- 2026 Budget reduces Bangladesh funding under Neighborhood First Policy
- 2026 Budget reallocates aid to Bhutan, Nepal, Sri Lanka
India’s 2026 Budget has sent a strong policy signal by sharply reducing financial assistance to Bangladesh while increasing allocations to several other neighboring countries. The Union Budget for 2026 was presented in Parliament on Sunday. It reflects India’s approach under the Neighborhood First Policy, which provides yearly financial support to neighboring nations. However, this year’s allocations show a clear shift in priorities.
Under the 2026 Budget, funds allocated to Bangladesh were cut by half. Last year, Bangladesh received Rs. 1.2 billion. This year, the allocation stands reduced to Rs. 60 crore. According to the available information, Bangladesh used only Rs. 34 crore out of the Rs. 1.2 billion allocated in the previous year. Due to this underutilization, India reduced the Neighborhood Funding for Bangladesh. The budget document also notes that Bangladesh has been adopting anti India methods for some time and encouraging attacks on Hindus, who are minorities there. Against this background, the reduction in aid marks a notable change in financial engagement.
Meanwhile, the 2026 Budget increased allocations to several other neighboring countries. Bhutan received the highest allocation of Rs. 2,288.55 crore. These funds will support hydropower projects and infrastructure development. Nepal also saw an increase in assistance. It received Rs. 8 billion this year, compared to Rs. 7 billion last year. India also increased its aid to Mauritius. It allocated Rs. 550 crore, which is Rs. 50 crore more than last year’s Rs. 500 crore. Seychelles received Rs. 19 crore, the same amount as the previous year.
The 2026 Budget also raised assistance to Sri Lanka. Last year, Sri Lanka received Rs. 3 billion for economic development. This year, the allocation increased to Rs. 4 billion. Mongolia, located between China and Russia, saw a fivefold increase in aid. Last year, Mongolia received Rs. 5 crore. This year, the grant rose to Rs. 25 crore. India also increased aid to Afghanistan. The allocation went up from Rs. 100 crore last year to Rs. 150 crore this year. This assistance will be used for reconstruction and humanitarian needs.
However, the budget reduced aid to Myanmar. Myanmar will receive Rs. 3 billion this year, down from Rs. 3.5 billion last year. Aid to the Maldives was also slightly reduced. It stands at Rs. 5.5 billion, compared to Rs. 6 billion last year. In another key move, the 2026 Budget did not allocate any funds for the Chabahar Port project in Iran. This decision was reportedly taken due to US sanctions and international political developments.
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