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PC boost for foreign affairs budget

New Delhi, Feb. 18: Finance minister P. Chidambaram yesterday announced a 20 per cent hike in the nation’s diplomatic budget in a move aimed at assuaging growing concerns over the inability of a financially hamstrung foreign office to deliver promised aid to key developing world allies.

But the hike still leaves the ministry of external affairs (MEA) with less money for the coming financial year than what it had asked the finance ministry two years ago in 2012 and the gap will continue to hurt Indian diplomacy, senior foreign office officials said.

Chidambaram announced Rs 14,130 crore as the budget allocation for the foreign office, up from Rs 11,719 crore he had allocated last year.

“The hike is welcome, but whether it’s enough to pursue effective diplomacy remains a big question,” an official said.

The economic slump over the past year meant the finance ministry on multiple occasions since the last budget held back even the funding it had allocated to the MEA, according to reports of the parliamentary standing committee on external affairs.

The foreign office had to delay the release of a $200 million grant it had promised to Bangladesh, and had to hold back on investing in three hydroelectric power projects in Bhutan where India is assisting financially and technically.

“The committee was distressed to note that high-level international commitment had to be kept on hold or partially implemented due to lack of budgetary support,” the parliamentary panel said in August last year.

India, the house panel concluded, was also lagging behind in meeting its commitments to African nations — promises it had made in 2012 at the India Africa Summit.

In the interim budget announced yesterday, Chidambaram hiked aid to Bhutan from Rs 2,145 crore last year to Rs 2,635 crore. The increase will cover for India’s resumed fuel subsidy to the Himalayan nation and contribute to the neighbour’s latest Five Year Plan.

The Maldives, India’s tiniest neighbour that China has aggressively courted in recent years, will also benefit from a raise in Indian aid from Rs 30 crore last year to Rs 183 crore this year. He has also increased the aid to African nations from Rs 300 crore in 2013 to Rs 350 crore in yesterday’s budget.

But at Rs 14,130 crore, the total budget for the foreign office remains significantly lower than the Rs 19,000 crore the MEA had asked for in 2012 — pointing to a vast mismatch between what diplomats argue they need to assert India’s global role, and what a slow economy can afford.