India’s Union Budget 2026–27 has quietly sent a strong diplomatic message to its eastern neighbour. The government has cut financial assistance to Bangladesh by half, reducing the allocation to ₹60 crore from ₹120 crore last year, amid growing unease in bilateral relations.
While budget documents list the cut as a routine fiscal decision, officials and analysts see it as a reflection of New Delhi’s discomfort with recent developments in Bangladesh, particularly reports of violence against minorities. India has repeatedly raised concerns about attacks on Hindu homes, businesses and places of worship, stressing that the safety of minorities is a key pillar of its neighbourhood policy.
These concerns have reached the highest political levels. Prime Minister Narendra Modi had flagged the issue during his interaction with Bangladesh’s Chief Adviser Muhammad Yunus last year. However, Indian officials have indicated that responses from Dhaka have not been reassuring enough, adding to diplomatic strain between the two countries that otherwise share deep cultural, economic and historical ties.
Beyond minority issues, the aid cut also mirrors changing geopolitical equations. Since political transitions in Bangladesh in 2024, New Delhi has been closely watching Dhaka’s evolving foreign policy choices, including outreach to countries that India views with caution. For policymakers in New Delhi, development assistance is not just financial support but also a signal of trust and strategic alignment.
The reduction to Bangladesh stands out because India’s overall foreign assistance budget has seen a modest increase this year. Neighbours such as Bhutan and Nepal continue to receive strong support, underlining that India’s regional focus remains intact, though more selective.
Officials familiar with the matter describe the decision as a measured signal rather than a breakdown in relations. India has not withdrawn aid entirely, keeping channels open for cooperation if concerns are addressed and confidence rebuilt. Diplomatic engagement, they say, will continue alongside close monitoring of developments on the ground.
Also Read: Dalai Lama wins first Grammy at 90
