Budget 2026: India Halves Foreign Aid to Bangladesh Amid Rising Tensions

• The Union Budget 2026 has significantly cut foreign aid to Bangladesh by 50%, reducing it from ₹120 crore in Budget 2025 to ₹60 crore.
• Revised estimates for FY26 show an even steeper reduction, with allocations to Bangladesh dropping over 70% from the original ₹120 crore to ₹34.48 crore.
• This sharp decline signals a possible punitive measure due to ongoing diplomatic tensions and Bangladesh's interim government's positions clashing with India's.
• In contrast, aid to other neighboring countries like Nepal, Sri Lanka, and Bhutan either increased or remained steady, with Maldives seeing a modest decrease.
• Bhutan's funding saw an increase from ₹2,150 crore to ₹2,288 crore, indicating continued strong bilateral engagement.

Why It Matters: India's Budget 2026 slashes foreign aid to Bangladesh by 50% amidst escalating diplomatic tensions.