Dynamics of development aid
In the Union Budget outlay (2024-2025), Rs 4,883 crore has been allocated for ‘aid to countries’, of which India’s neighbours got a chunk. Among the neighbours, Bhutan got Rs 2,068 crore, Afghanistan Rs 200 crore, Bangladesh Rs 120 crore, Rs Nepal 700 crore, Sri Lanka Rs 245 crore, Myanmar Rs 250 crore, and the Maldives Rs 400 crore. When it comes to the Maldives, the media reported the allocation as a ‘reduction’ from last year’s Rs 770 crore, ‘reflecting strained relations with pro-China government under President Muizzu’. The story is not that simple.
The actual Budget apportionment for the Maldives in the last financial year (2023-2024) was Rs 400 crore. It was revised to Rs 770.9 crore due to unforeseen expenditures. The allocation in FY2024-2025, therefore, is the same as it was last year. Notably, in FY2022-2023, aid to the Maldives was only Rs 183.16 crore despite the so-called pro-India MDP government under Ibrahim Mohamed Solih at the helm of affairs. If political rapport is the determining factor, why did Bangladesh and Bhutan get less, and Nepal receive more this financial year when compared to the last one? The dynamics of aid cannot be attributed to minor political irritants. The quantum of India’s aid to other countries is determined by New Delhi’s long-term vision, and fund availability.
The fundamentals of India-Maldives ties are strong. The Maldives has been an important beneficiary of India’s development assistance for a long time. The atoll state figures prominently in New Delhi’s SAGAR (Security and Growth for All in the Region) vision. The extent of development partnership between the two countries amounts to over $3 billion in total, covering every facet of development in the island state. India’s ‘comprehensive strategy of development cooperation’ goes with the Maldives’ ‘national framework for development’. The scope of the development partnership includes budgetary support, infrastructure development, education, capacity building, health and sanitation. Significantly, India’s assistance to the Maldives has political, strategic, economic, environmental, and security contexts.
Despite this strong support, from time to time, the Maldives reaches out to extra-regional powers like China, the United Kingdom, and the United States to gain maximum concessions. The survival strategy of the Maldives is opportunistic bandwagoning with India. It also pursues hedging and external balancing strategies depending upon the regime in power in Malé.
It is important to note that external assistance — both governmental and non-governmental — have been an important source for Malé’s development expenditure. India’s development assistance has been transparent and focused on the needs and priorities of the people of the Maldives. India’s help in the infrastructure development in the Maldives has been gaining momentum as witnessed by numerous connectivity projects spread all over the archipelago. India’s development partnership experience shows that community development projects have generated a high impact in the Maldives. Given the fact of income disparity in the Maldives, the development assistance from India is tailored to boost the living standards of the poorest of the poor in the country.
India’s role in the development of healthcare facilities in the Maldives is noteworthy. What is more important is the training of local doctors and nurses, apart from constructing clinics and hospitals across the country. Developing the human resource development of the country is crucial. An educated and skilled workforce can improve productivity and help find additional economic niche markets for the country. Transport infrastructure and improved connectivity are critical. It is also important to enable and support both public and private investments in the growth process. The idea of a trust fund in collaboration with multilateral funding agencies like the World Bank and the ADB could further be enhanced in addressing the Maldives’ climate change-related challenges.
To make the development partnership effective, India can address the challenges that exist in the Maldives in the form of growth disparities, weak institutions, and lack of political unity. The involvement of local councils will go a long way in the effective execution of development projects. The fact that the country is geographically dispersed, decentralisation should be a natural way of governance.
Moving forward, on its part, the Maldives must shift to a more broad-based, sustainable, and inclusive growth. Diversifying the economy with a broader role for the private sector must be considered. Fiscal sustainability is key to the Maldives’ future economic stability. It should not go the Sri Lanka way.
Considering these, India must continue development assistance to all its neighbours, especially the smaller ones. India’s security and development hinges on the growth of its neighbours. With tides rise the ship.
(N Manoharan is a professor, and Timhna S is a doctoral scholar,
Department of International Studies, Christ deemed to be University, Bengaluru)