In the 2025 Union Budget presented by Finance Minister Nirmala Sitharaman, the Maldives received a notable 28 pc increase in its allocation, a shift that comes after a turbulent year in bilateral relations between India and the island nation.
Following a period of strained ties, the budgetary outlay for the Maldives has now been raised to ₹600 cr for the fiscal year 2025-26. This increase positions the Maldives as the country receiving the highest rise in developmental aid among its Southeast Asian counterparts.
This change in funding comes after the allocation for the Maldives was reduced in the 2024-25 Budget. In the interim Budget of 2024, before general elections were held, the Maldives had been allocated ₹600 cr, but following the formation of the new government under Prime Minister Narendra Modi, the full 2024 Budget saw a reduction to ₹400 cr.
This was later revised upwards to ₹470 cr. The decrease in funds in the 2024 Budget had occurred amid a decline in relations between the two nations, triggered by derogatory remarks made by some Maldivian political figures about PM Modi following his January 2024 visit to Lakshadweep.
The visit was seen by the Maldives as an attempt to divert tourism away from the country to India’s Lakshadweep islands, further souring the diplomatic atmosphere.
However, a notable thaw in relations occurred when Maldives President Mohamed Muizzu, who had campaigned on an 'India Out' platform, visited India in October 2024.
During his bilateral talks with Prime Minister Modi, Muizzu acknowledged India as an important strategic partner, signalling a shift towards mending ties between the two nations.
The increase in developmental aid to the Maldives aligns with India’s broader diplomatic approach, especially its 'Neighbourhood First' policy. The 2025 Budget also highlighted a significant increase in allocations to other countries in the region.
Bhutan, a close ally of India, received the largest share of development assistance, with an allocation of Rs 2,150 crore. Nepal followed with ₹700 cr, while Mauritius was allocated ₹500 cr, slightly lower than last year's ₹576 cr.
While the Maldives saw an increase in its budget, some countries in the region experienced a reduction in their allocations. Myanmar, for instance, saw a decrease in aid, with its budgetary allocation dropping from ₹400 cr to ₹350 cr.
Despite this cut, Bangladesh and Sri Lanka did not see any changes in their allocations compared to the previous year. Additionally, the budget for African nations was marginally increased from ₹200 cr to ₹225 cr.
Follow us
