180. Study Prepared in the Embassy in India1

INDIA, 1957–62, A STUDY

Summary

Purposes

The purposes of the following study are to analyze the over-all situation of India at the beginning of the Nehru Government’s second elected term of office and to develop such recommendations for policy action as are suggested by the conclusions to which the study comes.

Basic Assumption

The basic assumption upon which the study rests is that it is to the interest of the United States that India maintain its independence and its free institutions and achieve its long-range goals of internal development. This thesis needs no emphasis here, beyond the general statement that India is and can continue to be a great force for stability in Asia, perhaps in the whole world. It will, indeed, some day have to be the Free World defense in South Asia against Communist Chinese imperialism, if Free World interests are to be safeguarded in Asia. If properly led, and developed internally, it can undoubtedly play this role. Conversely, failure in this regard will have wide repercussions, adverse to United States and Free World interests.

The study is divided into a summary, which presents the picture of India in brief, and supporting annexes which fill in the details.

Highlights and Conclusions

(1)
India has the sources of strength, in resources, manpower, and human ability, to become one of the world’s leading powers.
(2)
India’s problems are immense but can be solved if time and economic pressures permit.
(3)
India is only ten years old as an independent, sovereign power and can be expected to evolve toward greater political maturity in the next few years.
(4)
India is Asian and Indians, no matter how westernized, are Asians and often unpredictable to Westerners.
(5)
A totally Western form of government cannot be expected to emerge out of the current transitional stage; it will be more Asian, less efficient than at present in administration, and less influenced by Western thinking from within.
(6)
India’s policy of non-alignment is expected to be maintained.
(7)
As Government’s new term begins the country is basically stable politically, has the necessary elements to win its struggle for survival as an independent, economically viable, and democratic member of the world community, but needs time to work out a number of problems.
(8)
These problems are (a) political, (b) economic, (c) psychological, (d) social, and (e) strategic, as follows:
(a)
Need to develop India’s own form of democratic structure and free institutions; inheritance of an authoritarian tradition; political party imbalance; deterioration in the Congress Party and uncertainty of the picture after Nehru goes or if Congress splits before he goes; urgency of arresting the spread of CPI power and appeal; unsound labor policies; failure to see the world political picture in true perspective because of inexperience and built-in biases; political challenge of Red China.
(b)
Heavy burden of the Second Plan; population pressure; religious customs adding to the burden of food production; narrowness of the base of qualified administrators and staff; need to demonstrate progress to the people; challenge of totalitarian economic system, especially from Red China.
(c)
Divisive elements at work: race, language, religion, communalism, regionalism; need for education on the nature and procedures of a democratic society; lack of individual initiative.
(d)
Casteism, the joint family and community self-sufficiency, feudalism; lack of educational facilities and media of communication; challenge of the totalitarian ideology, especially from Red China.
(e)
Strains with Pakistan; eventual military challenge from Red China; upset conditions in Naga Hills area.
(9)
The key to a satisfactory solution of the above is the adequate and prompt development of the Indian economy. Without it there will probably be no satisfactory solution to the country’s political and ideological problems as well.
(10)
The principal problems India’s economic development effort faces are two-fold; the deterioration in the foreign exchange position which threatens India’s economic and political stability during the next eighteen months to two years, must be arrested, and economic improvement must be achieved which will be perceptible to the people and at the same time provide a base for future economic development;
(11)
These problems can be met by the Government of India but only with outside help.
(12)
Therefore it is to the U.S. national interest to extend aid to India. Since India wishes no outright grants, such aid will be in the form of loans, or ordinary investment in the future.
(13)
If outside assistance is insufficient or too late and India fails substantially to continue its early progress and improve its people’s lot, not only will it suffer a severe, perhaps decisive, blow to its political and ideological foundations, but Red China and its totalitarian system will emerge with added prestige and influence in Asian countries.

Policy Recommendations

The following recommendations are designed to build on and broaden the body of currently operative U.S. policies in the political, economic, informational, and educational fields. They are deliberately restricted to a bare outline of topics, for clarity of presentation, and will be filled out in detail by the Embassy upon request.

The Embassy’s policy-action program for India is not confined to the purely economic, for economic aid, though a sine qua non and in very high priority, is not enough. It cannot be fully effective unless accompanied by relaxation of political tensions and supported by increase of understanding between India and countries important to it. The following recommendations are intended to reinforce each other:

To lessen Indo-Pakistani tensions

(1) Promote and be prepared to help finance a “package” settlement covering Kashmir, water rights, partition financial problems, reduction in armaments, and minorities guarantee.

(2) Find an appropriate way to reassure Pakistan on U.S. help to it if India attacks, as the U.S. has assured India it will help it if Pakistan attacks.

To improve Indo-U.S. relations

(3) Make a special effort to treat India as a grown-up in the family of nations. This will involve:

(a)

Informing the GOI of our reading of facts on important situations (e.g., Hungary, Syria) by messages to Nehru from the President or the Secretary of State in the most important cases, and through Embassy channels otherwise, for which more prompt and thorough informational cooperation from the Department would be required. U.S. failure promptly to give Nehru the facts in the Hungarian case, when Bulganin and Tito personally sent him their own versions of the situation, left the field to the communists and [Page 399] lost any opportunity there might have been of preventing Nehru from assuming an initial position from which, for reasons of “face”, he seems unable entirely to retreat, to the detriment of Indo-Free World relations.

It must be emphasized that a simple compilation or outlining of facts is what is needed in this particular activity. Interpretive comment is usually received by GOI leaders as “cold war propaganda” and so loses value.

(b)
Informing and as often as possible consulting the GOI in advance on important major moves of general importance (e.g., American doctrine for the Middle East, disarmament, peaceful use of the atom).
(c)
Consulting the GOI in advance on our thinking and proposed action on issues directly affecting India (e.g., Kashmir, Asian Nuclear Center, etc.).

This would not only give needed support to India’s nascent, but still inadequate, self-confidence as a nation in world affairs, but might lead to similar cooperation on her part which would be useful to us and unlikely to materialize in the absence of a first move on our part.

(4) Show friendliness by accommodating India on small matters of importance to her, e.g., putting up the Vice President in Blair House, supporting such Indian requests, when reasonable, as a recent one for a short delay in resuming Kashmir debate in the Security Council.

To broaden Indian friendship for and interest in U.S.

(5) Arrange a tour of Asia for President Eisenhower which will include India.

(6) Arrange for the U.S. Congress to invite an Indian parliamentary delegation to visit the U.S. during a session of Congress.

(7) Invite for visits or tours of duty with service units such Indian military personnel as the GOI will permit.

(8) Adapt our Leader Grant program to GOI limitations by giving the programs for personnel we wish to influence the required aspect of educational projects.

(9) Open the Foreign Service Institute, as far as security and administration considerations permit, to foreign service officers of other countries, including India.

(10) Expand USIS information and exchange of persons activities in India to help obtain widest possible understanding of U.S. policies and of the unique quality of U.S. capitalism so that India may more fully understand that it need not fear and can benefit from closer real collaboration with the U.S.

(11) Reconsider the ban on participation in international conferences, such as the Second Congress Party Youth Conference, and other such activities of respectable sponsorship where the communist [Page 400] countries can be expected to make gains in India at the expense of the Free World if left a clear, uncontested field.

To broaden U.S. understanding of India

(12) Take every possible means of educating the United States Congress and public to a true understanding of India and its importance to the Free World despite differences of opinion on many important issues, e.g., by speeches, congressional testimony, private talks with key Congressmen and Senators.

To strengthen India’s economy

(13) Assure the GOI of our best efforts to assure new dollar aid of $800 million over the next three years through a combination of:

(a)
Development loan fund projects;
(b)
Ex-Im Bank assistance, either through an overall line of credits such as that given to Brazil and the U.K., or by financing specific projects, or both;
(c)
Extra Ex-Im Bank loans by changing wheat loan dollar repayment into rupee repayment;
(d)
Special legislation.

(14) Provide another $300 million in PL 480 sales (including perhaps $100 million in FY 1958) to assist in the GOI‘s battle against inflation and to meet the rupee costs of development, including “labelled” packages, wherein the U.S. will meet the full financing of projects (i.e. dollars as well as rupees).

(15) Develop more flexible criteria in Washington to permit:

(a)
Loans financing projects of primarily local political effect (i.e., pro-Congress and anti-communist, e.g., housing and water supply in Calcutta), supplemented by grants from Special Assistance Funds where appropriate.
(b)
Handling disaster relief on a pre-planned basis so as to permit prompt announcement of U.S. help followed by early shipment of supplies (Current procedures require that the disaster actually occur before U.S. machinery can be mobilized, so that decisions to help are delayed and supplies may arrive several months after they are needed. Disasters are annual and predictable phenomena in India and helping promptly to meet them would be a major political asset to the United States).

(16) Press efforts to conclude an FCN Treaty, the Double Taxation Agreement, ultimately obtain the remainder of the Investment Guaranty, and encourage the GOI to further favorable actions towards the private sector and foreign private investment.

(17) Actively work to inform U.S. business about investment opportunities and improved investment climate in India, e.g., through the Department of Commerce Investment Survey of India, [Page 401] official trade missions and exhibits, visits of businessmen, visit of U.S. economic writers to India, etc.

(18) Provide technical and expert advice to the Indian export drive.

(19) Develop a major program in cooperation with the Foundations, AFL-CIO and U.S. private business, to help strengthen the non-communist labor movement in India, by training Indian labor leaders in the U.S. and India, exchanges of visits by labor leaders and education in U.S. labor-management relations. Such a program would probably require establishment of some central machinery in the Department to coordinate the information and work of the Department, the AFL–CIO, the Foundations and private U.S. firms.

. . . . . . .

  1. Source: Department of State, Central Files, 791.00/11–857. Confidential. Extract. Sent as an enclosure to despatch 485 from New Delhi, November 8. The narrative portion, not printed, included an examination of political, economic, psychological, social, and security aspects, in addition to a consideration of India’s assets and liabilities. The nine annexes are also not printed.