India cuts outlay to Maldives in 2025 external aid portfolio

India, under its ‘neighborhood first’ policy has allocated the largest share of development aid to Bhutan in the Union Budget for 2024-25 while outlays for Maldives saw a sharp decline.

The Indian government has allocated INR 20.7 billion (USD 247 million) as development aid to Bhutan while outlay for Maldives declined to INR 4 billion (USD 47.8 million) from INR 7 billion (USD 83.6 million).

While Indian media outlets report this cut to Maldives came amid strained relations between India and Maldives since Dr. Mohamed Muizzu, alleged with pro-China leanings, became Maldives President in November 2023, the relationship has been on the mend more recently with President Muizzu attending Indian Prime Minister Narendra Modi’s oath swearing ceremony.

President Muizzu’s administration put fresh impetus to reconcile with its closest economic ally after soured relations were adversely reflected on the island nation’s economy as well.

Besides Muizzu, Foreign Minister Moosa Zameer had visited India to strengthen bilateral ties.

Tensions between the countries intensified after three Maldivian government officials derided Prime Minister Modi on social media. All three ministers are still in suspension after the incident.