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Strategic Priorities Reflected in India’s MEA Budget 2025-26
Context:
The Ministry of External Affairs (MEA) plays a pivotal role in implementing India’s foreign policy. MEA’s budget has increased by 67% from 2014 to 2025 but its percentage share in the Union Budget has declined from 0.8% to 0.4%.
Key Priority Areas in MEA Budget
- Neighbourhood First: Country-wise Allocation
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- Bhutan: Rs 2,150 crore (largest recipient, 39.2% of total aid) – for hydropower, roads, and infrastructure.
- Maldives: Rs 600 crore (increase from Rs 470 crore) – reflecting efforts to counter Chinese influence.
- Sri Lanka: Rs 300 crore – supporting economic recovery.
- Nepal: Rs 700 crore – consistent aid allocation.
- Bangladesh: Rs 120 crore – no change despite political shifts.
- Myanmar: Rs 350 crore (decrease from Rs 400 crore) – due to political instability.
- Afghanistan: Rs 100 crore (reduced from Rs 200 crore) – reflecting a cautious approach towards the Taliban regime.
- Strengthening Strategic Connectivity
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- Chabahar Port (Iran): Rs 100 crore for regional trade and connectivity.
- Kaladan Multimodal Project (Myanmar): Continued funding to strengthen India’s Act East Policy.
- BBIN Electricity Trade (Bangladesh, Bhutan, India, Nepal): Increased allocation to enhance regional energy security.
- India-Myanmar-Thailand Trilateral Highway: Focus on better trade connectivity.
- Discretionary Expenditures
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- Indian Technical and Economic Cooperation (ITEC): Rs 16,375 crore – for capacity building, training programs, and grassroots development.
- Special Diplomatic Expenditures: Rs 24,900 crore – for bilateral relations and global perception management.
- Disaster Relief Allocation: Increased from Rs 60 crore to Rs 64 crore – for global humanitarian assistance.
Breakdown of MEA Budget 2025-26
- Total Budget: Rs 20,516 crore
- Foreign Aid Allocation: Rs 5,483 crore (down from Rs 5,806 crore in 2024-25)
- Overseas Development Partnerships: Rs 6,750 crore (33% of total MEA budget)
- Discretionary Spending (ITEC and Special Diplomatic Expenditures): Rs 24,900 crore & Rs 16,375 crore
- Chabahar Port Allocation: Rs 100 crore (same as last year)
- In 2025-26, the MEA was allocated Rs 20,516 crore, a 7.3% decrease from the previous year’s projection.
- The decline is partly due to the absence of Indian Exim Bank sovereign guarantees, which led to higher spending in 2023-24 and 2024-25.
MEA Budget in Global Context
- India’s diplomatic budget remains relatively small compared to major global powers.
- India has only 850 IFS officers for 193 embassies and consulates, whereas the US (1000+), China (7000+), and UK (1200+) have much larger diplomatic corps.
- India’s annual recruitment of 32-35 officers is insufficient to meet global diplomatic demands.
Geopolitical Objectives Behind MEA Spending
- Countering China’s Influence:
- Increased aid to Maldives as part of a diplomatic reset.
- Sustained investments in Bhutan and Nepal to maintain strategic influence.
- Regional Security:
- Aid to Sri Lanka and Myanmar ensures stability in the Indian Ocean region.
- Reduced aid to Afghanistan aligns with a pragmatic approach to the Taliban regime.
- Economic Diplomacy: Funding for Chabahar Port and BBIN power trade boosts India’s regional trade leadership.
- Act East and Extended Neighbourhood Strategy: Myanmar projects and Trilateral Highway align with India’s Act East Policy.
- Africa and Latin America Engagement:
- Increased aid to Africa (Rs 225 crore from Rs 200 crore) signals India’s global south leadership aspirations.
- Reduced aid to Latin America suggests a more region-specific approach.
Shortfalls in MEA Budget Allocation
- Institutional Capacity Constraints:
- India’s diplomatic corps remains understaffed (850 officers managing 193 missions).
- MEA’s training budget decreased by 11.4% year-on-year, impacting diplomatic effectiveness.
- Limited Investment in Emerging Domains:
- Lack of dedicated funding for critical technologies, AI, and cyber diplomacy.
- No structured plan for expanding India’s role in global digital infrastructure (DPI).
- Reduced Aid to Afghanistan & Myanmar: May limit India’s strategic leverage in these conflict-prone regions.
Steps to Address Budget Shortfalls
- Lateral Hiring:
- Expand IFS recruitment to 100+ annually.
- Integrate defence personnel and international relations experts for specialized diplomacy.
- Capacity Building for Critical Technologies:
- Establish a dedicated AI and cyber diplomacy desk.
- Train diplomats in technology-driven foreign policy.
- Strategic Resource Allocation:
- Increase funding for MEA training programs.
- Expand India’s footprint in digital governance and DPI leadership.
