Kathmandu- Nepal's southern neighbor, India, has decreased its annual grant in the Union Budget for 2026-27.

Union Finance Minister Nirmala Sitharaman, on behalf of the Central Government, announced an allocation of INR 8 billion  for Nepal under the Ministry of External Affairs.

This allocation has been dropped by four percent to compared to last FY where Nepal received INR  8.30 billion in last fiscal year 2025-26.

While Nepal’s funding saw a slight dip, other neighboring nations experienced varied shifts in financial support. Bhutan remains the largest recipient of India’s foreign aid with an increased allocation of INR 22 billion, while grants to Bangladesh surged by 74 percent to INR 600 million.

Similarly, assistance for Sri Lanka rose by 33 percent, reaching INR 4 billion.

Across the board, India’s total proposed grants and loans to foreign governments for FY27 stand at INR 87.9 billion, which is a significant 27 percent decline from the INR 121 billion estimated in last year’s revised budget.

This year’s total package is split between INR 69.97 billion from the Ministry of External Affairs and INR 17.94 billion from the Ministry of Finance. These adjustments highlight a strategic recalibration of India’s foreign aid priorities within the region.