A Sign of Strategic Priorities

MEA BUDGET REFLECTS GEOECONOMIC SHIFT, BUT INSTITUTIONAL CHALLENGES PERSIST

- Harsh V Pant

As the primary executive authority that formulates, implements, and pursues India's foreign policy goals and the strategic objectives therein, the Ministry of External Affairs' (MEA) annual budget merits a deeper analysis within the central government's annual budgetary allocations. The foreign ministry's budget not only reflects India's strategic and international priorities but also New Delhi's capacity to engage with its partners and deliver on its global ambitions and commitments.

While the MEA's budget has increased by 67% between 2014 and 2025, its percentage share in the annual Budget has gone down from 0.8% to 0.4% in the same timeframe. This year, Finance Minister Nirmala Sitharaman allocated ₹20,516.61 crore for the ministry, which is a 7.3% decrease from last year's projected spending and 18% from the revised estimates for 2024-25. However, this excludes the Indian Exim Bank sovereign guarantees which drove higher spending in 2023-24 (₹9,013.72 crore) and 2024-25 (₹4,383.40 crore). There is no such allocation for 2025-26, thereby reflecting that the MEA's budget rose by 15.45% over 2024-25. The provisioning for the Exim Bank remains a flexible process, subject to future needs, similar to the Indian Development and Economic Assistance Scheme provisions, which saw a marked decrease to ₹25 crore this year from FY23 (₹2,350 crore) and FY24 (₹3,849 crore).

The 2025-26 Budget pegged 33% (₹6,750 crore) of the MEA's allocations to overseas development partnerships.