The Maldives has received the highest increase in development assistance among Southeast Asian nations in India's Union Budget 2025, following a turbulent year in bilateral relations. The island nation, which saw a reduced allocation in 2024, has now been granted a nearly 28% increase in aid for 2025-26.

As per the Budget document presented by Finance Minister Nirmala Sitharaman on Saturday, India has allocated Rs 600 crore for the Maldives, a significant rise from the Rs 470 crore provided in the previous fiscal year.

Fluctuations in India's Aid to Maldives

Interestingly, the Maldives was initially allocated Rs 600 crore in the interim Budget of 2024, which was presented before the general elections. However, after the Modi government retained power, the final Budget in July reduced the amount to Rs 400 crore, later revising it to Rs 470 crore.

The reduction in aid came amid strained ties between the two nations, particularly after some Maldivian politicians made derogatory remarks about Prime Minister Narendra Modi following his visit to Lakshadweep in January 2024. The visit was perceived by the Maldives as an attempt to promote Lakshadweep as a competing tourist destination.

However, relations took a positive turn after Maldivian President Mohamed Muizzu, who initially ran on an ‘India Out’ campaign, visited India in October 2024. During his meeting with PM Modi, he acknowledged India's role as a "key partner," leading to improved diplomatic ties.

Budget Allocations for Other Nations

Under India's ‘Neighbourhood First’ policy, Bhutan received the largest allocation of development aid, amounting to Rs 2,150 crore. Nepal followed with Rs 700 crore, while the Maldives ranked third with Rs 600 crore. Mauritius saw a slight reduction in its aid, receiving Rs 500 crore compared to Rs 576 crore last year.

Myanmar’s allocation also decreased from Rs 400 crore to Rs 350 crore. Meanwhile, Bangladesh and Sri Lanka's allocations remained unchanged from the previous year. African nations saw an increase in development assistance, with their allocation rising from Rs 200 crore to Rs 225 crore.

The revised allocations reflect India's strategic priorities in the region while reinforcing its commitment to strengthening diplomatic and economic ties with neighboring countries.