The Indian government has allocated Rs 11.18 billion (INR 7 billion) in aid for Nepal for the upcoming fiscal year 2025/26, beginning April 1, maintaining the same level of support as the current fiscal year. 

India’s Finance Minister Nirmala Sitharaman announced the allocation while presenting the Union Budget on February 1. In the previous fiscal year, 2023/24, India had provided Rs 10.5 billion (INR 6.57 billion) in aid to Nepal.  

Nepal remains the second-largest recipient of Indian aid, while the Maldives receives a significant increase in its grant for the upcoming fiscal year. India has allocated INR 6 billion to Maldives.

India initially allocated INR 4 billion to the Maldives for the current fiscal year but later revised it to INR 4.7 billion. In 2023/24, the Maldives received INR 8.32 billion in aid from India.  

Bhutan continues to be the largest recipient of India’s financial assistance, with a pledged INR 21.5 billion for the upcoming fiscal year. India had initially committed INR 20.68 billion to Bhutan for the current fiscal year but later revised it to INR 25.43 billion. In 2023/24, Bhutan received INR 23.32 billion in grants.  

Besides Nepal, India has maintained a consistent aid allocation for Sri Lanka and Bangladesh at INR 3 billion and INR 1.2 billion, respectively. Meanwhile, assistance to Afghanistan has been doubled to INR 1 billion. Although Afghanistan was initially allocated INR 2 billion for this fiscal year, the amount was later reduced to INR 500 million.  

While presenting the budget, Sitharaman outlined key priorities, including accelerating economic growth, ensuring inclusive development, supporting industries, and enhancing the financial well-being of India’s expanding middle class.  

In a significant move to ease the financial burden on middle-income earners, she announced that annual earnings up to INR 1.2 million would now be exempt from income tax . Sitharaman emphasized that democracy, demography, and demand are the pillars of India’s journey toward becoming a "Viksit Bharat" [Developed India], highlighting the middle class as the backbone of the country’s economic growth.  

She also introduced revised tax slabs and rates aimed at benefiting all taxpayers. The new tax structure imposes a 5% tax on income between INR 400,000 and 800,000, 10% on INR 800,000 to 1.2 million, 15% on INR 1.2 million to 1.6 million, 20% on INR 1.6 million to 2 million, 25% on INR 2 million to 2.4 million, and 30% on income exceeding INR 2.4 million.  

India’s government projects total receipts (excluding borrowings) and total expenditure for the upcoming fiscal year at INR 34.96 trillion and INR 50.65 trillion, respectively, marking an increase from the revised estimate of INR 47.16 trillion for 2024/25. Gross market borrowings and capital expenditure are estimated to be INR 14.82 trillion and INR 11.21 trillion (3.1% of GDP) for FY 2025/26.  

The Economic Survey 2024-25, presented by Sitharaman in the Lok Sabha on January 31, projects India’s economy to grow between 6.3% and 6.8% in the fiscal year 2025/26. 

India’s $4.27 trillion economy remains the third-largest in Asia and the fifth-largest globally.