India has not allocated funds for the Chabahar port project in Iran in the Union Budget 2026–27 and has reduced development assistance to Bangladesh to ₹60 crore, reflecting strained bilateral relations.
Among neighbouring countries, Bhutan received the highest allocation of ₹2,288 crore, reaffirming close strategic ties.
This is followed by ₹800 crore for Nepal, and ₹550 crore each for Maldives and Mauritius.
The allocations underline India’s calibrated use of development assistance as a tool of foreign policy.
APSC Relevance:
India’s neighbourhood policy, foreign aid diplomacy, Union Budget and external relations.
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