India’s Aid To Maldives 50% Higher Than Last Year, But Numbers Don’t Tell the Whole Story

New Delhi: India has increased its development assistance to the Maldives by 50%, allocating ₹600 crore in this year’s interim Budget compared to ₹400 crore last year, despite actual spending reaching ₹770 crore. The development assistance marks a 22% decrease from the previous year. India employs a diverse model of developmental cooperation, encompassing grant-in-aid, line of credit, capacity building, and technical assistance, addressing partner countries’ varied priorities.

Recent shifts in the Maldives’ geopolitical stance, with President Mohamed Muizzu leaning towards China, have strained the traditionally strong ties with India. A diplomatic spat following derogatory remarks by Maldivian leaders on Prime Minister Narendra Modi’s visit and Muizzu’s subsequent visit to China have highlighted the evolving dynamics.

In response, the Indian government, post the rift, has promoted Lakshadweep as an alternative tourist destination for Indians. In the interim Budget 2024, Finance Minister Nirmala Sitharaman announced a significant investment in Lakshadweep’s tourism sector, aiming to enhance infrastructure and amenities to attract domestic tourists.

Sitharaman emphasized the success of hosting G20 meetings in 60 locations, showcasing India’s diversity to a global audience. She highlighted the country’s economic strength, making it an attractive destination for business and conference tourism. The Ministry of External Affairs (MEA) received a total allocation of ₹22,154 crore for 2024-25, with the ‘Neighbourhood First’ policy guiding the largest share of aid to Bhutan, amounting to ₹2,068 crore. The allocation for the strategic Chabahar Port project with Iran remains at ₹100 crore, underscoring India’s commitment to connectivity initiatives.