Union Budget 2026: Bhutan Receives Largest Development Aid Among Neighbours
In the Union Budget for 2026–27, Bhutan has emerged as the largest recipient of India’s development assistance among neighbouring countries, with an allocation of Rs 2,288 crore. The move underscores India’s continued focus on strengthening strategic and economic ties with its immediate neighbourhood.
Following Bhutan, Nepal has been allocated Rs 800 crore, while Maldives and Mauritius will each receive Rs 550 crore as part of India’s overseas development partnership programme.
The Ministry of External Affairs (MEA) has been allotted a total budget of Rs 22,118 crore for 2026–27. This marks an increase from the Budget Estimate of Rs 20,516 crore and the Revised Estimate of Rs 21,742 crore in the current fiscal year, signalling a sustained emphasis on foreign policy and diplomatic engagement.
Reduced Allocation for Bangladesh Amid Strained Ties
For the upcoming fiscal year, Bangladesh has been allocated Rs 60 crore, significantly lower than the Rs 120 crore earmarked in the 2025–26 Budget. The revised estimate for the current year stood at Rs 34.48 crore, reflecting a downturn in bilateral relations over the past year and a half.
No Allocation for Chabahar Port Project
In a notable shift from previous budgets, no funds have been allocated for the Chabahar Port project in Iran. Last year’s Budget had set aside Rs 100 crore, which was later increased to Rs 400 crore in the revised estimate. The absence of funding this year comes amid ongoing US-Iran tensions, which have impacted regional connectivity projects.
Overseas Development Partnership Overview
India’s total overseas development partnership allocation for 2025–26 has been pegged at Rs 6,997 crore, accounting for a little over 31% of the MEA’s total budgetary allocation. This highlights India’s continued use of development assistance as a key instrument of its neighbourhood-first and global outreach strategies.