The Indian government has increased its annual grant to Nepal for the fiscal year 2023/24 by 29.41 percent. Indian Finance Minister Nirmala Sitharaman presented the union budget for the fiscal year 2023/24 in the Indian parliament on Wednesday, in which Rs 8.8 billion (IRs 5.5 billion) has been allocated to Nepal as a grant.
India had initially allocated Rs 12 billion (IRs 7.5 billion) to Nepal for FY 2022/23 but it was later reduced to Rs 6.8 billion (IRS 4.25 billion).
The grant pledged by the Indian government for Nepal is the second-highest among South Asian countries. Like in past years, Bhutan stood at the top in terms of receiving Indian grants. According to grants and loans to foreign governments under the Finance Ministry expenditure profile for FY 2023/24, Bhutan has been allocated financial assistance of IRs 24 billion.
In FY 2021/22, India had announced Rs 15.87 billion (IRs9.92 billion) during the budget presentation but it was later reduced to Rs 10.4 billion (IRs 6.5 billion).
In FY 2019/20, Nepal received a Rs 19.16 billion (IRs 11.98 billion) grant from the southern neighbor, which was significantly reduced by 26.54 percent to Rs 14.08 billion (IRs 8.80 billion) in FY 2020/21.
Sitharaman presented a USD 550.7 billion spending in the budget for the next fiscal year starting in April to boost India’s economic growth. With the election in 2024, The Indian government through a new budget unveiled one of its biggest jumps in capital spending in the past decade. The capital spending increased to about USD 122.3 billion, which would be 3.3 percent of gross domestic product (GDP), in the next fiscal year.
The Indian government has targeted to keep the budget deficit at 5.9 percent of GDP for FY 2023/24 compared to 6.4 percent for the current fiscal year. The economic growth of 6-6.8 percent has been targeted for FY 2023/24.
The Indian government has raised the education budget to IRs 1.13 trillion from IRs 999 billion. Similarly, the health budget has been increased to IRs 889.5 billion while the allocation for the rural job guarantee program cut to IRs 600 billion from the existing IRs 894 billion. The defense budget has been increased to IRs 5.94 trillion from IRs 5.85 trillion. The Indian budget has allocated IRs 350 billion for the energy transition.