KATHMANDU, Feb 2: Nepal will be receiving grants worth Rs 12.8 billion (INR 8 billion) from India. The Indian government made the announcement for its northern neighbor while unveiling the budget for the fiscal year (FY) 2026/27.
Presenting the annual budget on Sunday, India’s Finance Minister Nirmala Sitharaman said the grant for Nepal was higher by more than INR 1 billion compared to the initial allocation for FY 2025/26. India had originally earmarked INR 7 billion for Nepal in the current fiscal year, which was later revised upward to INR 8.3 billion, which was later revised to INR 8.3 billion.
Almost every year, the South Asian giant has been allocating financial grants for its neighboring countries including Nepal, Bhutan, Bangladesh, Afghanistan and the Maldives. Through the grant amount, India has been supporting Nepal in its various infrastructure-related projects.
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Bhutan continues to be the largest recipient of India’s financial assistance, with a pledged INR 22.88 billion for the upcoming FY. India has pledged INR 21.5 billion for Bhutan in the current FY.
The Indian government will be providing grants of INR 6 billion to Bangladesh, INR 5.50 billion to the Maldives, INR 3 billion to Myanmar, INR 4 billion to Sri Lanka and INR 1.5 billion to Afghanistan, among the South Asian nations.
Through its annual budget, India has also announced to provide support of INR 2.5 billion to Mongolia and INR 2.25 billion to African countries.
According to India’s Economic Survey, the country is expected to record a gross domestic product (GDP) growth of 7.4 percent in the next fiscal year. The budget places strong emphasis on fiscal consolidation, with a target to further reduce the fiscal deficit.
The Indian government has kept personal income tax rates unchanged in the budget. In FY 2025/26, the government had significantly raised the income tax exemption threshold, making annual earnings of up to INR 1.2 million—excluding income taxed at special rates such as capital gains—tax-free.
For FY 2026/27, India has proposed a total budget of USD 583 billion. Capital expenditure for the fiscal year beginning April 1, 2026 has been increased by nine percent to INR 12.2 trillion (USD 133.1 billion), up from INR 11.1 trillion in the current year.
