New Delhi: In what can be seen as a major development in India's foreign policy, the interim Budget has laid a special emphasis on the country's foreign aid allocation with Bhutan emerging as a significant recipient.
In line with its Neighbourhood First policy, the largest share of aid has been granted to Bhutan with an allocation of Rs 2,608 crore compared to Rs 2,400 crore that has been set aside for the Himalayan nation in 2023-24.
India's foreign aid allocation to Bhutan in last 5 years
According to sources, India has been a consistent supporter of Bhutan’s socio-economic development, especially in terms of hydropower cooperation, a sector that is the primary driver of Bhutan’s economy. It is pertinent to note that India began providing aid to Bhutan for its socio-economic development in the 1960s and since the launch of Bhutan’s Five-Year Plans, India has been its principal development partner. The lion’s share of Bhutan’s total external grant is borne by India. In the current 12th Five-Year Plan (2018-23) of Bhutan, India’s contribution of Rs. 4,500 crore constitutes 73 per cent of the total external grant to the neighbouring nation.
Speaking to ETV Bharat, Smruti Pattanaik, foreign policy expert and research fellow at Manohar Parikkar Institute of Defence Studies and Analyses said, "Historically, India has shared closed relationships with Bhutan. This was governed by the 1949 treaty which was revised in 2007".
"This relationship has been crucial due to China’s occupancy of Tibet and the 1962 war with China. It remains one of the closest allies of India in the region. India had completely funded the first two five-year plans of Bhutan and now too it supports Bhutan’s development efforts", Pattanaik said.
"Since 1982 Bhutan has entered into negotiations with China. Bhutan is keen to resolve its border issue but has not agreed to China’s proposal for exchanging territory that will give China an advantage in the Chumbi valley adjoining the trijunction. Bhutan is the largest recipient of India’s aid and India has invested in hydropower projects there. I see the bilateral relationship flourishing further", Pattanaik added.
India's growing diplomacy towards Bhutan
Last month, Foreign Secretary Vinay Mohan Kwatra visited Bhutan, marking the first high-level visit from New Delhi after the formation of a new government under People's Democratic Party leader Tshering Tobgay. During his visit, Kwatra met Bhutan King Jigme Khesar Namgyel Wangchuck and discussed ways to further deepen the unique ties of friendship between the two nations.
India- Bhutan growing partnership
The highest allocation to Bhutan in this year's Budget underscores India's commitment to supporting neighbouring countries' development initiatives. This is also viewed as an important step by India in boosting relations with Bhutan in the face of growing Chinese influence especially when China (India's biggest rivalry) and Bhutan are looking at resolving their boundary dispute that may affect New Delhi’s security interests, particularly in the Doklam triangular dispute. New Delhi, however, has been closely monitoring the developments.
China and Bhutan decided in August of last year to move quickly and concurrently execute a three-step roadmap to end their boundary dispute. Bhutan and China signed the “three-step roadmap” agreement in October 2021 to step up talks to settle their boundary issue. The agreement was signed four years after China attempted to build a road across territory that Bhutan claimed as its own, resulting in a 73-day standoff between the Chinese and Indian forces at the Doklam tripoint.
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