INDIA: The Flabby Giant

India’s Prime Minister Jawaharlal Nehru is not used to heckling. But the audience he faced day after day in New Delhi’s Parliament House was the most critical he had faced for years. For India’s vaunted $10.8 billion second five-year plan, launched with high hopes last year as an answer to India’s ancient poverty, was in desperate trouble, and every legislator was demanding: “What do we do now?” Nehru had no answer, except to insist that “the basic structure” of the five-year plan would be carried out. Demanded the M.P.s: “How? How?” Last week, after ten days of rambling debate, Nehru at last admitted: “Nothing definite can be said . . . since the extent of our external resources still is not known.”

In short, everything depends on foreign aid. India, with the world’s second-largest population (380 million, v. 600 million in China) and seventh-biggest area (1,300,000 sq. mi.), is an international giant. In a vast belt running across four of its northeastern states lie an estimated 20.8 billion tons of iron ore and 26 billion tons of coal. Indian steel production last year was 1,900,000 tons (v. Red China’s 4,000,000 tons). Indian exports—manganese, tea from Assam, jute from Bengal and cotton cloth from Bombay and Madras—will earn about $1.3 billion this year.

But India is a flabby giant. Only one Indian in six is literate, and in the nation’s 500,000 villages there are only 300,000 schools. Per capita income is $59 a year (v. $237 in Japan, $2,013 in the U.S.). Nehru remarked not long ago that nearly 75% of the electric power generated in India is produced by burning cow dung.

The Muscle Builders. Ever since the dawn of independence in 1947, Nehru and his government have been working to strengthen India’s economic muscles. Between 1951 and 1956, India’s $5 billion first five-year plan increased the country’s total agricultural output 18%. With the second five-year plan, New Delhi’s economists hoped to raise per capita income to $69 a year, and double electric power output. Above all, they planned to treble steel production, thereby give India the heavy industry that all the world’s underdeveloped nations yearn for as the badge of true economic independence.

In the light of India’s needs, these goals were none too ambitious. If every development scheme now on the drawing board could be carried out, the Indian peasant would still be eating 500 fewer calories a day than the average American man.

The Assumptions. From the outset, the plan was based on assumptions that were more hopeful than realistic. One assumption was that the Indian peasant would somehow produce more than he has in the past. He has not.

Another was that India’s exports would prosper and earn more foreign exchange. They have not. In London last week there were whole warehouses full of unsold Indian tea. Increasing competition from Japan has prevented any significant increase in foreign sales of Indian cotton goods. The jute industry, faced with competition from Indonesia and Pakistan, is so deep in the doldrums that more than 10% of India’s looms are being held idle in an attempt to maintain world jute prices.

A third assumption was that between 1956 and 1961 India could count on getting at least $1.6 billion in foreign aid. Proudly, the Indians asked for loans, not grants. A month ago Indian Finance Minister T. T. Krishnamachari signed an agreement with the Soviet Union for a twelve-year $125 million loan, and last week West German Economics Minister Ludwig Erhard was on the verge of okaying $143 million in credits toward construction of a new steel plant in iron-rich Orissa. Other loans may come from Japan and the Colombo Plan nations.

All of these arrangements, firm and tentative, would at best net India $700 million. But to pay for the imported steel and equipment needed to complete even the hard core of the plan, India must have still another $500 million to $600 million in foreign aid within the next 18 months. Nehru makes no secret of the fact that he is looking to the U.S. to fill this gap.

Drainage & Drought. A month ago, in a desperate gamble on international credit, India released the sterling reserves held in London to back its currency, made them -available to pay for imports essential to the plan. Today those reserves are down to $666 million, and are draining away at the rate of $16 million a week.

By cruel coincidence, nature has dealt India a brutal blow. Across the north-central farm belt in recent weeks some 4,000,000 tons of grain have been lost in the worst drought to hit India since 1951. Just to keep the 25 million people in the drought area alive, India will have to import an additional 2,000,000 tons of grain, at an estimated cost of another $100 million in foreign exchange.

There are also problems of India’s own making. From the start, the second five-year plan was badly administered. New projects popped up like toadstools, and for months half a dozen uncoordinated ministries bought “plan equipment” without bothering to inform the Finance Ministry what they were buying or how much they were spending. Though India has explored less than 20% of its mineral resources, Indian politicians resisted importation of foreign geologists or engineers, arguing that “India must save its resources for itself.”

The Socialist bias of Nehru’s political philosophy, which expressed itself two months ago in a tax on capital assets, discourages private industry, foreign and domestic. Said leading Indian Industrialist G. D. Birla: “As things stand now, there is not the slightest possibility of raising any sizable capital in India.”

The Pruning. Faced with these grim prospects, Nehru’s brain-trusters last week were pruning whole sections out of the five-year plan. Instead of 8,000,000 new jobs, the planners now hope to create a mere 5,000,000. Instead of an increase of 15 million tons in grain production, they now hope for 10 million—far short of enough to keep pace with India’s 5,000,000 yearly births. Power and electricalequipment projects have been dropped. To save foreign exchange, the government has slapped strict import controls on luxury goods. Despite these measures, the huge Rihand hydroelectric dam in Uttar Pradesh stands useless for lack of $8,000,000 to buy electric generators.

With every project abandoned or deeply modified, India moved one step closer to political upheaval. The five-year plan is one of the few campaign arguments Nehru’s sagging Congress Party still has. If the plan fails, the people of India, blindly determined to raise their living standard by one means or another, are in a mood to rise up against the Congress Party at the polls. The chief gainers will be not Nehru’s democratic opponents, who are few and disunited, but India’s burgeoning Communist Party, which has already been voted into power in the state of Kerala (TIME, April 1 et seq.).

Pride & Practice. India, with its touchy pride, is a cantankerous and exasperating nation to deal with. Jawaharlal Nehru, who denies the existence of international Communism and can solemnly equate U.S. troops in Japan and Korea with Russian troops in Hungary, sometimes seems intent on proving to the West that he is a hard man to like. But for all his faults, Nehru is a practicing democrat. Throughout Southeast Asia today new nations, hungry for economic growth, are eying the progress of democratic India and Communist China. If India falls too far behind, Indians will be tempted to switch to China’s totalitarian methods; if they do, nations on India’s flank, such as Burma, Ceylon and Pakistan, might be drawn by their massive neighbor into the path toward Communism.

The U.S. can ill afford to let India lose the race, and does not intend that it should. The Agriculture Department has opened negotiations to barter U.S. surplus wheat for Indian manganese. More important, the Eisenhower Administration is earnestly exploring ways and means of raising the aid money that would give the stumbling giant time enough to find its own strength.