245. Memorandum From the Assistant Secretary of State for Policy Planning (Smith) to the Secretary of State1


  • Aid for India
The Syracuse University study for the Senate Foreign Relations Committee on “Operational Aspects of US Foreign Policy”2 says that the Policy Planning Staff’s role should be to “facilitate and guide the use of slow-acting instruments in foreign affairs, thus avoiding to some extent drastic responses to emergencies too long ignored and helping to keep these slow-acting responses from being forgotten in the rush to react to more drastic crises.”
I would like to put in a word for vigorous use this year of one such slow-acting instrument: greatly increased aid to India.
It is generally agreed that:
More rapid economic growth will be needed over the long run to maintain stable non-Communist government in India.
More extensive US and free world financing will be needed to spur such growth.
It is also clear, however, that Indian development is long-term problem. There is thus a natural temptation to put off remedial action on the scale that will eventually be needed, in order to concentrate our resources in the meantime on seemingly more urgent threats.
This issue has now been posed in concrete terms: The FY 1961 request for a $1 billion DLF which the Mutual Security Coordinator has submitted to the Budget Bureau includes $350 million for India. It is intended that this aid would be accompanied by a vigorous US effort to move other free world countries to roughly matching contributions. The resulting total would—together with projected IBRD loans, private investment, etc.—just about meet the annual deficit under the proposed Indian Third Five Year Plan.
An amount of around $350 million can probably not be committed by the US to India in FY 61 if the DLF request is very greatly cut by the executive branch even before the Congress starts to work on it. If such a cut is made:
We may be postponing the action that is needed for two years, since a new administration might be reluctant to make a decision of this magnitude during its first few months in office. We might thus not be able to offer greatly increased aid, or to stimulate other countries to offer greatly increased aid, during the critical first two years of the Third Five Year Plan.
We would, in addition, have lost an opportunity to influence the over-all dimensions of that Plan, which India is now firming up. Whether the Indian Government settles on a large or a small Plan will depend, in good part, on the impression which it forms in early 1960 of how much aid it can expect from the US and other free world countries.
Equally important, we would have lost a chance to exploit the favorable public and Congressional attitude toward India which are likely to result in the next several months from the border situation and the President’s visit to India.
If you take part in discussion of the FY 61 MSP with the President, I would urge that you lay before him these foreign policy reasons for avoiding a cut in our DLF request which would be so great as to cripple the prospective Indian aid program. The President’s forth-coming trip to India and the strong interest that he has lately shown in the less developed areas might lead him to decide that this was one long-range program that he would make a major effort to launch before the end of his term.
  1. Source: Department of State, PPS Files: Lot 67 D 548, India. Secret.
  2. Reference is to “United States Foreign Policy: The Operational Aspects of United States Foreign Policy,” a Study Prepared at the Request of the Committee on Foreign Relations, United States Senate, by the Maxwell Graduate School of Citizenship and Public Affairs, Syracuse University, 86th Cong., 1st Sess., November 11, 1959 (Washington: U.S. Government Printing Office, 1959).