India has significantly increased its financial aid to the Maldives in its latest budget, a strategic move amid efforts to counter China's growing influence in the region. The Maldives will receive an allocation of 6 billion rupees (US$69 million) in 2025, marking the largest increase among South Asian beneficiaries. This development comes after a period of strained relations between the two nations, which reached a low point in November 2023.
The downturn in diplomatic ties was primarily triggered by Maldivian President Mohamed Muizzu's directive to withdraw Indian troops who were operating and maintaining Indian-gifted helicopters and aircraft. This move, motivated by concerns over national sovereignty, strained the historically friendly relations between the two countries. The Maldives' allocation of aid is up from the 4.7 billion rupees earmarked last year, which had been reduced from an initial allocation of 6 billion rupees due to a diplomatic chill.
This diplomatic chill was exacerbated by derogatory remarks made against Indian Prime Minister Narendra Modi by Maldivian officials. However, recent months have seen improvements in bilateral relations, with both nations reaching a compromise on the aircraft issue. Nilanthi Samaranayake, an adjunct fellow at the East-West Centre in Washington, noted that India and the Maldives have successfully mended ties.
President Mohamed Muizzu's political platform, which included an "India Out" campaign, initially posed challenges to bilateral relations. Despite this, the recent increase in aid reflects India's ongoing commitment to strengthening ties and fostering regional stability. By bolstering financial support, India aims to "outdo and outwait" China's influence in the region, demonstrating its strategic interest in maintaining a strong presence in the Maldives.
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