891.231/3–3051: Telegram

The Ambassador in India ( Henderson ) to the Secretary of State

top secret

2617. For eyes only Burton Berry NEA.

1. Sundaresen,1 vice chairman Indian Reserve Bank, called on me yester for one his periodic informal chats. Said he had had talk with Deshmukh,2 MinFin, preceding day re India’s current financial position. Deshmukh told Sundaresen he was in something [Page 2134] quandary. Although India financial exchange position not easy unexpected improvements taken place during last two months due number factors including increase in price and volume India’s export commodities, inability obtain just now certain goods India had hoped import, benign effects Indian-Pakistan trade agreement. Deshmukh was studying India’s position to ascertain whether in new improved position it might not be able buy in US additional half millon tons foodgrain. If study shld yield affirmative answer he was considering advisability recommending Nehru that since foodgrain was India’s most urgent need purchase be authorized. He was wondering, however, whether purchase wld impede or forward efforts thus far made US Govt obtain for India two million tons foodgrain one and half million of which wld be urgently needed any event. On one hand Deshmukh did not wish embarrass US Govt in its efforts, or other he thought if India shld have available fon exchange it shld buy as much grain as it cld. Sundaresen said my suggestion wld be helpful.

2. I replied not sufficiently well acquainted situation Congress have opinion re possible effect purchase. Inclined believe no one cld foretell. If purchase accompanied by proper explanations it might help; on other hand Congress might take attitude that if India had found possibility making this purchase it might eventually find ways make additional purchases. Matter deserved considerable thought. My present tentative thinking was that if on account changed conditions India shld find it possible without unduly injuring its economic position purchase additional foodgrain it wld be right thing for it to do so immediately with appropriate frank explanations regardless effect on proposed legislation before US Congress.

3. Sundaresen said Deshmukh wld probably speak to me re matter in day or two. He wld certainly approach me before taking any action.

4. Wld appreciate any comments or suggestions which Department may be position offer in case Deshmukh shld approach me.

  1. Nivarti Sundaresan.
  2. Chintaman D. Deshmukh, Indian Minister of Finance.