Foreign Relations of the United States, 1958–1960, South and Southeast Asia, Volume XV

269. National Intelligence Estimate¹

NIE 51–60

Washington, October 25, 1960.

THE OUTLOOK FOR INDIA²

The Problem

To estimate probable developments in India’s internal affairs and international position over the next few years.

Conclusions

1. India has made considerable progress in constructing the foundations of a modern democratic state. The Congress Party governments have carried out extensive political and social reforms while preserving and even strengthening parliamentary institutions. They have focused the aspirations and energies of a growing segment of the Indian people on the drive for economic development, and made steady progress toward developing a modern industrial economy. Nevertheless, India’s extreme poverty and the divisive effects of strong regional loyalties and linguistic and caste differences pose major long-term threats to the country’s stability and national unity. (Paras. 10–13)

2. Over the next few years the outlook for stable democratic government in India is good. In the 1962 elections the Congress Party is likely to retain its majority in Parliament and control of most, if not all, the state governments. However, the party’s effectiveness is gradually being weakened by factionalism, complacency, and corruption, which may reduce its majorities, at least in certain states. (Paras. 16, 22)

3. India’s democratic system and national unity will face crucial tests after Nehru leaves the scene. If this happens within the next few years, control of the Congress Party and of the government will probably pass to veteran but more conservative leaders, none of whom enjoys Nehru’s commanding prestige. Although the party probably would be able to operate on its momentum for several years after his departure, unless strong new leadership emerges, intraparty conflicts probably will lead to an eventual split. If such a split were along liberal versus conservative lines, it would result in the development of two major democratic parties. If the Congress Party broke up on regional issues, political fragmentation would be likely, with a threat to the stability and cohesiveness of the country. (Paras. 25–26)

4. The Communist Party of India (CPI) is likely to provide the principal opposition to the Congress Party during the next few years, and in the 1962 elections probably will maintain its present electoral strength. In contrast to the non-Communist opposition parties of both left and right, the well-organized CPI has experienced leaders, a strong trade union base, and considerable appeal to many poverty-stricken Indians. These advantages are offset by the intense factionalism within the party, by its lack of strength in large areas of the country and among the peasantry, and by India’s dispute with Communist China. (Paras. 23–24)

5. India’s economic progress has created the base for more rapid advances in the future. The growing dynamism of the Indian business community together with the sharply increased resources allocated to scientific research and education augur well for India’s future progress. The Third Five-Year Plan (1961–1966), which calls for the expenditure of $23.6 billion, aims at an annual gross national product (GNP) growth rate of 5–6 percent, a major step toward India’s goal of self-generating economic growth. (Paras. 27–33)

6. The success of the Third Plan almost certainly will depend on India’s ability to get large-scale foreign aid. It has already secured about $2 billion and will probably require an additional $5-5.5 billion in order to carry out the entire program. While some of this aid will come from the Soviet Bloc, Indian leaders look to the West for most of it. (Paras. 36–40)

7. Even if India is successful in stepping up the pace of economic development, the task of satisfying the rising aspiration of its people will remain formidable. Even if there is a sharp decline in the birth rate, it will be extremely difficult during the next decade or so to provide employment opportunities for the rapidly expanding labor force. While an eventual decline in birth rates is likely, the question whether this decline will occur soon enough and rapidly enough is the great imponderable of India’s economic future. (Paras. 45–46)

8. India’s basic international policy of nonalignment is almost certain to be maintained during the next few years. The trend toward improved relations with the West probably will continue, aided by need for Western economic support, increased understanding of US foreign policy objectives, and fear of the Chinese Communist threat. Nevertheless, India will continue to value friendly relations with the USSR because of its need for Soviet economic aid and for Soviet neutrality in its dispute with Communist China. There probably will be a further improvement in relations with Pakistan, and the chances are about even that the Kashmir issue will be settled during the next few years. (Paras. 53–62)

9. The combat effectiveness of India’s 456,000 man military establishment is believed to be among the highest in free Asia. India’s major military weakness is its heavy dependence on foreign sources of equipment, a dependence which is likely to decline only slowly. India’s military attention, once focused largely on Pakistan, is increasingly directed toward Communist China—a trend that is likely to continue. (Paras. 47–52)

[Here follows the “Discussion” section, comprising numbered paragraphs 10–65.]

1. Source: Department of State, INR–NIE Files. Secret.

   According to a note on the cover sheet, the following intelligence organizations participated in the preparation of this estimate: the CIA and the intelligence organizations of the Departments of State, Army, Navy, Air Force, and The Joint Staff. All members of the U.S. Intelligence Board concurred with the estimate on October 25 with the exception of the representatives of the Atomic Energy Commission and the Federal Bureau of Investigation who abstained since the subject was outside their jurisdiction.

2. Supersedes NIE 51–56, “India Over the Next Five Years,” dated 8 May 1956; NIE 51–57, “Consequences of Economic Crisis in India,” dated 8 October 1957; and NIE 51–58, “The Economic and Political Consequences of India’s Financial Problems,” dated 2 September 1958. [Footnote in the source text. Neither NIE 51–56 nor NIE 51–57 is printed. NIE 51–58 is printed as Document 217.]