic importance. Mauritius saw a reduction in aid from ₹576 crore to ₹500 crore, while Myanmar’s allocation dropped from ₹400 crore to ₹350 crore. Bangladesh and Sri Lanka maintained their previous allocations at ₹120 crore and ₹300 crore, respectively. African nations, however, saw an increase from ₹200 crore to ₹225 crore.
This financial shift comes in the wake of improved ties, following high-level engagements and a recalibration of priorities that underscore India’s strategic focus on its neighbours.
Interestingly, the interim Budget of 2024 had initially set aside ₹600 crore for the Maldives during India’s election year. However, after the Narendra Modi-led government returned to power, the final Budget presented in July slashed this figure to ₹400 crore, later revised to ₹470 crore.
The reduction in aid coincided with a diplomatic fallout triggered by derogatory remarks from some Maldivian leaders against Prime Minister Narendra Modi following his visit to Lakshadweep in January 2024.
The visit was perceived by the Maldives as an attempt to divert tourism from the island nation to India’s Lakshadweep archipelago, exacerbating tensions.
Relations began to mend after Maldivian President Mohamed Muizzu, who campaigned on an ‘India Out’ platform, visited India in October 2024. During bilateral discussions with PM Modi, Muizzu acknowledged India as a “key partner,” signalling a shift towards reconciliation and strategic cooperation.
