Bhutan’s share of assistance this year comprises 63 percent of total grants and loans 

Budget: The government of India (GoI) has significantly increased the financial aid package to Bhutan to Rs 61.6 billion in its annual budget for 2015-16 presented in the Indian parliament last week.

This is an increase of Rs 12.88 billion from last year.  India had allocated Rs 48.72 billion for the fiscal year 2014-15 under the “Grants and Loans to Foreign Governments” expenditure head.

Bhutan is the biggest receiver of Indian aid. Bhutan’s share of aid comprises 63 percent of the total grants and loans India will disburse to foreign governments during the new fiscal year.

Disbursement of the aid will begin from April 1, coinciding with the beginning of the new Indian financial year. The Bhutanese fiscal year, on the other hand, starts from June 30 and ends on July 1.

Under the “plan expenditure” heading, India increased aid by 33 percent.

Grants and loans for the five-year plan activities have increased to Rs 49.6 billion from Rs 37.25 billion last year.

Rs 12 billion has been set aside under the non-plan expenditure heads. However, there is only a 4 percent increase under non-plan heads of expenditure. GoI last year allocated Rs 11.46 billion under this expenditure head.

The non-plan aids are in grant form.

Overall, Indian aid to Bhutan increased by 26 percent this year.  India has agreed to provide Rs 45 billion for the 11th Plan, excluding the Rs 5 billion as economic stimulus package to boost the economy and help Bhutan overcome the problems arising out of the acute INR shortage.

An official from the finance ministry said, the numbers look inflated because of the inclusion of the hydropower budgets, which do not form part of India’s commitment for the 11th Plan. “It’s normal for the figures to be high as the hydropower budgets have been included in them,” he said.

As compared to Bhutan, India has given marginal hikes to other countries of the South Asian Association for Regional Cooperation (SAARC).

Though India’s engagement in Afghanistan has increased in the recent years, it has not got a significant hike and will receive Rs 6.76 billion.  In the last fiscal year’s budget, Afghanistan was allocated Rs 5.25 billion and is the second biggest receiver of Indian aid after Bhutan.

India allocated the fourth highest amount of grant to Nepal in South Asia after Bhutan, Afghanistan and Sri Lanka. India’s aid to Nepal is Rs 4.2 billion.

Bangladesh has been allocated Rs 2.5 billion in grant, and the grant allocated for Maldives is Rs 1.83 billion.

India’s total expenditure budget for foreign governments for this year is Rs 97.35 billion, an increase by 26 percent.

India’s assistance package for Bhutan’s 11th Plan was decided during the visit of Prime Minister Tshering Tobgay to India from August 30 to September 4, 2013.  Out of the Rs 45 billion, Rs 28 billion will be provided as project-tied assistance (PTA).

The PTA will go for mutually agreed projects covering major priority sectors of socio-economic development like roads and bridges.

Meanwhile, GoI continues to be the largest development partner, providing grants of Nu 47.81 billion, constituting 65 percent in the current year of total external grants.

By MB Subba