In a clear signal of the enduring and unique friendship between the two nations, the Government of India (GoI) has increased its development aid to Bhutan, raising the allocation from Rs 20,516.61 crore to a remarkable Rs./Nu. 22.89 billion for the fiscal year April 2026–March 2027.
This historic move underscores India’s unwavering support for Bhutan’s growth, development, and long-term prosperity, further cementing the model partnership that has defined bilateral ties for over six decades.
The Indian Embassy in Thimphu highlighted that India–Bhutan development cooperation is a cornerstone of the special relationship shared by the two countries. “From the first Five Year Plan in 1961, Bhutan has been a key recipient of Indian support and has traditionally topped India’s ‘Aid to Countries’ budget,” the Embassy stated. The partnership, it emphasized, is defined by mutual respect, trust, and understanding — principles that have guided both nations through decades of shared progress.
“Right from the first Five Year Plan in 1961, Bhutan has been a key recipient of support from India and has traditionally been the top nation under “Aid to Countries” budget of the Ministry of External Affairs of India.
This development cooperation and overall relationship between the two countries is characterized by mutual respect, trust and understanding. During his visit to Bhutan in November 2025, the Prime Minister of India Shri Narendra Modi had said that “the partnership of trust and development between India and Bhutan stands as a model for the entire region”.
The Embassy underlined that the budget document for the year April 2026 – March 2027 placed before the Indian Parliament maintains the highest allocation of Rs./Nu. 22.89 billion for Bhutan in “Aid to Countries” section. “We believe that it will continue to contribute to Bhutan’s infrastructure development, economic growth, socio-economic progress, various services, and wider prosperity.
The allocation for Bhutan will be mainly spent on projects under Bhutan’s 13th Five Year Plan in sectors such as road & bridge construction; urban infrastructure and utilities; agriculture, chain link fencing, irrigation and livestock; primary and tertiary education; hospitals and enhancement of healthcare services; conservation of cultural heritage; renewable energy; e-mobility; trade and commerce; sports and youth exchanges; digital economy, and space technology.”
A substantial portion of the budget — Rs./Nu. 5.2 billion — is earmarked for capital funding, including hydropower development. Hydropower projects, long considered a backbone of Bhutan’s economy, provide both energy security and revenue from electricity exports to India, highlighting the mutually beneficial nature of this cooperation.
India’s growing support to Bhutan also aligns with its “Neighbourhood First” policy, emphasizing the importance of regional development and connectivity. While neighbouring countries such as Afghanistan, Bangladesh, Nepal, Sri Lanka, and the Maldives are also recipients of significant aid, Bhutan continues to be a top priority, reflecting the special strategic and cultural ties that bind the two nations.
The significance of this partnership is also validated by global economic trends. According to the World Bank’s Global Economic Prospects Report of January 2026, India and Bhutan are the fastest growing economies in South Asia.
Their growth trajectories are increasingly intertwined, driven by collaboration across energy, infrastructure, technology, environment, youth engagement, and landmark Royal initiatives such as the Gyalsung National Service Programmes.
The Indian Embassy confirmed that ongoing cooperation under Bhutan’s 13th Five Year Plan is progressing smoothly, with tangible facilities and services being delivered across the country.
The significant allocation under India’s latest budget is expected to sustain this momentum, ensuring continued development and prosperity for Bhutan while reinforcing the strong bonds of friendship and trust with India.
In essence, this record aid allocation is more than just financial assistance. It is a reaffirmation of a decades-long partnership that has evolved into a model of regional cooperation, shared progress, and mutual respect. As Bhutan continues to advance its development agenda, India’s steadfast support signals a bright and collaborative future — one where growth, innovation, and prosperity are shared across borders.
Sangay Rabten
From Thimphu
