India extends financial lifeline to Maldives with Rs 832 crore aid

India has provided a substantial aid of Rs 832.83 crore to the Maldives in the 2023-2024 fiscal year, marking the highest aid extended to any foreign country during this period. This move aims to support the Maldives in overcoming its financial troubles, which have been exacerbated by the Covid pandemic.

According to the World Bank, the Maldivian economy has struggled to maintain momentum, with GDP growth slowing down to 4% in 2023, compared to 13.9% in 2022. The tourism sector, a significant contributor to the Maldives’ economy, has also been impacted, with tourists spending at rates below pre-pandemic levels.

Prior to his visit to India in October last year, Maldivian President Mohamed Muizzu, who was initially perceived as “pro-China”, softened his stance towards India. Muizzu acknowledged that India was aware of the Maldives’ financial strain and was willing to offer assistance.

Notably, India’s aid to the Maldives is a significant development, given the strategic location of the island nation in the Indian Ocean. The Maldives has been at the centre of a rivalry between India and China, with both countries vying for influence over the nation.