Business

India's government has announced it will provide 4 billion Indian Rupees in grants and loans to Sri Lanka as part of its 2026/27 Budget. In her budget speech on February 1, Finance Minister Nirmala Sitharaman emphasized support for the manufacturing sector, aiming to boost growth in Asia's third-largest economy amid global uncertainties. The upcoming fiscal year will focus on significant reforms in manufacturing, enhancing the financial sector, and increasing investments in advanced technologies, such as artificial intelligence. The Indian government seeks to raise manufacturing's share of the gross domestic product (GDP) from below 20 percent to 25 percent, creating jobs for the millions entering the workforce each year. India's economy is projected to grow by 7.4 percent this financial year, while inflation is expected to be around 2 percent. The fiscal deficit for the year is anticipated to be 4.4 percent of GDP. In the same budget, India has made notable changes to its overseas development assistance. Aid to Bangladesh has been cut by half, and there is no funding for the Chabahar port project in Iran. However, the overall assistance budget managed by the Ministry of External Affairs (MEA) has seen a slight increase. The budget for "Aid to Countries" has been raised to INR 56.8 billion, roughly 4 percent more than last year’s allocation of INR 54.8 billion. Yet, this amount is about INR 1 billion less than the revised estimate of INR 57.8 billion for 2025–26, indicating stricter financial management. Most notably, there is no funding for the Chabahar port project, which had initially received INR 4 billion in 2024–25. The project had an initial allocation of INR 1 billion for 2025–26, which was later increased to INR 4 billion in revised estimates, but now has no allocated funds for 2026–27. This decision comes even after India signed a 10-year agreement in 2024 to manage the Shahid Beheshti terminal at Chabahar, a project considered essential for India's access to Afghanistan and Central Asia, avoiding routes through Pakistan.