Analysis of the Union Budget

23 June 2016

Over the past few years, India has been actively engaged in development cooperation across various regions, including South Asia, Africa, and Latin America. This brief on the 2016-17 Indian Budget highlights India's continually rising development cooperation commitments, despite a budget aimed at narrowing the deficit, as well as the increasing role played by the Ministry of Finance in allocating these commitments. It also highlights how Indian diplomacy, including the soft power tool of foreign aid, continues to be constrained due to the low budgetary allocations towards the Ministry of External Affairs.. Despite Prime Minister Modi’s significant personal engagement in regional and global diplomacy and the government’s policy pronouncements of a Neighborhood First Policy and an Act East Policy, decreased development assistance to most countries in the region will do little to shore up these policies. India’s ambition of securing influence both in its neighborhood and globally, as well as gaining a larger say in international financial institutions, makes it imperative to better understand the budgetary commitments India has made in 2016-17 in order to fulfill its foreign policy objectives.