WEEKLY SUMMARY SPECIAL REPORT INDIA: DOMESTIC DILEMMA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001500050014-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: December 16, 2016
• Document Release Date: November 26, 2004
• Sequence Number: 14
• Publication Date: March 23, 1973
• Content Type: REPORT

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Secret
25X1
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
Special Report
India: Domestic Dilemma
CIA
DOCUMENT SERVICES BRANCH
PILE COPY
DO NOT DESTROY
Secret
N9 660
23 March 1973
No. 0362/73A
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 Domestic Dilemma
Summary Prime Minister Gandhi is still in the
driver': seat, but her inability to lead India
out of the economic doldrums gives the nation
a sense of drift and encourages a feeling of
political malaise. The government's recent handling
of difficult domestic problems has a.-oused sharp
public criticism, which has so far focused on
bureaucratic incompetence rather than on Mrs.
Gandhi. The most pre$sing economic problems
arise from last year's sparse and erratic monsoon.
The entire nation is experiencing shortages
of food, water, and electric power, but extreme
hardship is confired to relatively small areas.
A good spring hai pest and ample rain this summer
are vital if India is to avoid a major economic
crisis by the end of the year. In the midst
of rapidly rising prices and industrial stagnation,
the government's renewed pledge to end poverty
may only highlight its inability to do so.
On the political front, scattered but potentially
contagious cases of regional unrest could further
strain center-state relations. Problems with
students and labor also persist. The government
has been put on the defensive by an energetic
free press, a highly critical but weak political
opposition, and dissidents in the Ruling Congress
Party.
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-Traditional folk tale
But there were, once, fateful years when spring failed
to collie to India. Long, long ago a wicked (lemon held
sway over the whole world-which, of course, was India-
arad so perverted the seasons that they forgot to do
their work; this harassed even the gods, because they
were beset by the anguished prayers of men .for cold
weather or hot weather, rain, and above all, the absent
spring's fertility.
-Indian novelist Kamala Markanarda
Then, after the heat had crrchcred for days and days
and our hopes have shrivelled with the paddy---too late
to do any good then we saw the storm cloud. gathering,
and before long the rain Caine lashing dowry, retaking up
ill jury for the long drought and giving the grateful
land as much as it could stick and more. But in its there
was nothing left-no joy, no call for joy. It had collie
too late.
Special Report _2.
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Now in her eighth year as prime minister,
Mrs. Gandhi enjoys great personal popularity and
is not threatened by any credible rival. In Indian
eyes, she fulfills the need for a strong and con-
fident leader. Both the communist and non-
communist oppositions are so limited in numbers
and appeal as to be no real challenge. Yet, public
dissatisfaction with the government's perform-
ance is more evident, and the Ruling Congress
Party-which Mrs. Gandhi formed in 1969 by
breaking from conservatives in the original Con-
gress Party-has made little headway in imple-
menting the populist goals proclaimed at its crea-
tion.
Today, there are rumhlings that younger,
leftist-oriented activists may generate a second
split. They rallied under Mrs. Gandhi's campaign
oratory in 1971 and 1972, but they now charge
that the government has failed to implement
promised socio-economic reforms. In some states,
tension is building between conservative party
regulars and members of the aggressive student
and youth wings who want more voice in shaping
policy-and whose defection to the opposition
would tarnish the party's progressive image.
The highly charged slogan "garibi hatao"
(remove poverty) helped win national and state
elections, but it also heightened public expecta-
tions. The issue of economic development has
thus become highly politicized. Today, with two
thirds of the country affected by drought and
industrial stagnation, the long-range political out-
look is uncertain.
The Economy: Failures and Hopes
The government's record and prospects are
weakest in the economic sphere. New Delhi's eco-
nomic policies are under heavy fire in the streets,
in parliament, and in the press, although much of
the problem stems from the costly war with
Pakistan in 1971, providing temporary food and
shelter for millions of Bengali refugees, and,
finally, last year's inadequate monsoon. (There is
an average of one poor monsoon every four
years.)
Special Report -3-
New Delhi rejects accusations that five good
crop years led to complacency and plays down
the severity of the 1972 drought. The government
claims food imports, the spring harvest, and sum-
mer rains will provide sufficient relief. Meanwhile,
officials are pointing to the prospect of a brighter
future, envisioned in the next five year plan
(1974-79). Economic plans do not evoke the
intense interest they did in Nehru's day, but they
still provide a vehicle on which to pin hope in the
midst of distress.
New Delhi has gone all out to portray the
fifth plan as a war on poverty. It features a dual
pledge to remove poverty and attain national
self-reliance. Welfare measures include elementary
education to age 14, extended public health facil-
ities and rural e:ectrification, home sites for the
rural landless, more roads and wells, and im-
proved conditions in urban slums. The govern-
ment is trying to get the public involved by revi-
talizing the old system of village councils. The
goal of self-reliance underscores India's deter-
mination to do without foreign aid after 1979,
except for debt repayment, and to speed up de-
velopment of the sluggish industrial sector.
Many are skeptical about the plan and its
goals. Despite government claims, statistics indi-
cate that fifth plan allocations will resemble those
of the fourth plan, which emphasized economic
growth and earmarked a relatively small propor-
tion for "social justice." Pragmatists are still dom-
inant among economic decision makers, and they
contend that India is in no position to provide the
benefits of a welfare state.
Competition between priorities has always
complicated India's planning process, but Mrs.
Gandhi has compounded the problem by her sim-
plistic approach to economics and her public
commitment to unrealistic goals. Official!: are told
to devise policies that will substantially improve
living standards, but she has only vague notions of
how this can be achieved. Her few direct ventures
into the economic sphere were widely publicized,
but economically they are of marginal impor-
tance. Attacks on the wealthy and the private
sector are basic features of her speeches, and she
increasingly warns against unspecified "dangerous
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forces" within and outside the country. Mrs.
Gandhi appears convinced that these "vested in-
terests" are actively seeking to impede India's
economic development.
The public probably finds little solace in
rhetoric from New Delhi. The masses are pro-
testing against inflation, which in a year has
boosted food prices almost 20 percent. Prices
may continue to climb if the imminent wheat
harvest falls very short of expectation, or if the
states bungle their take-over of the wholesale
trade in food grains, which begins with wheat this
month and will include rice in November. Re-
sponsible state officials acknowledge that they
lack the facilities and expertise to handle the
tremendous undertaking. Waste in the storage and
transport of grain, coupled with customary graft
and corruption, could raise prices further rather
than provide stabilization or curb speculative buy-
ing and hoarding.
At the same time, widespread enthusiasm for
land reform has largely disappeared with the real-
ization that Mrs. Gandhi-even with her concern
over "vested interests"-has chosen not to alien-
ate the powerful farm lobby that fills party cof-
fers and delivers the rural vote. Last year, New
Delhi finally endorsed a moderate land redistri-
bution scheme that the states are to implement
by the end of the year, but many large land-
owners have found ways to circumvent the new
state laws. Significant land reform and the impo-
sition of a tax on agricultural income could be
achieved, if Mrs. Gandhi were willing to use her
large parliamentary majority to amend the con-
stitution and transfer these subjects from state to
federal jurisdiction.
Labor unrest is another grim reflection of
the state of the economy. Industrial workers as
well as government employees commonly view
strikes a5 the only effective means of getting pay
raises and allowances to offset rising prices. The
unions are virtual wings of national political par-
ties, a fact that partially accounts for the inten-
sity of intra- and inter-union rivalry.
Mrs. Gandhi's appeals fo? peaceful coopera-
tion between labor and management in the
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.......on self reliance: "I think that we .-ai do
without most outside things. If there is not
enough grain we should try to get some, but
we should also persuade our people to use
tapioca or potatoes. But this habit of adap-
tation is not there. I get so many letters
saying 'maize does not agree with us and we
get pains.' Rice-eating people reject wheat
and wheat-eating people reject rice. We have
to get out of that. The whole thing really ties
up with having a strong sense of national
purpose."
.......on her role: "I wili go when I think I
have completed my job."
.......on the future: "Our problems are gigan-
tic. No one in the world has faced the like of
them. I t is, therefore, necessary to see how we
can cooperate rather than compete with one
another."
.......on government programs: "We are seri-
ously trying to coordinate measures, but
everybody tries to politicize the situation. We
also have the most peculiar attitude you can
encounter anywhere in the world. Elsewhere
people want to say 'I am doing better than
you. But in this country we want to say 'No,
we are worse, we are more backward.' "
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Andhra Separatist Leader Subba Reddy (I)
Striking Teachers in New Delhi
Public Relief Jobs in Drought Area
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national interest have had little effect. Neverthe-
less, she recently reaffirmed that a proposed
three-year moratorium on strikes and lockouts
would not be adopted. Her tendency to side with
labor has, in a number of instances, conflicted
with a proclaimed interest in modernizing the
industrial sector. Moreover, the cost-of-living
increment recently granted federal employees
fuels the high rate of inflation and generates sim-
ilar demands from state employees.
In the wake of mounting unemployment-
aggravated by layoffs resulting from power short-
ages-the government has proriised to create half
a million jobs for the educated unemployed this
year and annually throughout the fifth plan. It is
already providing temporary work for some 4.2
million people in severely hit drought areas. Until
industrial production picks up, however, the job
market looks bleak.
Unhappy States
While one arm of government grapples with
economics, the other is trying to quell political
unrest in various states. All winter, the often
bloody struggle to split the state of Andhra
Pradesh has beer front-page copy and, next to
prices, is the prime topic in parliament. New
Delhi is reluctant to give in to the separatists for
fear that dissatisfied elements in other states will
also turn to violence.
State boundaries were redrawn on essentially
linguistic lines in 1956, but the scheme left many
ethnic and regional anomalies. Prime Minister
Gandhi has rejected opposition demands for a
second major reorganization of states and opposes
continuing fragmentation. The 14 states formed
in 1956 have already been increased to 21. A
sirong case can be advanced for creating smaller,
more manageable units, but New Delhi fears this
would reinforce regional differences and weaker.
the central government. Additional states could
also provide new bases for ambitious politicians
who might ultimately threaten the domination of
the Ruling Congress Party.
Nonetheless, creation of two states out of
the Telugu-speaking state of Andhra Pradesh
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seems inevitable. Despite their bitterness toward
each other, the Andhrans and the Telenganans
have joined in bringing pressure on New Delhi.
The uneasy relationship between inhabitants of
the two regions erupted in 19,159 and again last
year over employment rules that benefit the
poorer Telengana region. Amid growing violence
in January, New Delhi took over administration
of the state. Reports indicate w;despread food
and water shortages that are difficult to ease
because of dis,':apted rail service and paralysis in
the bureaucracy. The separatists are determined
to hold out for their objective, and Mrs. Gandhi
probably is considering a face-saving device to
accompany assent.
The Andhra situation is not unique. For
years, the tribal people of Vidarbha, a region in
the Marathi-speaking state of Maharashtra, have
complained of economic exploitation by the
Maratha caste that dominates the state. Their bid
for separatism was regarded as legitimate 20 years
ago by the State Reorganization Commission that
recommended statehood.
Other regions would settle for greater auton-
omy. The desire for a weak central government is
most intense in the southern state of Tamil Nadu.
The ruling Dravida Munnetra Kazhagan party has
backed away from its earlier demand for an inde-
pendent Tamil-speaking state-Dravidistan-but
continues to champion expanded states rights.
The state has been singularly successful in evading
Mrs. Gandhi's control and is likely to remain the
most intractable member of the union.
In the extreme northeast, ethnic discontent
supplies unending problems. The state of Assam
has been sectioned until it is no more than a rump
of its former self, but minority problems still
exist. The Bengali-speaking inhabitants of Cachar
District are the most restive today. When the state
government attempted to eliminate Bengali as a
language of instruction in the schools last year,
the Bengalis rebelled. The proposal was with-
drawn, but Bengali resentment of the dominant
Assamese-speaking population is by no means
played out. With time, the tribal groups in central
Assam are also likely to make forceful demands
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for their own autonomous territory-Uda-
yachal-along the northern bank of the Brahma-
putra River which flows through the middle of
the state.
Students are in the front lines of anti-govern-
ment agitation. In part, this reflects the fact that
they are highly poli-iicized and easily manipulated
by politicians. In fact, candidates for student of-
fices usually run as members of national political
parties. Students are in no hurry to graduate
because of scarce job opportunities, and have
many idle hours to devote to non-academic
causes.
The degree of student and faculty unrest
today is revealed in the number of colleges that
are closed, on strike, or in turmoil. Falling aca-
demic standards are a result of the rapid expan-
sion in the university system that came with in-
creasing public demand. The recent upheaval at
Delhi University-for years one of the most selec-
tive and least troubled universities in India-has
led Mrs. Gandhi to take a new interest in the
student problem. The situation is so closely re-
lated to economic conditions, however, that early
improvement is unlikely.
Mrs. Gandhi's recent words and actions
indicate three priority objectives:
? to upgrade living conditions at the poor-
est levels of Indian society;
? to show the world that India has the
wherewithal for economic self-reliance;
? and to retain her tight grip on Indian
politics.
With her power consolidated at both national and
state levels and parliamentary elections not re-
quired until 1976, she may now delve more seri-
ously into the troubled economy. However, eco-
nomic plans for the rest of the decade-just an-
nounced-contain little to suggest that she will
achieve either her welfare goals or a more rapid
rate of economic growth. New Delhi has renewed
its commitment to large defense expenditures and
inhibiting controls over industry. Its determina-
Special Report -8-
tion to diminish, and ultimately eliminate, the
role of private foreign investment and foreign aid
is inconsistent with the aim of rapid economic
modernization and the acquisition of develop-
ment resources at the lowest availab!G cost. The
economic outlook is further clouded by the fact
that more than half of India's national income
derives from agriculture and, despite technolog-
ical advances, agricultural output remains highly
dependent on rainfall.
Mrs. Gandhi is likely to postpone controver-
sial political decisions until m;d-summer, when
the strength of the monsoon is known. Mean-
while, state leaders are being called to New Delhi
for high-level talks-a means of buying time and
keeping options open. In a bid for the continued
loyalty of those demanding reform in the Ruling
Congress Party, New Delhi has promised struc-
tural changes. So far, however, few party officials
seem willing to come to grips with the basic and
difficult economic problems that underlie mu c'
of the public discontent.
25
23 March 1973
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