india-announces-500-mn-package-for-maldives

Context: India announced new connectivity measures for the Maldives, in an effort to help it deal with the economic impact of the COVID-19 pandemic.

The connectivity measures are:

  • An air connectivity “bubble” for travel: India would also be the first country to initiate the “travel bubble” with the Maldives, beginning with an Air India flight from Delhi-Thiruvananthapuram-Male.
  • The Cochin-Kulhudhuffushi-Male cargo ferry service
  • A submarine cable for telecom connectivity; and 
  • Financial package consisting of a grant of USD 100 million and a new Line of Credit (LoC) of USD 400 million for the Greater Male Connectivity project (GMCP) 

‘Air bubble’ is a bilateral agreement between countries that allows both to fly their national carriers to and from each other’s soil. The nations under this deal have eased entry restrictions.

Greater Male Connectivity project (GMCP) 

  • The GMCP would be the “largest civilian infrastructure project in Maldives”.The US $400 million Line of Credit comes in addition to a previous LoC of $800 million that was announced by New Delhi in December 2018. 
  • The project will connect Male to Villingili, Thilafushi and Gulhifahu islands spanning 6.7 km.
  • It will help decongest the main capital island of Male for commercial and residential purposes. 
  • Significance: 
    • India has put aside its own current COVID-19 crisis to demonstrate the nation’s ‘Neighbourhood First’ policy and commitment, by rushing food and medical supplies Maldives which is eternally dependent on imports for subsistence, given the size and saline nature of the available land.
    • The project is “a new milestone in India- Maldives ties that will anchor the economic and industrial transformation of the Maldives.
    • The project is far bigger than the Chinese built Sinemale Friendship bridge connecting Male to two other islands.
    • The low cost assistance by India came in sharp contrast to the expensive Chinese commercial loans for Maldives. 

India-Maldives cooperation:

  • Both sides were finalising an additional soft loan arrangement as part of India’s decision to extend “urgent financial assistance” to the Maldives to cope with the COVID-19 situation.
  • At present, India-assisted projects in the region include water and sewerage projects on 34 islands, reclamation projects for the Addl island, a port on Gulhifalhu, airport redevelopment at Hanimadhoo, and a hospital and a cricket stadium in Hulhumale.