As a major economy, India makes substantial financial contributions to various countries and international organisations. In the budget for 2026-27 unveiled by Finance Minister Nirmala Sitharaman today, allocations have been made for such international grants and loans.
The budget 2026 has allocated ₹8,272.40 crore as grants to various foreign governments, apart from ₹519.92 allocated for loans, totalling ₹8,792.32 crore. This marks a decrease from the revised estimate of ₹12,107.58 crore for 2024-25 but an increase from the initial budget estimate of ₹6,886.79 crore for that year. The major reason for this huge increase in revised estimate was the allocation of ₹4885 crore for Lines of Credit under the Indian Development and Economic Assistance Scheme, against the budget estimate of ₹27.10 crore.
The budget emphasises India’s “Neighbourhood First” policy, with significant outlays directed toward South Asian nations. Bhutan receives the lion’s share at ₹2,288.56 crore, including ₹1,768.64 crore in grants and ₹519.92 crore in loans, up from ₹1,950 crore in the revised 2024-25 estimates, supporting hydropower projects and economic ties. Bhutan is the only country receiving a part of the contribution as a loan, as all other countries have been allocated only grants.
Nepal follows with ₹800 crore in grants, a slight dip from ₹830 crore revised last year but still robust for infrastructure and reconstruction efforts in the Himalayan nation after the fall of the government. The Maldives is allocated ₹550 crore, down from ₹625 crore, amid ongoing maritime cooperation.
Other key recipients include Sri Lanka (₹400 crore, up from ₹300 crore), Myanmar (₹300 crore, up from ₹200 crore), and Afghanistan (₹150 crore, up from ₹100 crore). Aid to African countries remains stable at ₹225 crore, while Latin American nations see an increase to ₹120 crore from ₹96.68 crore revised. Eurasian Countries have been allocated ₹38 crore. These figures highlight India’s push for diversified partnerships in the Global South, with total aid under the Ministry of External Affairs contributing to broader strategic goals like connectivity and trade.
Reduced allocation for Bangladesh and nothing for Chabahar Port
A notable change is the slashed aid to Bangladesh, pegged at ₹60 crore for 2025-26, which is half of the ₹120 crore budgeted for 2024-25. However, the actual grant to Bangladesh last year was ₹34.48 crore as per the revised estimate. This reduction comes against the backdrop of deteriorating bilateral relations following the ouster of former Prime Minister Sheikh Hasina in 2024, who has been sheltered in India since her overthrow.
Tensions have escalated recently after the interim govt of Bangladesh criticised India for allowing Hasina to make her first public address from exile, fuelling anti-India sentiments. With Bangladesh’s national elections looming in February 2026, concerns over radicalisation and Islamist influences have prompted India to withdraw diplomats’ families due to security threats. Incidents like murders of Hindu men in Bangladesh have further strained ties. Bangladesh’s cricket team even refused to visit India to participate in the T-20 World Cup, resulting in their removal from the tournament.
Another notable change in external allocations is that no allocation has been made for the Chabahar Port project in Iran, down from ₹100 crore budgeted and ₹400 crore revised in 2024-25. This comes after reports of India’s strategic withdrawal from the project. India was given only 6 months’ exemption from sanctions by the USA, which is expiring in April. While the Indian govt has said that talks were going on with the Trump administration to extend the exemption, for now, no new amount has been allocated for the port project.
Notably, India has already transferred its entire commitment of around $120 million for the port to Iran before the sanctions were re-imposed. US President Donald Trump has threatened 25% additional tariff on countries doing business with Iran. This means that if India can’t extend the waiver, and it continues to get involved in the port project, the country will be subject to the additional tariff.
Contributions to International Bodies
As a member of a large of international organisations and forums, India needs to make annual contributions to these bodies, and the budget allocated funds to various ministries for this reason. ₹2911.70 crore has been allocated for 2026-27, up from ₹2861.98 crore budgeted in 2025-26. However, the revised estimate went up to ₹3997.60 crore, therefore, this allocation is around ₹1000 crore less than the revised estimate.
The finance ministry has been allocated the highest amount of ₹1146.30 crore for contributions to several international funds and banks, including ₹773.70 crore for the International Development Association and ₹121 crore for the Asian Development Fund.
Ministry of External Affairs is the second largest recipient with ₹925.19 crore. Apart from the United Nations, the ministry will contribute to some other organisations and universities.
Among individual bodies, the International Development Association will receive the highest amount of ₹773.70 crore, followed by the United Nations Organisation with ₹450.00 crore and Nalanda International University with ₹200.00 crore.
South Asian University, International Fund for Agricultural Development, World Trade Organisation, International Atomic Energy Agency, International Labour Organisation, World Health Organisation, etc., are some other notable organisations among the 87 international bodies receiving contributions from the Indian government.
