INDIA'S BUDGETARY PRIORITIES: BALANCING AID, DEFENCE, AND DIASPORA

In the contemporary globalized world, the lines between economics and foreign policy are becoming increasingly blurred.

- DR. CCHAVI VASISHT

A nation's budget, while primarily aimed at directing domestic economic growth, must reflect its foreign policy priorities and strategic interests. Economic decisions, such as trade agreements, investment policies, and infrastructure development, have significant geopolitical implications.

Moreover, budget allocations for defense, diplomacy, and most importantly, foreign aid directly reflect a country's commitment to its foreign policy goals. Prime Minister Modi's "Neighbourhood First" policy, introduced during his first term, has emerged as a cornerstone of India's foreign policy. Recognizing the significance of this policy, successive budgets have reflected a growing focus on aid allocation to neighboring countries, making it a subject of keen interest for policymakers, academics, and observers.

The emphasis on regional engagement is evident in the increased budgetary allocations to the Ministry of External Affairs (MEA) in recent years. In 2024, the overall MEA budget saw an increase from INR 18,050 crore to INR 22,154 crore.

The budget is categorized into key areas: maintaining diplomatic missions, fostering international cooperation (including aid and multilateral engagements), promoting cultural and academic exchanges, providing citizen services, and fulfilling other administrative expenses. This allocation strategy reflects the diverse priorities of Indian foreign policy, encompassing diplomatic outreach, economic diplomacy, cultural diplomacy, and citizen welfare.

Notably, a significant portion of the budget is allocated to "Other Central Sector Expenditure," highlighting the multifaceted nature of India's foreign policy engagements beyond traditional diplomatic channels.