Why in the News?

The Union Budget presented by Finance Minister Nirmala Sitharaman prioritized India-funded projects in neighbouring countries, receiving the majority of the Ministry of External Affairs’ allocation.

What are the India-funded projects in the neighbourhood? 

• India has provided significant aid to Nepal, including funding for hydroelectric power plants like Pardi, Trishuli and Devighat.
• In Afghanistan, India has provided over $3 billion in assistance and was involved in over 400 projects across 34 provinces, including major infrastructure projects like the Salma Dam and the Zaranj-Dalaram Highway.
• In Myanmar, Kaladan Multi-Modal Transit Transport Projects is $484 million project aims to connect the northeastern Indian state of Mizoram to the Sittwe port in Myanmar’s Rakhine state.
• In the 2024-25 budget, India allocated ₹700 crore to Nepal (up from ₹550 crore), ₹245 crore to Sri Lanka (up from ₹150 crore), and ₹30 crore to Seychelles (up from ₹10 crore).

Reasons for reduced focus on Bhutan

• Bhutan, the largest recipient of MEA’s annual allocation, saw a dip in funding by ₹332.02 crore to ₹2,068.56 crore.
• However, this slight reduction does not indicate a decrease in funding for projects in Bhutan, as India and Bhutan recently cleared 61 projects amounting to ₹4,958 crore.

Importance of Bhutan for India:

• Strategic Importance: 

• • • Bhutan shares borders with India and China, acting as a buffer state between the two. Its strategic location is crucial for India’s security interests.
    • India has provided assistance to Bhutan in areas like defence, infrastructure, and communication to maintain its sovereignty and territorial integrity.
    • During the 2017 Doklam standoff between India and China, Bhutan allowed Indian troops to enter its territory to resist Chinese incursions.

• Economic Importance: 

• • • India is Bhutan’s largest trading partner, accounting for 98% of its exports and 90% of its imports.
    • Bhutan’s hydropower potential is a significant source of revenue, and India has been instrumental in assisting Bhutan in developing these projects.
    • India provides substantial economic support to Bhutan. In 2015-16, India’s budgetary support to Bhutan stood at ₹61.60 billion, making it the largest recipient of India’s foreign aid.

• Cultural Ties:  Bhutan and India share strong cultural ties, as both countries are predominantly Buddhist

Future scope for India’s Neighbourhood Policy (Way forward) 

• Strengthening Bilateral Ties: Need to negotiate free trade agreements, promote investments, and collaborate on infrastructure projects to boost economic ties.
• For example, India and Bangladesh have made significant progress in recent years, with the inauguration of the Maitri Setu bridge connecting Tripura to Bangladesh. The two countries are also working on the Akhaura-Agartala rail link to enhance connectivity.
• Promoting Regional Cooperation: Need to collaborate on regional initiatives such as the BBIN (Bangladesh, Bhutan, India, Nepal) Motor Vehicles Agreement for seamless movement of goods and people.
• For instance, India has been actively involved in the BIMSTEC Coastal Shipping Agreement and the BIMSTEC Grid Interconnection project to enhance regional connectivity and energy cooperation.

Mains PYQ: 

Q Evaluate the economic and strategic dimensions of India’s Look East Policy in the context of the post-Cold War international scenario. (UPSC IAS/2016)

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now