New Delhi, 30 July 1952
190. RESTRICTED
Economic Developments
Your telegram 153.1
Indian Authorities are assembling a list of equipment needed for Tungabhadra2 and Malampuzha3 projects; in respect of both pounds 500,000 available from last year and whatever sum is forthcoming for the present year. Could a rough figure of £3,000,000 be assumed to work on? The need to refer to the Governments of Hyderabad and Madras makes it unlikely that the list can be sent you before two weeks at least.
2. The purpose for which you seek this information is fully understood by the Finance Ministry and so is the need for haste.
3. It has been explained also that 1952/3 contribution is likely to be made wholly or mainly in Australian manufactured goods in view of the poor wheat yield and the balance of payment position. The Indians accept this.
4. So much for immediate problems raised in your telegram. Opportunity has been taken of this week’s talk here, however, to discuss the general policy of Australian contribution to India’s economic developments with the object of arranging that concentration suggested in paragraph 4 of your memorandum 406, 23rd June,4 upon ‘one or a very small number of projects with which Australian assistance can be identified, rather than spreading in small lots so that the size and origin of our gift is lost’. I consider this a wise and much needed policy. An additional advantage of such concentration would be to simplify administrative work involved in Australian aid both in Australia and here. The Indian authorities are most receptive to both of these arguments and would be glad to make their future plans accordingly. They say they would always’ have preferred such a policy which is working well in the case of Canada.
5. Two points should be remembered regarding aid to India. First, unlike Pakistan, India already possesses a fairly developed economy and the present five year plan is directed towards making it balanced. Second, Australia’s limited availability pre-determines the aid we can give in manufacture so that it becomes a case of finding opportunity to fit in what we can offer.
6. The Government of India will now endeavour to select one or a few major projects which might be followed through by Australia for the duration of the plan. It seems most likely that Tungabhadra will be their main choice. In that case every effort will be made to absorb this year’s contribution in manufactured goods. If, however, next year, circumstances allow you to resume the gift of wheat policy and counter-part funds are available, this will be much more acceptable. The Indians have suggested wool gift or other consumer goods might in part replace wheat.
7. My memorandum 415 sets out general background. Further details will follow as soon as possible.
[NAA: A9879, 2202/El part 4]
1 Not found.
2 The Tungabhadra Project was an agreement on the apportionment of the waters of the Tungabhadra river and the development of hydro-electric and irrigation schemes between the Governments of Madras, Mysore, and Hyderabad.
3 The Malamphuza Project was an irrigation project in Madras.
4 Not found.
5 Not found.