India has proposed a substantial increase in financial assistance to Bangladesh in its budget for the upcoming fiscal year 2026–27. The proposed allocation for Bangladesh stands at ₹60 crore, marking a 74 per cent rise compared with the revised figures of the previous year. Despite this increase, Bangladesh still receives the lowest Indian aid among South Asian countries.
According to the Indian Union Budget documents, the allocation has been made in response to requests from India’s Ministry of External Affairs (MEA). In the previous fiscal year, 2025–26, Bangladesh received ₹34.48 crore in aid under the revised estimates. The initial budget proposal had suggested ₹120 crore in assistance, but this figure was subsequently reduced to approximately ₹34.5 crore in the revised budget.
India’s budget documents also indicate that Bhutan is set to receive the highest level of aid among South Asian countries. Bhutan has been allocated a total of ₹2,288.56 crore, which includes ₹1,769 crore in grants and ₹520 crore in loans. By comparison, Bhutan received a total of ₹1,950 crore in the previous fiscal year.
Other South Asian countries are allocated varying amounts of Indian aid as detailed below:
| Country | Proposed Allocation 2026–27 (₹ crore) | Grants (₹ crore) | Loans (₹ crore) | Allocation 2025–26 (₹ crore) |
|---|---|---|---|---|
| Bhutan | 2,288.56 | 1,769 | 520 | 1,950 |
| Nepal | 800 | 800 | 0 | 700 |
| Maldives | 550 | 550 | 0 | 625 |
| Sri Lanka | 400 | 400 | 0 | 300 |
| Myanmar | 300 | 300 | 0 | 200 |
| Afghanistan | 150 | 150 | 0 | 100 |
| Bangladesh | 60 | 60 | 0 | 34.48 |
Experts note that aid allocations are closely linked to a country’s economic situation. With Bangladesh currently facing economic constraints, many donor countries, including India, are reducing grants and increasingly providing loans under stricter conditions. Over the past decade, India has extended financial support to Bangladesh through Lines of Credit (LoC) alongside grants.
On 1 February, Union Finance Minister Nirmala Sitharaman presented India’s budget for the new fiscal year, proposing a total expenditure of ₹53.50 lakh crore. This represents a 7.7 per cent increase compared with the previous year’s budget. India’s fiscal year begins on 1 April and concludes on 31 March of the following year.
While the increase in aid to Bangladesh is welcome, analysts point out that it remains modest compared to allocations for other South Asian nations, particularly Bhutan and Nepal. Nevertheless, the budgetary provision reflects India’s continued commitment to supporting its neighbour amid broader regional economic challenges.