SPECIAL REPORT INDIAN PRIME MINISTER GANDHI: PERFORMANCE AND PROSPECTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A005400050002-8
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• Document Creation Date: December 19, 2016
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• Content Type: REPORT

Release2006/04/27
4opy No: 3 8
CURRENT INTELLIGENCE WEEKLY
INDIAN- PRIME MINI EA .GANDHI: PERFORMANCE AND PRO PELTS
CENTRAL INT LLIGEN 1 ~ A EN '
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INDIAN PRIME MINISTER GANDHI: PERFORMANCE AND PROSPECTS
In her seven months as head of India's govern-
ment Indira Gandhi has shown greater decisiveness
in her approach to major policy questions than most
observers expected. This has earned her the dis-
approval of some early backers in the ruling Con-
gress Party who believed they were getting a more
malleable prime minister. At the same time, a num-
ber of party wheelhorses who resisted her appoint-
ment are now supporting her for a variety of essen-
tially pragmatic reasons. Her future position will
depend in large measure on how well the party fares
in the general elections scheduled for next Febru-
ary.
The elevation of Mrs. Gandhi
to the premiership following
Shastri's sudden death seven
months ago was essentially a
stopgap. She was not considered
the most competent of the half
dozen leading contenders, but it
soon became apparent that her
selection would be least likely
to stir up antagonisms within
the ruling party. She was not
closely allied with any of the
party's regional power blocs, nor
was she caught up in the personal
feuding that damaged other candi-
dates' prospects.
Her credentials for the job
were mixed. As Nehru's daughter
she had long been active in party
work--she claims to have attended
her first party conclave at the
age of three. As her father's
closest aide and confidante she
had been drawn into decisions of
crucial importance. The extent
to which she influenced Nehru's
judgment was never clear, how-
ever. During his lifetime she
shunned government posts, al-
though she served creditably as
Congress Party president in 1959.
She was not impressive in her
only previous cabinet position--
that of minister of information
and broadcasting in the Shastri
government.
In recent months Mrs. Gandhi's
image has changed. After an in-
itial halting performance she has
shown unexpected decisiveness in
making and defending major shifts
in economic policy. Some of
these changes have involved back-
ing away from the outdated brand
of London School socialism she
inherited from her father, and
reducing controls over private
business activities. These moves
have brought her government under
heavy opposition fire, and drawn
anguished criticisms from Congress
Party leftists who had previously
regarded Mrs. Gandhi as solidly
in their camp. She has countered
by taking her case directly to
the people in an impressive series
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INDIA
Prime Minister
INDIRA GANDHI
IA44h4I 1IMIR
Congress Forty President
K. KAMARAJ
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of radio addresses and visits to
the provinces.
Mrs. Gandhi's approach to
cabinet leadership differs from
that of either of her predeces-
sors. Where Nehru overwhelmed
and dominated his colleagues and
the mild-mannered Shastri patiently
sought consensus among them, Mrs.
Gandhi tends to rely heavily upon
a few key associates whom she re-
spects and trusts. Some observers
feel she is not fully attuned to
the substance of the problems fac-
ing her government. Most major
policies have, in fact, been
authored by her advisers. Never-
theless, in recent months she has
shown an increased willingness
to become personally involved in
disputes and to make firm deci-
sions in the face of conflicting
advice.
Economic Issues
The most urgent problems con-
fronting Mrs. Gandhi when she took
office were economic. In tackling
them she called upon the services
of two men who had played impor-
tant roles in economic policy form-
ulation during the Shastri ad-
ministration--Agriculture Minis-
ter Subramaniam and Planning Min-
ister Mehta. Both were on close
terms with the prime minister
prior to her selection, and both
were already deeply immersed in
a crisis brought on by a serious
food shortage, dangerously low
foreign exchange reserves, and
the suspension of US economic aid
commitments since last summer's
war with Pakistan.
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Under Subramaniam's super-
vision Indian delegations sought
emergency food stocks from the
West to make up the deficit
caused by the worst drought of
this century. The Indians esti-
mated that 11 to 12 million tons
of food grain would be needed,
in contrast to a record 7.4 mil-
lion tons imported during 1965.
In July the Agriculture Ministry
announced that over 11 million
tons had been lined up, 80 per-
cent of which would come from
the US under PL-480 agreements.
Although the specter of wide-
spread famine thus appears to
have been averted, localized
hardships may occur before the
November marketing of this year's
autumn crop--particularly with
monsoon rains now hampering grain
handling. Moreover, food prices
are continuing their sharp
seasonal climb, creating an ex-
ploitable issue for the opposi-
tion.
Some of the Gandhi govern-
ment's efforts to cope with the
food crisis have stirred protests.
Subramaniam was chided earlier
this year when he announced new
policies designed to encourage
private and foreign participa-
tion in the faltering fertilizer
industry--part of a larger pro-
gram to improve long-term agri-
cultural prospects. Indian left-
ists, including the Congress
Party left wing, argue that this
does violence to a ten-year-old
decision that increased fertilizer
production should come primarily
from government plants. Other
food programs--such as rationing
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and distribution schemes--have
been resisted by producers in
food surplus areas who are re-
luctant to sell to the govern-
ment at controlled prices, and
have caused complaints from def-
icit states that they are not
getting their share of avail-
able stocks.
The Gandhi government re-
ceived additional brickbats when
it acted on World Bank recommen-
dations for economic reform.
The new measures were introduced
following a visit to Washington
last spring by Planning Minister
Mehta to discuss the resumption
of economic assistance with of-
ficials of the bank, which chairs
the consortium of Western aid
donors. He found the bank dis-
satisfied with India's lagging
economic progress during the
third five-year plan (1961-1966).
It was clear that the bank would
not endorse New Delhi's requests
for increased aid for its ambi-
tious fourth plan--now in the
final stages of drafting--unless
the Indians agreed to begin clear-
ing away the clutter of controls
that was stifling productivity.
In early June New Delhi took the
first step toward reform by de-
valuating the rupee by 36.5 per-
cent, bringing it more in line
with world market rates.
Domestic critics promptly
charged Mrs. Gandhi with follow-
ing a "Made in America" economic
policy and predicted that the
move would lead inevitably to
skyrocketing prices. There was
a rumbling of discontent among
Congress Party bosses, who feared
runaway inflation would cost
votes in the coming general elec-
tions. These fears persist,
even though the World Bank sub-
sequently called upon the con-
sortium to underwrite the re-
forms by providing $900 million
in nonproject loans during fiscal
year 1966-67. At least $830 mil-
lion of this'has been promised
by member nations.
Political Challenges
Several political crises,
most of them involving regional
and linguistic disputes, have
also plagued the Gandhi govern-
ment. In meeting these Mrs.
Gandhi has proven less forceful
than in deali.racr with economic
dislocations.,
An uprising in March by a
thousand tribesmen in the Mizo
Hills District of Assam State,
paralleling the ten-year-old
independence struggle of nearby
Naga tribes, called attention
to the need fo a new approach
to the problem of India's
ethnically distinct hill tribes.
Mrs. Gandhi nerertheless found
herself hobble by conflicting
pressures from'',her colleagues.
Some advocate qreater local
autonomy while others demand
harsh punitive', action. Indian
troops managed to contain the
Mizo guerrillas,, but the rebel-
lion has not been stamped out.
The Naga movement, quiescent
since 1964 under the terms of
a tenuous ceases-fire, shows signs
of heating up again.
Trouble ofia different na-
ture broke out ~ri the northwestern
state of the Punjab, almost
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simultaneously with the Mizo re-
volt. The Sikh religious minor-
ity there resumed its periodic
agitation for the partitioning
of the bilingual state along
linguistic lines. This proposal,
designed to create a state in
which the Sikhs would constitute
a majority, had been resisted by
previous Indian governments on
the grounds that its emphasis on
religious and linguistic dispari-
ties would damage national unity.
This time, however, the demand
was backed up by an apparently
genuine threat of self-immolation
by the Sikhs' most popular leader.
Fearing the disorders that would
follow, the Congress Party's 21-
member Working Committee recom-
mended acquiescence. Although
the prime minister--a member of
the Working Committee--concurred
and her government ordered par-
tition, reports indicate that
the decisive voice was that of
party president Kumaraswami
Kamaraj.
The Punjab decision appears
to have rekindled demands for
border adjustments elsewhere.
Maharashtra and Mysore states,
both headed by Congress Party
governments, have revived a
long-standing quarrel over pos-
session of several political sub-
divisions along their common
border. The territory in ques-
tion is now included in Mysore,
but a slight majority of the in-
habitants speak Marathi, the
language of Maharashtra. The
attempt by the latter state to
win control over the disputed
areas sparked violent demonstra-
tions in Mysore, spurred on,
ironically, by state Congress
Party and government officials.
Disgruntled elements in eastern
Maharashtra have now added to
the confusion by reopening their
own claims to separate statehood.
Similar problems in other states
lie just beneath the surface.
Mrs. Gandhi seems inclined to
tread cautiously, even though
the continuing discord is damag-
ing Congress Party unity.
Mrs. Gandhi and the Party
Mrs. Gandhi's own power po-
sition is unclear. Her asser-
tiveness and independence have
established her as a force to be
reckoned with in Congress Party
councils. On the other hand,
she has also earned the disap-
proval of some party leaders who
had expected her to be more amen-
able to their advice.
The picture is further clouded
by the shifting of alliances that
has characterized Congress Party
politics since Nehru's death.
Nehru's commanding stature--and
that of Mohandas Gandhi before
him--not only dwarfed other party
leaders, but also obscured the
fact that the Congress movement
was anything but monolithic. Ever
since the 1920s, when Gandhi ex-
panded it into a broad-based ve-
hicle for agitation against the
British, the party has been es-
sentially a federation of pro-
vincial blocs organized along
linguistic lines. Over the past
two decades most of the nationally
prominent independence leaders
have died, leaving both party and
government largely in the hands
of regionally based strong-men
and their proteges.
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Indira Gandhi is one of the
few leaders who can claim an all-
India image. She is without a
solid local power base, however,
even in her home state of Uttar
Pradesh. Her selection as prime
minister was engineered almost
single-handedly by party presi-
dent Kamaraj, south India's fore-
most politico.
Kamaraj chose Mrs. Gandhi
for a variety of reasons. As
Nehru's daughter she would be an
asset at election time. She
seemed less likely than others
to divide opposition to the bid
of conservative former finance
minister Morarji Desai--a Kam-
araj foe. Moreover, Kamaraj's
previous dealings with her had
been harmonious and her lack of
political muscle seemed to guar-
antee a cooperative future re-
lationship.
The Kamaraj-Gandhi Rift
In recent months, however,
that relationship has begun to
erode. The earliest strains
developed last February, when
Kamaraj voiced objections to the
cabinet's revised fertilizer
policies despite his normal de-
tachment from government deliber-
ations. He judged that the new
approach would work to the det-
riment of India's rural poor,
whose cause he has diligently
championed throughout his po-
litical career.
Since then Kamaraj has been
among those who have indicated
growing disgruntlement at what
they regard as an excessive read-
iness on the part of Mrs. Gandhi
to adopt Western proposals for
economic reform. His opposition
is more emotional than intellec-
tual, and his understanding of
the complex issues involved is
rudimentary. The 64-year-old
Kamaraj is a :Lower caste Hindu
with little formal education.
His political development has
been conditioned by decades of
active participation in anticap-
italist and anti-Brahmin maneuver-
ing in his native Madras State.
He espouses an unsophisticated
socialist philosophy in which
the merit of any policy is meas-
ured by its immediate impact upon
India's downtrodden masses.
Kamaraj's':Latest dissent
was registered! over the currency
devaluation, which the Gandhi
cabinet apparently decided upon
without his approval. It troubled
him on several! counts. It could
cost votes, it. was not well re-
ceived by businessmen upon whom
Kamaraj was depending to fill
the party's election coffers,
and it looked like a further
knuckling under to Western in-
fluence. Perhaps most important,
however, it reflected Mrs. Gand-
hi's growing independence in
major policy areas.
Kamaraj's!disappointment
over the prime minister's perform-
ance probably has been heightened
by recent shifts in Congress Party
power relationships which have re-
duced his oncel-paramount position.
Some of these adjustments have
had the concurs-ent effect of
strengthening Mrs. Gandhi's hand
by winning her'the support--albeit
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opportunistic and transitory--
of powerful elements who were
not among her early backers.
The Revival of the "Syndicate"
Among those most active in
recent intraparty manipulations
were three key members of the
"syndicate" of regional bosses
who worked with Kamaraj to secure
Shastri's succession to Nehru.
Two of these, Railways Minister
Patil and Transport Minister
Sanjiva Reddy, were caught badly
off balance by Shastri's sudden
death. Their relations with
Kamaraj had already become some-
what strained, and they lost
further ground as a result of
their inability to settle on and
promote a winning candidate.
Since then they have made
a comeback. Reddy placed first
in a party vote last May to select
members of the important Election
Committee, an ad hoc body formed
to approve Congress Party candi-
dates for state and national elec-
tions. Patil, already an ex of-
ficio member of the committee,
stage-managed the election of
one of his cohorts. Patil also
scored well in recent elections
to the Executive Committee of the
Congress Party's parliamentary
group.
Patil, rightist political
boss of wealthy Bombay and an
important party fund raiser, has
now publicly thrown in with Mrs.
Gandhi. Although initially cool
to her selection, he seems to
calculate that her government is
likely to drift gradually toward
closer economic ties with the
West. As one of India's most
Western-oriented leaders, he prob-
ably sees himself as a major
beneficiary of such a trend. His
support for the prime minister
is clearly opportunistic, however,
and could evaporate rapidly if
her political prospects begin to
dim.
Sanjiva Reddy has been more
reserved in his backing of Mrs.
Gandhi, but political develop-
ments in his home state of Andhra
Pradesh may increase his inter-
est in a more cooperative rela-
tionship. His opposition to her
at the time of her selection was
largely the result of her support
for his archrival D. Sanjivayya,
a former chief minister of Andhra
who is now industries minister
in Mrs. Gandhi's cabinet. More
recently, however, a revolt back
home by an erstwhile lieutenant
has driven Sanjiva Reddy into
an odd alliance with Sanjivayya.
The US Consulate General in Madras
understands that the arrangement
envisages Reddy, as senior partner,
acting as Andhra's spokesman in
New Delhi while Sanjivayya works
to restore the pair's control over
the state machinery. As part of
the deal, Reddy reportedly has
agreed to support the prime minis-
ter.
A third member of the old
syndicate, eastern India's strong-
armed political boss Atulya Ghosh,
has indicated he is willing to go
along with Mrs. Gandhi, at least
for the time being. Although not
one of her early supporters, Ghosh
lost little ground because of her
selection. Her finance minister,
Calcutta lawyer S. Chaudhuri, is
close to the Ghosh organization
and probably helps keep open the
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lines of communications between it
and the prime minister.
Ghosh, like Sanjiva Reddy,
has not been on the best of terms
with Kamaraj lately. Nevertheless,
he has attempted to debunk rumors
relating to the Kamaraj-Gandhi
rift and probably hopes an open
confrontation can be avoided.
Ghosh's most immediate ambition
apparently is to succeed Kamaraj
as the party president in 1967 or
1968, and he will weigh political
decisions accordingly. As a re-
sult, he will probably try to
steer clear of binding commitments.
Meanwhile, Ghosh has recently
thrown his support behind the mach-
inations of both Reddy and Patil,
giving rise to speculation that
the somewhat disjointed syndicate
may be in for a revival. It would
be an alliance of convenience
geared to the advancement of spe-
cific mutual interests. In the
short run this might involve a
nod in the direction of the prime
minister, but the group would al-
most certainly leave open the door
to a deal with Kamaraj as a hedge
against snifting political for-
tunes.
Other Cabinet Supporters
Three other important cabi-
net colleagues are actively sup-
porting the prime minister: De-
fense Minister Chavan, Agriculture
Minister Subramaniam, and Planning
Minister Mehta. Of the three,
Chavan is by far the most influ-
ential in terms of the votes he
commands in Parliament and in
party councils. He is the undis-
puted overlord of Maharashtra
State--excluding Bombay--and his
capable handling of his portfolio
during last year's war with Paki-
stan brought him national acclaim
second only to that accorded to
Shastri.
Chavan wants to be prime min-?
ister, but e did not press his
case following Shastri's death
because heyrecognized that paro-
chial rivalries with Patil and
Mysore Chief Minister Nijalingappa
would weaken his chances. He
therefore cooperated with Kamaraj
in promoting Mrs. Gandhi, thus
preserving his already good re-
lations with both.
Chavari generally plays his
cautiously and well. He
knows that at age 53 he still has
ample time Ito reach the top. In
the early :months of Mrs. Gandhi's
administration he remained aloof
from the mdre contentious issues
facing the government, concentra-
ting narrowly on his own ministry
and on cementing his relations
with congress parliamentarians
from other parts of India.
In the uproar that followed
the rupee devaluation, however,
Chavan finally spoke out in de-
fense of Mrs. Gandhi. His move
probably reflects a judgment that
the prime minister is doing at
least an adequate job, and that
she is not likely to be forced
from office: in the near future.
On the other hand, there is no
indication !so far that the defense
minister's (relations with Kamaraj
have soure,3. Indeed, Chavan will
probably continue to avoid moves
that could ;deprive him of Kama-
raj's important backing when the
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time finally comes for him to bid
for the premiership.
tions as a substitute for strik-
ing directly at Mrs. Gandhi.
Subramaniam and Mehta are
valuable to the prime minister
largely because they are competent
and because their approach to In-
dia's urgent economic problems
accords with her own views. Nei-
ther has a particularly strong
political base, however.
Subramaniam is strong in the
Coimbatore district of western
Madras, but the state's overriding
loyalty to his sometime antagonist
Kamaraj severely limits the value
of this following in national level
politics. Although an articulate
debater, he has irritated other
senior party leaders in the past
by his schoolmasterish lectures
on the wisdom of his programs.
Mehta, a long-time socialist who
broke with the Congress Party in
the late 1940s and did not rejoin
until 1964, has no grass-roots
support.
The recent friction between
Kamaraj and the cabinet has en-
couraged Congress dissidents--
both left and right--in their
jibes at Gandhi government poli-
cies, and Subramaniam and Mehta
have provided ideal targets. They
are inescapably identified with
the most controversial issues, and
they have relatively little ammu-
nition with which to fire back.
There have been rumors of an at-
tempt to force one or both from
office even before the 1967 elec-
Despite the unsettled power
relationships among the Congress
Party leadership, the approaching
general elections will discourage
open feuding. Kamaraj's distress
over Mrs. Gandhi's behavior is not
likely to blind him to the fact
that any move to replace her would
cost the party heavily at the polls.
Similar considerations militate
against attempts to oust Subramaniam
or Mehta against Mrs. Gandhi's will.
Factional strains will continue to
trouble the party, both in New
Dehli and in the states, but the
odds are against a major blowup
between now and next February.
Congress Party disarray is
offset by the even more fraction-
alized nature of its opposition.
Major opposition forces at the
national level include two right-
ist parties, the relatively pro-
Western Swatantra Party and the
Hindu communal Jan Sangh. In ad-
dition, there are four parties on
the left: the irresponsible and
obstreperous Samyukta Socialist
Party (SSP), the more placid
Praja Socialist Party (PSP), and
the right- and left-wing Commu-
nist parties. None of these
groups has more than a limited
regional following, and none has
the slightest chance of displac-
ing the Congress government in
New Delhi.
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In the individual state
governments the Congress posi-
tion is less secure. None of
the 16 states is presently in
the hands of the Congress' po-
litical rivals, but several
could be wrested from its grip
in the next election. A Commu-
nist-dominated coalition would
have a good chance of defeating
the badly split Congress Party
of Kerala. In Orissa, Congress
dissidence could well result in
a victory by a Swatantra-PSP al-
liance. In what remains of the
Punjab after partition, the
Congress Party may find itself
edged out in a contest between
the pro-partition Akali Dal, po-
litical arm of the Sikh religious
group, and the Jan Sangh, which
adamantly opposed the division
of the state. In two other
states--West Bengal and Gujarat
--opposition groups feel that
they have the Congress Party on
the ropes, but their predictions
appear to be overly optimistic
at this point.
Recognizing that their best
hope lies in capturing state
legislatures, the opposition
groups will probably concentrate
their slender campaign resources
on local rather than national
efforts. They are exploring the
possibility of electoral arrange-
ments which would avoid splitting
the anti-Congress vote. In spite
of difficulties caused by diverse
ideology and personal antago-
nisms,the present trend of these
interparty negotiations is toward
a fairly impressive network of
electoral accords. On the other
hand, past exp rience has shown
that where lat:nt competition
between the a:>ociated groups is
intense--as itlnow is between
the two Communist factions--local
politicians fetid subtle ways to
evade the agre?ments and under-
cut their foes Thus, the suc-
cess of the electoral pacts will
vary widely frpm state to state.
Political debate over the
next seven months probably will
focus on the state of the economy
as viewed by eLeection-minded pol-
iticians. Elements now critical
of the Gandhi administration will
be looking for issues with which
to tar the government, and any
economic deterkioration will play
into their hands. The more radi-
cal opposition parties, particu-
larly the Comunists and the SSP,
will resort e tensively to open
agitation, including street dem-
onstrations, riots, and parlia-
mentary uproa~s.
At the some time, Congress
Party fence-sitters will be
carefully gauging developments
to determine their own postelec-
tion alignmen s within the party.
Their decisions will turn as
much on local situations as upon
national issues. The outcome
of such currE t: altercations as
the MaharashtEL-Mysore boundary
dispute and t:e Andhra Pradesh
factional fic4~t will significantly
influence the future positions
of Chavan, Sa4jiva Reddy, and
other key figures.
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Mrs. Gandhi's own political
future thus remains obscure. Her
strained relationship with Kamaraj
is a definite liability. On the
other hand, she has been able to
capitalize on her unique national
stature to carry her message di-
rectly to the people. In the
past few months her public state-
ments have reflected greater self-
confidence. Such performances
will probably become more frequent
in the final stages of the cam-
paign.
If the party emerges from
the elections without a substan-
tial reduction of its parliamen-
tary majority--now about 70 per-
cent of the seats--the victorious
prime minister will be difficult
to dislodge. If she proves un-
able to lead the Congress effort
competently, however, there could
be an attempt to force her from
office next March when the party's
newly elected Parliamentary Group
meets to select its leader. A
crucial determinant will be Kama-
raj's own ambitions. If he wants
the premiership himself, however,
he is hiding his wishes well, and
he is not likely to press any
claim until the February vote is
safely counted. (CONFIDENTIAL)
SECRET
SPECIAL REPORT 26 Aug 66
Approved For Release 2006/04/27: CIA-RDP79-00927AO05400050002-8
 Approved Forlease 2006/04/27: CIA-RDP79-0092005400050002-8
SECRET
SECRET
Approved For Release 2006/04/27: CIA-RDP79-00927AO05400050002-8