891.03/5–1051: Telegram
The Ambassador in India (Henderson) to the Secretary of State
3165. 1. Have delayed preparing statement requested Deptel 1800 May 21 pending clarification GOI attitude re proposed food grain grant aid. Statement by Nehru in Parl this morning expressing preference loan2 renders it difficult me prepare convincing statement without [Page 2162] more knowledge than that at present my possession. GOI has not yet asked be included any fon aid program and Nehru’s statement might be taken indicate India does not desire grant aid under conditions on which we likely insist. In view our experiences in connection food grain during last 4 months, I cannot recommend attempt be made persuade Cong incl India any aid program for econ development unless Nehru after understanding conditions under which we propose extend such aid, shld assure us in advance GOI needed and desired it.
2. It might be argued India cld be granted extensive loans rather than grants in framework our contemplated aid program. Altho India’s fon exchange position materially improved during recent months, we believe this improvement only transitory character and not reflection improvement in basic economy country. We cannot, therefore, support with much conviction any aid program which will materially increase India’s indebtedness US altho further loans wld probably be of considerable aid India at present. India wld probably not find it easy to even pay off loan for purchase 2,000,000 tons food grain.
3. In view above, I shall postpone preparation statement suggested until I hear further from Dept. Inclined believe my appearance before Cong comites in present circumstances wld serve no useful purpose and hope Dept can discourage such comites from calling on me.
4. If Dept desires me endeavor ascertain Nehru’s attitude re inclusion India in fon aid program, wld appreciate instructions containing appropriate background info.
- Telegram 1800 to New Delhi, not printed, requested Ambassador Henderson to prepare a statement justifying economic aid to India in fiscal year 1952 for possible use in Congressional hearings (891.03/5–251).↩
- Prime Minister Nehru stated in Parliament on May 10 that although the Indian Government would agree to the terms of either the House or Senate bills, it preferred the simpler terms of the House bill, which put the program entirely on a loan basis. Referring to provisions in H.R. 3791 calling upon India to make partial payment for the grain supplied in the form of raw materials, Mr. Nehru stated that India would gladly supply those materials that were available and could be spared, but emphasized that “it is a fundamental part of our foreign policy that such material as is particularly related to the production of atomic or like weapons should not be supplied by us to foreign countries.” (India, Parliamentary Debates: Official Report, 1951, vol. xi, col. 359) Telegram 1894 to New Delhi, May 12, reported as follows: “Press reports interpreted Nehru food statement to mean Nehru prefers loan. Reaction on Hill followed this line despite full text which reached them promptly and Senate leaders consider Committee bill impossible passage in view Nehru statement. Senate supporters bill now revising to make it conform House bill, specifying all loan. Bill may come up for Senate consideration Monday, May 14. House bill may be considered later in week.” (891.03/5–1251)↩