India has reduced the assistance to Nepal in its budget for the year 2006-2007 unveiled in New Delhi on Wednesday.

According to the proposed new budget presented by the Finance Minister P. Chidambaram, Nepal would get the financial assistance of IRs 650 million for this year. The Indian assistance to Nepal has gone down by more than IRs 50 million within the last two years.

The decline in Indian assistance has been observed as indication of India’s displeasure towards derailment of democratic process in Nepal.

The Indian assistance to Bangladesh has also been reduced to IRs 500 million this year from IRs 520 million last year. Indian assistance to Bhutan and Maldives has also been reduced while assistance to Sri Lanka has been kept constant.

The total budget for the Ministry of External Affairs- which oversees all foreign assistances– has been reduced to IRs 36,950 million, which was IRs 41,820 million during the last fiscal year.

Assistance for Central Asia and Myanmar has, however, been increased. Central Asia would get IRs 110 million of assistance and Myanmar would get IRs 250 million. Last year Indian assistance for Central Asia stood at IRs 90 million and for military-ruled Myanmar the sum was IRs 220 million.

India is one of the major donors in Nepal’s development since 1950s. It has halted the military assistance to Nepal after the royal take over of Feb. 1, 2005 and has been demanding that the king restore democratic process as soon as possible.