This cut in aid to Lanka comes after a resolution against Lanka in UN Human Rights Council last month. After sponsoring the resolution that was adopted the Council, the US had told Lanka that it must take meaningful action on reconciliation and accountability in order to move forward.
Kerry noted that while some important progress has been made in Sri Lanka, there is much work still to be done.
Kerry had said last month that the United States stands ready to assist Sri Lanka and looks looks forward to continuing its engagement with the Government of Sri Lanka and strengthening its friendship with the Sri Lankan people.
However, the cut in aid, believed to be the highest drop for any South Asian country makes it clear that the US is still not happy with the progress made by Lanka on rights issue.
While the actual US development assistance to Sri Lanka in 2012 was $ 8 million, Kerry has proposed about USD 6 million for 2014.
Aid to India goes below 100 million
Meanwhile, the aid to India has also been cut on a positive note that the relations between US and India have been changing from a traditional "donor-recipient" relationship to a "strategic partnership". The cut in Indian aid is almost 16 percent and a continuation of the trend that has emerged over the past few years.
In 2010, the United States aid to India was $ 126.7 million, which drooped to $ 121.6 million in 2011 and $ 108 million in 2012 and was proposed to $ 98.3 million in the current fiscal of 2013, which ends on September 30.
"That (drop in US aid to India this year) reflects the ongoing transition we had under way from the more traditional donor-recipient kind of relationship to much more of a strategic partnership," a state department official said.
The largest portion of US aid is slated for the health sector.
Overall the State Department budget request for FY-2014 was $ 47.8 billion, which is a six per cent cut from the previous FY-2012 of actual spending.