India’s New Budget Allocates Significant Funds for Neighbouring Countries

In the recently presented Union Budget 2026–27, the Government of India has set aside substantial financial assistance for foreign governments and neighbouring countries, underscoring its continued emphasis on regional cooperation and development partnerships.

The budget presented by Finance Minister Nirmala Sitharaman allocates funds under grants and international assistance, with significant portions directed toward India’s neighbours and strategic partners.

Under the foreign aid and grants-in-aid provision, India has earmarked over ₹11,000 crore for various foreign governments and international bodies.

Among recipient countries, Bhutan receives the largest share of development assistance, reflecting its longstanding close ties with India. Nepal, the Maldives and other neighbouring countries also feature in the allocation list with notable grant amounts, supporting development projects, infrastructure and economic cooperation.

For Bangladesh — one of India’s closest neighbours — the budget has announced an allocation, although the amount is reportedly lower compared to the previous fiscal year.

India continues to provide assistance as part of its regional cooperation agenda, though the scale of funding for Bangladesh has seen changes in the new budget cycle. Other neighbouring countries such as Sri Lanka, Myanmar and Afghanistan have also been included, either with increased support or maintained allocations, depending on strategic and developmental priorities.

Foreign assistance in the budget is part of a broader framework that includes diplomatic engagement, infrastructure support, and multilateral cooperation.

The allocations for neighbouring countries are aimed at strengthening bilateral ties, fostering economic development, and supporting regional stability. India’s foreign grants also include contributions to international organisations and development projects outside the immediate South Asian region.

The overall budget reflects India’s foreign policy priorities, with a balance between domestic expenditure and international commitments. While key domestic sectors such as infrastructure, defence and economic growth are central to the budget, the allocation for foreign assistance remains a significant aspect of India’s fiscal planning for the 2026–27 financial year.