Changing contours of India's aid to neighbouring countries and regions

Prime Minister (PM) Narendra Modi will be on a state visit to Sri Lanka from April 4 to 6. As part of it, the PM will travel to Anuradhapura, in the northern part of the island nation, to inaugurate development projects being implemented with Indian financial aid. Modi last visited Sri Lanka in 2019. 

Last year, Sri Lanka President Anura Kumara Dissaanayake paid a three-day state visit to India in December — his first overseas visit after taking office. Returning the favour, Modi will be the first foreign leader to be hosted by Dissanayake. India’s assistance to Sri Lanka increased by 112 per cent between financial year 2023-24 (FY24) and FY25 (until January), but has declined significantly to Bangladesh, where violent protests forced former Prime Minister Sheikh Hasina to resign and seek refuge in India last August. (see chart 1). 

 

In the wake of the earthquake in Myanmar, India has sent aid for its eastern neighbour. India’s disaster relief assistance has increased substantially in recent years, from ₹1.60 crore in FY23 to ₹41.18 crore in FY24, and ₹27.88 cr in FY25 (until January 2025). 

In addition to its development assistance, India has offered new loans, under the Lines of Credit (LOCs) and Concessional Financing Scheme (CFS), through a lending bank to six partner countries between January 2022 and January 2025. The total amount of loans —under LOCs and CFS — offered to these partner countries during this period stands at over $ 3.73 billion. This excludes disbursements for on-going projects under earlier LOCs. The six partner countries include: Bangladesh, Bhutan, Nepal, Sri Lanka, the Maldives, and Myanmar. 

Over the years, out of the total LOCs of $ 32 billion under the “Neighbourhood First” policy, India has extended LOCs worth $7.8 billion to Bangladesh, $1.65 billion to Nepal, over $ 2 billion to Sri Lanka, $745 million to Myanmar, and $ 1.43 billion to Maldives.