India has revised its initially proposed US$72 million (MVR 1 billion) in grant aid to the Maldives for the current fiscal year; reducing the amount to US$47 million (MVR 732 million), marking a 48 percent reduction on the initially proposed amount.
Indian media reported that Bhutan will be the beneficiary of the largest amount in grant aid under India’s ‘Neighbourhood First’ policy, with Nepal a close second. India had budgeted US$91 million (MVR 1.4 billion) in aid to the Maldives last year.
According to Indian media, the cut comes amid weakening relations between the two countries, as the Mohamed Muizzu administration had sought to strengthen relations with rival China.
The previous Ibrahim Mohamed Solih administration had moved forward with significant development projects across the country with Indian assistance. The Greater Malé Connectivity Bridge, connecting Malé and Thilafushi, had been initiated with Indian grant aid and loans.
Relations between India and the Maldives deteriorated earlier this year. The Indian public launched a campaign against the Maldives after three senior officials of the Muizzu administration made insulting remarks pertaining to Prime Minister Narendra Modi on social media. Since then, the number of tourists coming to the Maldives from India has significantly declined.
However, the current administration looks to be working to strengthen relations between the two countries, especially with Prime Minister Modi being sworn in for his third term.