India has halved its financial assistance to Bangladesh in the Union Budget 2026-27, a move that comes against the backdrop of strained bilateral ties, rising attacks on minorities in Bangladesh.
India has cut its budgetary allocation for Bangladesh by 50 per cent in the Union Budget 2026-27, assigning Rs 60 crore compared with Rs 120 crore in the previous fiscal year, as Delhi-Dhaka ties have come under strain amid rising attacks on minorities in Bangladesh.
The cut coincides with growing diplomatic friction over violence targeting the Hindu community. At the same time, the Yunus-led administration in Bangladesh has been moving closer to Pakistan following the ouster of former Prime Minister Sheikh Hasina in 2024.
Dhaka’s pivot to Islamabad
The current Bangladesh administration appears to be pursuing closer ties with Pakistan despite historic tensions stemming from the 1971 liberation war, during which widespread human rights atrocities were committed by Pakistan in what was then East Pakistan, now Bangladesh.
In 2024, Yunus met Pakistan’s Prime Minister Shehbaz Sharif in Egypt.
Since then, the two countries have agreed on visa-free entry for holders of diplomatic and official passports, revived the Joint Economic Commission (JEC), and announced plans to establish a Trade and Investment Commission. Cargo ships are now sailing directly between Bangladesh and Pakistan, and direct flights are planned. On Thursday, a Dhaka-Karachi flight restored non-stop air connectivity after 14 years. These developments coincide with deteriorating India-Bangladesh relations since 2024.
Earlier on Thursday, the Ministry of External Affairs told the Rajya Sabha that it continues to monitor reports of attacks on homes, businesses, and places of worship. “India has consistently raised the matter of safety and security of minorities with the authorities in Bangladesh at political and diplomatic levels on several occasions,” said Minister of State Kirti Vardhan Singh.
He added that Prime Minister Narendra Modi raised the issue during a meeting with Bangladesh’s Chief Adviser Muhammad Yunus on April 4, 2025. The ministry criticised Dhaka for attributing the attacks to personal rivalries or political differences, warning that such statements “embolden extremists and deepen fear among minority communities.”
No allocation for Chabahar
For the first time, India has not allocated funds for the Chabahar port project in the 2026-27 Budget, a move seen as a strategic response to renewed US sanctions on Iran. India remains a key partner in the port’s development, but the US exemption allowing India to continue work will expire on April 26.
Bhutan remains top aid recipient
Bhutan continues to be India’s largest foreign aid recipient, with an allocation of Rs 2,289 crore in 2026-27, up from Rs 2,150 crore in the previous year.
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