𝐈𝐧𝐝𝐢𝐚 𝐀𝐥𝐥𝐨𝐜𝐚𝐭𝐞𝐬 𝐑𝐬 𝟐𝟐.𝟖𝟖 𝐁𝐢𝐥𝐥𝐢𝐨𝐧 𝐆𝐫𝐚𝐧𝐭 𝐓𝐨 𝐁𝐡𝐮𝐭𝐚𝐧 𝐅𝐨𝐫 𝐅𝐢𝐬𝐜𝐚𝐥 𝐘𝐞𝐚𝐫 𝟐𝟎𝟐𝟔-𝟐𝟕

…. 𝑩𝒉𝒖𝒕𝒂𝒏 𝒓𝒆𝒄𝒆𝒊𝒗𝒆𝒔 𝒉𝒊𝒈𝒉𝒆𝒔𝒕 𝒔𝒉𝒂𝒓𝒆 𝒐𝒇 𝒊𝒏𝒅𝒊𝒂𝒏 𝒂𝒔𝒔𝒊𝒔𝒕𝒂𝒏𝒄𝒆 𝒕𝒐 𝒔𝒖𝒑𝒑𝒐𝒓𝒕 𝒊𝒏𝒇𝒓𝒂𝒔𝒕𝒓𝒖𝒄𝒕𝒖𝒓𝒆, 𝒄𝒐𝒎𝒎𝒖𝒏𝒊𝒕𝒚 𝒅𝒆𝒗𝒆𝒍𝒐𝒑𝒎𝒆𝒏𝒕 𝒂𝒏𝒅 𝒆𝒄𝒐𝒏𝒐𝒎𝒊𝒄 𝒈𝒓𝒐𝒘𝒕𝒉

By Kezang Choden

The Government of India has announced a grant of Rs 22.88 billion for Bhutan for the fiscal year 2026-27, reaffirming the country’s position as the largest recipient of Indian assistance among neighbouring nations. According to allocation details, other countries in the region will also receive financial support from India, including the Maldives and Mauritius, each allocated Rs 5.5 billion, Bangladesh Rs 0.6 billion, Nepal Rs 8 billion, and Sri Lanka Rs 4 billion.

The grant reflects India’s continued development partnership with countries in its neighbourhood, with Bhutan receiving the highest share of assistance in the current fiscal year.

The Ministry of Finance shared that the Royal Government of Bhutan will receive the grant to prioritize the implementation of approved projects under the 13th Five Year Plan, in line with national development priorities. The allocation will support 71 approved Project Tied Assistance projects, including 53 new initiatives and 18 ongoing multi-plan projects carried forward from the 12th Five Year Plan. These projects cover sectors considered critical for long-term development, including education, health infrastructure, roads, bridges and railways, agriculture and livestock, renewable energy, information and communication technology, trade and cultural infrastructure, as well as human resource development and skills training.

A portion of the grant will also be directed towards High-Impact Community Development Projects to promote inclusive and regionally balanced growth. A total of 572 HICDPs approved across 19 dzongkhags and three thromdes will receive support. These projects focus on addressing grassroots needs, including drinking water supply, irrigation facilities, last-mile road connectivity, protection of agricultural land, and improvement of township infrastructure.

In addition, part of the funding will be channelled to the Economic Stimulus Programme, in line with programmes and allocations approved by the Lhengye Zhungtshog, to support economic recovery and growth. Overall, the grant is expected to strengthen infrastructure development, improve service delivery, and enhance livelihoods across the country, with emphasis on projects that deliver immediate and tangible socio-economic benefits during the fiscal year 2026–27.

For the 13th Five Year Plan period, the total grant allocation from India amounts to Nu 100 billion. Of this, Nu 70 billion has been earmarked for Project Tied Assistance projects, Nu 10 billion for High-Impact Community Development Projects, Nu 15 billion for the Economic Stimulus Programme, and Nu 5 billion for programme grants.

The Indian Embassy highlighted that Bhutan has remained a key recipient of Indian support since the launch of its first Five Year Plan in 1961 and continues to be the largest beneficiary under the Ministry of External Affairs’ “Aid to Countries” budget.

The embassy said this sustained support reflects the special and enduring friendship between the two countries, built over decades on mutual respect, trust and understanding. Recalling the visit of Indian Prime Minister Narendra Modi to Bhutan in November 2025, the embassy noted his remarks that the partnership of trust and development between India and Bhutan stands as a model for the entire region.

The embassy added that the highest allocation for Bhutan in the “Aid to Countries” section of the Indian budget for April 2026 to March 2027, tabled in the Indian Parliament, reaffirms India’s continued commitment to Bhutan’s development.

“According to the embassy, the allocation is expected to contribute significantly to Bhutan’s infrastructure development, economic growth and overall socio-economic progress, supporting wider prosperity across the country. In addition to grant assistance, the Government of India continues to provide financing support for the construction of hydropower projects in Bhutan. These projects have become a long-term asset for meeting Bhutan’s national energy needs and a major source of revenue through electricity exports.”

The Ministry of Finance stated that no new projects are planned under the current grant, as the Nu 100 billion assistance from India has already been programmed for various approved projects. The ministry said the grant is aligned with Bhutan’s long-term development objectives and is being used to finance priority investments under the 13th Five Year Plan.

“The funding supports inclusive growth, economic diversification and human capital development by targeting key sectors such as infrastructure, renewable energy, agriculture, digital technologies, education, health and skills development. These investments are expected to strengthen the foundations for sustained productivity, improve service delivery and enhance the overall resilience of the economy.”

From a fiscal perspective, the ministry highlighted that the grant plays an important stabilizing role by reducing reliance on domestic borrowing and external debt to finance capital expenditure. Grant financing enables the Royal Government of Bhutan to implement high-impact development projects without adding to the national debt or increasing future debt servicing obligations, thereby preserving fiscal space and maintaining debt sustainability over the medium to long term.

“Overall, the ministry said the grant allows Bhutan to pursue its long-term development goals in a fiscally prudent manner, ensuring that development outcomes remain aligned with macro-fiscal stability and the sustainability of public finances.”

The Indian Embassy said the budget announcements also highlighted significant aid allocations to several neighbouring countries, including Afghanistan, Bangladesh, Nepal and Sri Lanka. The embassy noted that these countries feature prominently in India’s Aid to Countries list, reflecting a continued focus on regional cooperation.

According to the embassy, the allocations are in line with India’s Neighbourhood First policy, which emphasizes shared growth and prosperity among India and its neighbours. The policy seeks to strengthen regional ties through development cooperation, mutual support and long-term partnerships that benefit the wider South Asian region.