India increases budgetary aid to Bhutan

The Government of India has proposed to increase the financial aid to Bhutan significantly in its interim Union Budget presented to the parliament this week.

Finance Minister P Chidambaram, presenting the union budget at the federal parliament proposed to provide aid and grants worth Rs 50.5 billion to Bhutan during the fiscal year 2014-15.

The increase will cover for India’s resumed fuel subsidy and contribute to Bhutan’s 11th Five Year Plan.

Last year, India had provided a total of Rs 41 billion to Bhutan in grant and non-grant areas in the revised budget in the last fiscal year. The non-plan aid has been decreased from Rs 15.89 billion to Rs 13.5 billion and plan aid has been increased from Rs 25.2 billion to Rs 37 billion.

Bhutan is the highest aid recipient from India. The sum of all grants that India provides to other countries is far below to what it provides to Bhutan.

Chidambaram in his budget had announced a 20 per cent hike in the nation’s diplomatic budget in a move aimed at assuaging growing concerns over the inability of a financially hamstrung foreign office to deliver promised aid to key developing world allies.

But he allocated fewer budgets to the Ministry of Foreign Affairs than it had demanded. The strain in budget amount had caused delay in releasing the grants and aids to the allies last year.

The foreign office had to delay the release of a $200 million grant it had promised to Bangladesh, and had to hold back on investing in three hydroelectric power projects in Bhutan where India is assisting financially and technically.