The ties between New Delhi and Dhaka were hit following ouster of Sheikh Hasina. 78-year-old Hasina later fled to India and the Bangladesh government has been demanding that the former prime minister must be handed over to it.
Amid the strained ties with Bangladesh, India on Sunday (February 1) cut aid to the neighbouring nation by half, as Union Finance Minister Nirmala Sitharaman announced the Union Budget for the financial year (FY) 2026-27. Even though the government has raised the allocation under ‘Aid to Countries’ to Rs 5,686 crore, it has allocated just Rs 60 crore to Bangladesh.
In Union Budget 2025-26, the government had allocated around Rs 120 crore to Bangladesh.
The ties between New Delhi and Dhaka were hit following ouster of Sheikh Hasina. 78-year-old Hasina later fled to India and the Bangladesh government has been demanding that the former prime minister must be handed over to it. India, on the other hand, has said it is examining Bangladesh’s request to extradite Hasina, who leads the Awami League.
India has also asked Dhaka to ensure the safety of minorities, particularly the Hindus, in Bangladesh. Following Hasina’s ouster, the attack on minorities, particularly the Hindus, have increased significantly in Bangladesh.
“We remain committed to the best interests of the people of Bangladesh, including peace, democracy, inclusion and stability in that country, and will continue to engage constructively in this regard with all stakeholders,” said Ministry of External Affairs (MEA) spokesperson Randhir Jaiswal.
No allocation for Chabahar
In addition to cutting aid to Bangladesh, the central government has also not made any allocation for the Chabahar Port in Iran, despite New Delhi signing a 10-year agreement in 2024 with Tehran to operate the Shahid Beheshti terminal there. This comes amid Iran’s tensions with the United States (US) amid the ongoing political turmoil there.
President Trump has also threatened to impose 25 per cent tariffs on countries that are engaged in trade with Iran.
Bhutan gets maximum allocation
In the Union Budget 2026-27, Bhutan remains the largest recipient of Indian aid, as it has been granted Rs 2,288 crore (which is an increase of around 6 per cent). Meanwhile, Nepal, Sri Lanka and Myanmar have been granted Rs 800 crore, Rs 400 crore and Rs 300 crore, respectively. The Maldives and Mauritius have been granted Rs 550 crore each, Afghanistan Rs 150 crore, Mongolia Rs 25 crore, African countries Rs 225 crore, and Seychelles Rs 19 crore.
