On the eve of Mr. Callaghan’s arrival in New Delhi, Britain has given India five grants totalling £144 million (Rs. 228 crores), the biggest ever to this country by London. This is a gesture of goodwill which no one here can fail to appreciate. This is so specially because while it is only in the past few months that Britain has overcome its own enormous balance of payments deficits, India has been building up comfortable foreign exchange reserves for the last three years. These are not “embarrassingly” large, as some people have described them rather carelessly, for they can be quickly depleted if this country experiences a year or two of poor monsoon, as it easily can in view of the past experience of the five-year cycle comprising two good, one or two indifferent and one or two bad years, and has to import food on a substantial scale. But basically India is and is likely to remain in a position to pay for what it needs to import and can absorb without disrupting its own production capacity in agriculture and industry. In plain terms, India cannot, at least at present, appeal, as it could and did in the past, for aid on the plea that its growth would otherwise grind to a halt and that hopelessness would spread and bring democratic institutions into disrepute. In its search for aid it has to depend essentially on the goodwill of the donor government and their appreciation of its long terms needs on the one hand and their own enlightened self-interest on the other.
In view of – not in return of – its generous aid, Britain is wholly justified in expecting India to buy more of its products. But its goods have to be competitive with those of other countries if its aid is not to become a thinly disguised method of subsidizing its exports. This they have not been for years in several cases. Indeed, that is the main reason why despite its long familiarity with British brand names and the respect these have commanded in the Indian market, this country has been diverting its purchases elsewhere. Only recently it placed an order for six ships with British shipyards. But it could do so only because it was willing to pay five to six million pounds sterling more for each vessel than it would have had to if it had shopped in Japan and Yugoslavia, for instance. New Delhi may deny that it has accepted this substantial loss because the British government was unhappy that India was not utilizing its aid and not buying enough in the United Kingdom. But what other explanation can there be for its otherwise strange behavior?
In the present case it is perhaps a mere coincidence that the report of the agreement on the magnificent British grants should have been accompanied in the columns of this paper (January 5/6) by another which says that the question of India buying defence equipment from Britain, specially the Jaguar fighter bomber, will figure in the talks between Mr. Callaghan and Mr. Desai. From this it will be unfair for anyone to conclude that there is a hidden link between the two. But it is possible that if the Indian authorities have decided that they have to go in either for the British Jaguar or its Swedish counterpart, the Viggen, they may favour the former out of a sense of gratitude to London, though Sweden, too, has been giving aid to this country on the same grant basis. It will be wrong for the government to be so influenced but it will not be unusual, specially after the order for six ships. What needs to be questioned very strongly is the assumption that India needs deep penetrative aircraft and can also afford them.
The cost is astronomical, between 50 million to 60 million dollars a piece, the total being around two billion dollars for two squadrons of 15 planes each. This is clearly a sum which no government can wish to spend on a non-productive item unless it suffers from delusions of grandeur – the desire to be recognised as a great power is another name for the disease – or unless it reckons that it faces a threat to the country’s security. By any reckoning India has not faced such a threat since the breakup of Pakistan and is not likely to face it in the foreseeable future in view of China’s and Pakistan’s almost total preoccupation with urgent domestic problems and President Carter’s helpful decision not to permit the sale of 100 A-7 aircraft to Islamabad. If India buys any deep penetrative aircraft it will only make it difficult for him to resist Pakistan’s pressure to permit the sale. And it hardly needs to be emphasized that a “favourable” decision on his part will stimulate an arms race which a fortuitous combination of circumstances has so far helped to avoid. Mr. Desai must think again before he allows himself to be persuaded by his air force top brass and to be charmed by Mr. Callaghan.