Doing more with less

Against this backdrop, the Indian Ministry of External Affairs (MEA) saw its Union Budget share shrink from 0.69 to 0.41 per cent between 2017-18 and 2026-27. Its allocation nonetheless grew 49.47 per cent in absolute terms over that period, from Rs 14,798.55 crore to Rs 22,118.97 crore. Funding has moved unevenly, contracting during three years, with the sharpest cut, 7.39 per cent, coming in 2025-26. This year’s 7.81 per cent increase has left the allocation just below its 2024-25 peak of Rs 22,154.67 crore. The figures appear in a Committee on External Affairs report examining MEA’s 2026-27 demands for grants, tabled in March.

Testifying in February on the ministry’s shrinking slice of the Union Budget, the foreign secretary noted that the “Committee has also underlined the need for greater budgetary allocation, underscoring the decreasing share of the MEA’s allocation as a percentage of the overall Government of India (GOI) Budget”. The submission also explained that MEA’s actual allocations are increasing, which is what has enabled it to meet its international obligations “more effectively”.

The MEA’s spending record could also offset that shrinking share, with utilisation topping 95 per cent of its revised estimate (RE) allocation in all but two full years between 2015-16 and 2024-25. Those exceptions were 2016-17, which narrowly missed at 94.99 per cent, and pandemic-hit 2021-22, when utilisation slumped to 88.58 per cent, the lowest among full years. In 2017-18, MEA even overshot the RE, hitting 100.44 per cent. The 2025-26 figure of 67.80 per cent covers spending only until December 31, 2025, so cannot yet be compared.

Between 2017-18 and 2026-27, the MEA received less than it sought every year at the budget estimate (BE) stage. The same held at the RE stage for each year from 2017-18 to 2025-26, beyond which RE figures are unavailable. Over that nine-year span, the RE shortfall peaked in 2018-19, when allocation trailed demand by Rs 4,180.73 crore. It narrowed to Rs 2,224.52 crore by 2021-22, widened again until 2024-25, then hit its lowest, Rs 2,141.36 crore, in 2025-26.

Asked by the Committee to compare foreign affairs allocations, as shares in overall national budgets, across “select major countries with comparable global engagements”, the MEA put its BE 2026-27 figure at around 0.06 per cent of the gross domestic product (GDP). Countries such as the US, the United Kingdom (UK), Singapore, Germany and France, it noted, allocate 0.15-0.30 per cent of GDP to foreign affairs.

In 2025-26, the US International Affairs Budget stood at about Rs 4.71 trillion, nearly 23 times MEA’s Rs 20,516.61 crore. The UK’s Foreign, Commonwealth and Development Office was allotted roughly Rs1.29 trillion, or more than six times India’s allocation.

Budgetary outlay earmarked under the “Technical and Economic Cooperation” head funds India’s aid and assistance programmes abroad. Its beneficiaries lie in India’s immediate and extended neighbourhood. Programmes also cover countries across Southeast Asia, Central Asia, Africa, Latin America, the Caribbean and the Indo-Pacific. Disaster relief and contributions to various regional funds come under this head too. According to the MEA, such aid furthers bilateral ties while strengthening friendship, respect and mutual trust with partner countries. Spending under this head matched the 2023-24 allocation almost exactly, at Rs 5,074.57 crore against Rs 5,080.24 crore, or 99.9 per cent. In 2024-25, it outran its budget, with Rs 6,435.57 crore spent against Rs 4,677.86 crore allotted, or 137.6 per cent. Nepal overshot its allocation in both years, using 119.5 per cent during 2023-24, then 100.2 over 2024-25. For Sri Lanka, utilisation rose from 79.6 per cent in 2023-24 to 129.6 during 2024-25. That year, its ~245 crore allocation even exceeded MEA’s Rs 200 crore demand. Bangladesh moved the opposite way, its utilisation slipping from 78.8 per cent in 2023-24 to 49.3 per cent during 2024-25. Even its reduced allocation of Rs 120 crore, down from Rs 200 crore, went less than half spent.

Global uncertainty is rising, and current circumstances suggest little respite ahead. It might therefore be warranted to arrest, perhaps even reverse, MEA’s slipping share of the overall budget, better preparing India for meeting its foreign policy priorities.