India Reduces Development Aid Allocation to Maldives

India has allocated the largest share of its development aid to Bhutan in the Union Budget for 2024-25, while the outlay for the Maldives has seen a sharp decline under its ‘Neighbourhood First’ policy. 

The Indian government has earmarked INR 20.7 billion (USD 247 million) as development aid to Bhutan, whereas the allocation for the Maldives has been reduced to INR 4 billion (USD 47.8 million) from INR 7 billion (USD 83.6 million).

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Indian media reports attribute the cut in aid to the Maldives to strained relations between the two nations following the election of Dr. Mohamed Muizzu as President in November 2023. 

Muizzu is perceived to have pro-China leanings, which initially led to tensions. However, the relationship has shown signs of improvement, with President Muizzu attending Indian Prime Minister Narendra Modi’s oath-taking ceremony.

Muizzu’s administration has taken steps to mend ties with India, recognising the adverse impact of strained relations on the Maldivian economy. In addition to the President’s efforts, Foreign Minister Moosa Zameer has visited India to strengthen bilateral ties.

Tensions had escalated after three Maldivian government officials made derogatory remarks about Prime Minister Modi on social media. These officials remain suspended following the incident.