Union Budget 2017: MEA gets minor jump in allocation, but Chabahar, IOR see major spike in grants

The Ministry of External Affairs has been allocated Rs 14798.55 crore for FY 2017-18 in this year’s Union Budget. This is an overall increase of just Rs 135 crores compared to last year, when the MEA had been allocated Rs 14662.66 crore. However, the ministry received only Rs 13,426 crore of the total fund allocated to it in 2016-17 Budget.

While the total budgetary allocation to the ministry has only risen by a mere one percent, a careful breakdown of the allocation tells a different story.

Although, there has been a 14 percent decline in the total aid and grants to countries between the 2017 and 2016 editions of the Budget, countries like Seychelles, Mauritius and the Maldives have seen their grants skyrocket.

While the Maldives received just Rs 80 crore in grants in 2016-17, this year it has been allotted Rs 245 crore. This amounts to a 512 percent increase in funds.

Seychelles, on the other hand seems to have hit a jackpot as it has been allocated Rs 300 crore in the present Budget, while Mauritius has been allotted Rs 400 crore. No grants had been announced for both these island nations in the last Budget.

If seen through the prism of New Delhi’s foreign policy priorities, this signals India’s growing interest in the Indian Ocean Region to counter China.

Bhutan, however, still takes a large slice of the pie, despite a one-third cut in funds for the Himalyan kingdom. With Rs 3,714.13 crore of the total 6,479.13 crore allotted to just Bhutan, Thimpu takes about 57 percent share of the total aid and grants. The country remains close to India, having no diplomatic ties with China and is strategically crucial for India vis-à-vis China.

The same can be said of Nepal, another buffer state between China (technically, the region of Tibet) and India. The MEA has allocated Rs 375 crore to Kathmandu, an increase of 25 percent from the previous budget.

However, the biggest addition to the MEA Budget has been the Chabahar Port project, in which Indian companies have a huge stake. The port is reportedly being propped up by India as a counter to China’s growing influence in the Indian Ocean Region through the Gwadar Port in Balochistan. The government has approved an allocation of Rs 150 crore to the Iranian port.

Nevertheless, there are many other countries that have been allotted less than what they had received last year.

The Union Budget has slashed the allocation to the war-torn Afghanistan, where India has been active in many infrastructure projects like construction of the Salma Dam and the Afghan Parliament. With a one-third cut in the total grant, Kabul has been allocated just Rs 350 crore, down from Rs 520 crore last year. The Economic Times reported that the completion of the Salma Dam and the new parliament building had been the possible reason for the cut in the total grant.

However, Myanmar, an important component of India’s Look-East policy, and Sri Lanka, a long-time partner, have seen a cut in their allocation. While Colombo has been alloted Rs 125 crore — a decline of 45 percent, Myanmar has been allocated 43 percent less funds this year.

Bangladesh, too, will see a minor cut in the total grant it will receive. While in 2016-17, Dhaka had been allotted Rs 150 crore, this year it has been alloted just Rs 125 crore.

Overall, if the budget allocation is any indication of India’s future foreign policy priorities, it suggests that the Narendra Modi government is consolidating its presence in the Indian Ocean Region to balance China’s aggressive maritime expansion.