New Delhi: Maldives President Mohammed Muizzu’s anti-India posturing may adversely impact the country’s already fledgling economy if New Delhi’s long standing assistance programme for Male gets diluted and the proportion of Chinese loans increases.
India has been the biggest development partner of Maldives for decades and has rolled out major projects over the last five years to build the country’s infrastructure.
Compared to this, Maldives, which has borrowed heavily from China, is at a high risk of “debt distress,” the IMF had warned last week. The Maldives remains at high risk of external and overall debt distress, according to the IMF. Exposure of Maldives to Chinese loans is at a staggering 37%.
Growing from modest beginnings, the India-Maldives bilateral trade has increased from about USD 128 million to USD 937 million in 2022-23. Trade has jumped significantly during the last two financial years 2021-22 and 2022-23. This is a direct result of the launch of the cargo vessel service between the two countries in September 2020 and commencement of work on three Lines of Credit (LoC) projects from February 2021.
Implementation of visa-free entry in February 2022 for Indians arriving in the Maldives for business purposes further boosted growing commercial partnership, officials informed. Indian tourists have also contributed significantly to the Maldivian economy.
In August 2022, India unveiled a financial assistance of more than $250 million for the Maldives, one of the main beneficiaries of New Delhi’s ‘Neighbourhood First’ policy. In August 2022, the two sides signed six agreements, including one on cybersecurity and another on creating a network of police facilities in the archipelago, as the then visiting Maldivian President Ibrahim Solih held talks with India’s Prime Minister, officials recalled.
In November 2022, India provided additional financial assistance of 100 million US dollars to the Maldives, officials recalled.
Earlier In December 2018, India supported Maldives a financial assistance package of US$ 1.4 billion which included USD 50 million as budgetary support, subscription by the State Bank of India to the Maldives Treasury bills of USD 150 million, the Currency Swap Agreement for USD 400 million and 8 infrastructure projects under the USD 800 million Line of Credit.
Under this LoC, 8 infrastructure projects have been taken up, out of which 5 projects are already under implementation, which are Water & Sanitation on 34 Islands, Addu Development Project (Roads and Land Reclamation), Hanimaadhoo International Airport Redevelopment Project, Expansion of Maldives Industrial Fisheries Company Limited (MIFCO) facilities in Felivaru and Gemanafushi, Gan International Airport Redevelopment project, ET has learnt.
India also offered additional 1000 training slots to Maldives over the next 5 years.
India’s development cooperation with Maldives is rooted in history. Indira Gandhi Memorial Hospital was built with Indian Grant Assistance in 1995. Maldives Institute of Technical Education (now called the Maldives Polytechnic) was completed at a cost of INR 12 Cr in Sept 1996. India-Maldives Faculty of Hospitality & Tourism Studies was built with Indian grant assistance of Rs 64.5 crore in 2014.
Technology Adoption Programme in Education Sector in Maldives with the cost of USD 5.3 million project was launched in June 2011 to provide ICT training to Maldivian teachers and youth and for vocational training. National College for Police and Law Enforcement (NCPLE) with the Government of India grant funding of Rs 222.98 Crore was inaugurated in March 2022.
A cash grant of INR 50 crores was extended by India to Maldives for vital bilateral projects focusing on socio-economic development, especially infrastructure in education, health, and community development.
A total of 18 projects, including community/convention centers, outdoor gyms, children parks, coastal protection, street lighting, student ferry services, vehicles for city councils, police infrastructure, sports facilities, inclusive education units, school classrooms, and emergency health units across islands, have been successfully completed in Maldives with India’s assistance, officials said. There are several Infrastructure & Connectivity Projects built and progressing under the Exim Bank Line of Credit of USD 800 million in Maldives.
India has been a traditional partner for the Maldives in human resource development across sectors for decades. Given its small population base, isolated geographical location of islands, and many resource challenges, Maldives suffers from a crunch of good human capital.
Several Maldivian youths acquire their higher education in Indian Universities every year. Indian teachers have been a fixture at Maldivian schools across islands for decades. India has traditionally offered a substantial number of ICCR scholarships to Maldivian youth. India also offers 10 seats every year to Maldives under Department of Science and Technology (DST), Govt. of India “India Science and Research Fellowship (ISRF) Programme”. Maldives has been a partner of the ITEC programme for several years.
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