STAFF NOTES: MIDDLE EAST AFRICA SOUTH ASIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000400010035-0
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 14
• Document Creation Date: December 15, 2016
• Document Release Date: July 20, 2004
• Sequence Number: 35
• Publication Date: February 20, 1975
• Content Type: REPORT

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Top Secret
27 nAv~ KO~H)O
Middle East
Africa
South Asia
NSA review completed
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Top Secret
13I
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February 20 , 1975
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MIDDLE EAST - AFRICA -- SOUTH ASIA
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India: The Narayan Challenge . . . . . . . . . 2
Bangladesh: Ineffective Economic Policies
Continue Despite Mujib's New Powers . . . . . . 8
Feb 20, 1975
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The Narayan Challenge
A nascent protest movement headed by Jayapra-
kash Narayan, a frail, 72-year-old disciple of
Mahatma Gandhi, poses the most tangible challenge
to the supremacy of the ruling Congress Party since
independence 27 years ago. Accusing Prime Minister
Gandhi of becoming a dictator, Narayan returned to
national prominence last year to lead what he calls
a "total, peaceful revolution" of Indian society
along the lines envisioned by Mahatma Gandhi.
Narayan's goal is a village-based, self-sufficient
society in which love, brotherhood, and non-violence
prevail.
Above all, Narayan wants political power
concentrated in the vil';,ges where 80 percent of
the population lives. He also would do away with
political parties and the parliamentary system,
replacing them with a pyramid of non-partisan
"people's assemblies" in which members could be
recalled at any time for unsatisfactory perfor-
mance. A weak central government--the antithesis
of the present situation--would act merely as a
coordinator of local governing bodies.
Narayan's chances for undermining the Congress
Party depend on whether public dissatisfaction with
Congress rule is severe enough to produce a repudia-
tion of the party in a general election. This
could come about if India's many small opposition
parties, which are trying to ride on Narayan's
coattails, can bury ideological, caste, and person-
ality conflicts in the interest of a united effort
against the Congress Party.
Previous alliances have floundered, allowing
the Congress Party to prevail since independence
with less than 50 percent of the popular vote.
There is an off-chance Narayan may be the missing
catalyst, but most predictions call for Congress to
retain at least a plurality in the next parliament,
which must be elected by early 1976.
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Nonetheless, Congress Party leaders are grow-
ing more concerned about the opposition challenge
and fear a nationwide anti-Congress mood may be
building. The unexpected defeat of a Congress
Party candidate by a pro-Narayan "people's candi-
date" in a prestigious central India by-election
last month was a severe jolt to the party. In
public, party leaders blame the loss on organi-
zational problems within the party and on recent
enactment of an unpopular farm tax. In private,
however, they are shaken by the Congress' poor
showing in rural areas, the traditional bedrock of
its support.
Prime Minister Gandhi's advisers apparently
have convinced her not to hold parliamentary elec-
tions soon, largely because of Narayan. Most
expect the party will loose seats whenever the next
election is held, and they want to retain their
two-thirds majority, at least until the govern-
ment's five-year term expires in early 1976.
apostle of Gandhi
Narayan's ascetic style is reminiscent of
Mahatma Gandhi. He is soft-spoken, convincingly
sincere, and his reputation is impeccable. Of
middle-class origin, Narayan joined the Congress
Party in the 1930s after returning-to-India from
several years of study at US universities. He
became a close ally of Nehru and leader of the
Congress Party's socialist wing.
After independence in 1947, Narayan helped
found a separate socialist party, but soon renounced
party politics to devote himself to Gandhi's
"sarvodaya" movement aimed at eliminating poverty,
ignorance, and the caste system from village life.
In recent years Narayan has focused on a complex
village cooperative scheme in his home state of
Bihar, one of India's poorest.
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The Bihar Conflict
Despite poor health, Narayan, a veteran of the
independence struggle, felt compelled to return to
an active national role last spring. Mrs. Gandhi,
he claims, is suspending civil liberties and expand-
ing police and paramilitary forces in order to
suppress legitimate public discontent over corrup-
tion and her government's poor economic performance.
A student-led revolt in Bihar served as the
vehicle for Narayan's return. The Biharis, follow-
ing in the footsteps of rebellious students in
Gujarat State, are demanding dissolution of the
Congress Party state government in Bihar and new
elections. They allege the Bihar government is
corrupt and that its programs have resulted in
record rates of inflation and unemployment.
Mrs. Gandhi, who apparently regrets ousting
under pressure the Congress Party government in
Gujarat last year, refuses to acquiesce in the
student demands in Bihar. This impasse has led to
formation of a fragile national coalition of pro-
Narayan opposition parties.
The "Saintly Tradition"
Narayan is wary. of opposition party leaders,
but is willing to cooperate on his own terms.
.Following Gandhi's "saintly tradition," he refuses
formal leadership of the coalition, recognizing
that much of his public appeal derives from his
apparent lack of political ambition. He continu-
ally draws the distinction between his goal of a
peaceful, total revolution and that of a power-
hungry opposition craving electoral victories.
Fragile: Unity
Opposition coalition leaders, do not want the
popular Narayan to slip through their hands. They
are now struggling with the almost impossible task
Feb 20, 1975
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of formulating a program that can be accepted
within the disparate coalition--where ideologies
range from Marxism to the far right--and by Narayan
as well. For election campaign purposes they must
unite under a single flag and symbol, an essential
step considering India's 70 percent illiteracy
rate. In the immediate future, they plan to attack
,the Congress Party from the floor of parliament.
Narayan's cooperation with the opposition will
probably continue on an ad hoc basis. He supports
the concept of nonpartisan "people's candidates" to
oppose the Congress Party in future national and
state elections, and the use of non-violent dis-
obedience to disrupt civil administration. Mean-
while, he wants to establish state committees to
mobilize support.
Narayan's first showing of mass strength is
scheduled for March 6 in the Indian capital. He
plans to lead a four-mile march to parliament to
present Mrs. Gandhi with a list. of demands
calling for electoral reforms, clean government,
and lower prices. Narayan proved his ability to
draw huge crowds outside of Bihar during his visit
to the Bombay region in January. Although the
march is slated to be "non-violent," there is the
possibility of clashes with security forces.
Mrs. Gandhi Reacts
So far, Mrs. Gandhi has not taken direct
action to impede Narayan. The two held talks last
fall, but her determined support of the Bihar
government and his decision to extend his movement
to other states ruled out an early solution. Mrs.
Gandhi must be cautious in her criticism-of Narayan,
as he has many supporters within the Congress Party
itself.
The focus of Mrs. Gandhi's recent speeches
indicates that she is now primarily, concerned
about Narayan's impact on the frustrated urban
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middle-class. She is attempting through speeches
and interviews to identify the Congress Party with
stability, democracy, and moderate economic poli-
cies, a sharp contrast to her fiery oratory of the
1967-71 period.
She depicts the opposition as radical, vio-
lence-prone, and anti-democratic because of its
calls for the ouster,of elected governments. Her warning
that the opposition may be anti-secular is aimed at
the sizeable Muslim minority and the lowest classes
who have traditionally looked-to Congress for
protection. As usual she accuses unnamed foreign
interests of supporting a conspiracy to topple her.
Prospects
The impact of the march on parliament next
month will probably guide Narayan's future stra-
tegy. He may concentrate on building grassroots
support, or he could move the conflict into a new
potentially explosive phase by going on a hunger
strike to force concessions from-the government.
On the other hand, Narayan's campaign could
easily founder. He is a known to be a poor admini-
strator and has been involved in numerous short-
lived campaigns to revolutionize Indian society and
instill a greater sense of morality in public life.
Narayan might suddenly withdraw because of ill
health or disgust with the material aims of his
supporters. The urban-oriented students picked as
his vanguard are not likely to be enthusiastic
about work in the villages.
Mrs. Gandhi, a tough and shrewd politician,
probably expects that this opposition coalition, like
previous ones, will fall apart. This summer's
monsoon if significantly better than last year's
would ease the tight food situation'and help
reduce anti-government sentiment.
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Meanwhile, Mrs. Gandhi is trying to revitalize
the Congress Party which grow weak and flabby in
recent years as she concentrated political power in
her own hands. A new party president is shaking up
state units and beginning preparations for the next
election. Mrs. Gandhi's political instincts prob-
ably will urge her? to continue treating Narayan
with kid gloves while waiting for the incongruities
within the opposition to take their toll on present
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Bangladesh
Ineffective Economic Policies Continue
Despite Murjib's New Powers
President Mujibur Rahman justified his move
last month to a more authoritarian presidential
system by proclaiming it would enable him to deal
more effectively with the country's pressing problems--
particularly its deteriorating economy. Since then
he has revealed no new plans to alter the country's
economic policies. Even after consolidating
his new powers, Mujib will be'unlikely to-make significant
changes in economic policy.
Mujib is typically slow to act and will remain
reluctant to abandon the present complex system of
price marketing controls. A few minor trade controls
have been liberalized over the past three months,
but this does not signal a change in the government's
underlying policy of detailed regulation of prices
and marketing. Changes were made only in response
to specific bottlenecks. For example, imports of
spare parts for unauthorized rice and flour mills
were legalized because the government believed that
the inadequate milling capacity of the authorized
mills had hampered rice procurement. In other stop-
gap moves, the government modified restrictions on
the sale of some types of yarn and cloth because
local mills were overstocked. It also lifted import
restrictions on Salt and some raw materials to ease
shortages intensified by the curtailment of smuggling.
Under pressure from foreign aid donors, Dacca has
agreed to a World Bank study of import procedures,
but improvement is still far off.
Feb 20, 1975
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value of confiscated goods range from $1.5 million
to several tines that figure. Seized imports have
consisted of luxury products as well as industrial
spare parts and, basic consumer items. Outgoing
contraband consisted of numerous small shipments of
foodgrains and fish, and a few lots of gold and
silver worth several thousand dollars each.
If the goods seized to date represent smuggling
patterns, illegal trade constitutes only a minor
economic loss. Farmers and users of imported goods
benefit at the expense of rice consumers and gover-
ment revenues. Smuggling also provides a quick
channel for getting critically short spare parts.
For this reason, even if the anti-smuggling campaign
were successful, production would not increase.
Smuggling on a very large scale, however, could
generate capital flight and price distortions suf-
ficient to harm the economy even further. In the
past, some observers have estimated that the illicit
grain and raw jute trade amounts to several hundred
thousand tons a year. Recent contraband seizures
do not support so high an estimate, but they may be
misleading. The seizures could have been affected
by selectively lax enforcement, a temporary reduction
in shipments, or seasonal patterns in the trade.
The government has increased its efforts to
purchase rice from the current harvest. The procure-
ment price is higher than in the past, but the
farmers would benefit more from a free market.
For the first time,' farmers throughout the
country--not just those in border areas--are required
to sell at least half of their "surplus" paddy pro-
duction to the government. To facilitate government
procurement, severe restrictions have been placed
on trade and transport of grain as well as on the
stocks that may legally be held by rural households
and by wholesale and retail traders.
As of mid-January, Bangladesh officials expected
to procure about 120,000-140,000 tons of rice--twice
as much as last year, but less than a tenth of the
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farmers' marketable surplus. The government had
hoped that increased domestic procurement could
replace a substantial part of the two million tons
of grain imports needed to supply the subsidized
urban ration system, but this will not now be
possible.
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Farmers and local officials have a persuasive
reason for underreporting agricultural production
now that farm "surpluses" must be sold to the gov-
ernment. As a resvilt, the data base for estimating
foreign aid requirements will become even more
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