India Earmarks Rs. 4 Billion for Sri Lanka as Budget Pivots Towards Manufacturing Push

February 01, Colombo (LNW): India has set aside financial assistance amounting to 4 billion Indian rupees for Sri Lanka in its 2026 national budget, signalling continued regional support even as New Delhi sharpens its focus on domestic economic priorities.

Presenting the annual budget, Finance Minister Nirmala Sitharaman outlined an agenda aimed at strengthening India’s economic foundations amid uncertain global conditions.

Central to the plan is a renewed drive to expand the manufacturing base, supported by reforms designed to modernise industry, deepen financial markets and attract long-term investment.

The government also intends to channel increased funding into advanced and emerging technologies, with artificial intelligence and digital innovation highlighted as key growth drivers for the coming years. Sitharaman said these measures were essential to sustaining momentum in Asia’s third-largest economy while navigating external pressures.

Boosting manufacturing remains a critical challenge for the Modi administration. Despite years of policy initiatives, the sector still contributes less than a fifth of national output, falling short of the government’s long-standing ambition to raise the share to 25 per cent and create sufficient employment for India’s rapidly expanding workforce.

Economic projections included in the budget point to growth of around 7.4 per cent in the current financial year, with inflation expected to remain subdued at close to 2 per cent. The fiscal deficit is forecast at approximately 4.4 per cent of gross domestic product, reflecting a balance between development spending and fiscal restraint.

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