BASIC DEMOCRACIES

An important factor in the country's progress, particularly in East Pakistan, is the basic democracies program. Under Pakistan's Constitution, every 5 years one elector is elected by each group of 1,000 voters. These electors in turn help elect the provincial and national assemblies and the President. There were 80,000 electors in the last election. By the next election in 1970, there will be 120,000.

During the period between elections, the electors form union councils of 10 to 11 members, each council representing a cluster of villages. Not only has the basic democracies program helped create political stability, but the union councils have provided effective local leadership. For example, the councils have provided the leadership for the public rural works program through which villagers work together on development projects such as irrigation, drainage improvement, roads, bridges, and schools.

INDIA

The importance of India to U.S. foreign policy is a reflection in part of its population of 500 to 550 million, which is larger than the combined population of Latin America and Africa. It is a reflection also of India's geographic location vis-a-vis Communist China and its dedication to achieving progress and stability through the democratic process. Thus, we were especially interested in observing conditions in India and appraising, through firsthand observations, the prospects for future progress.

Most of our stay in India was spent out of New Delhi. After an initial briefing by the Embassy staff, we went to Benares in Uttar Pradesh State to see rural development. In this area we visited Mirzapur District to discuss self-help programs with locally elected officials, and saw an irrigation project using "lift" irrigation from the Ganges. Later we flew to Madras State for an inspection of the intensive agricultural development program in the Tanjore District. Here we saw a coordinated program of agricultural development including the use of new seeds, fertilizer, irrigation, and rice dryers. At Hyderabad we witnessed the fine contribution being made by Kansas State University in the development of the Andhra Pradesh Agricultural University.

We found in India a growing sense of self-confidence, which reflects in part India's recovery both militarily and psychologically from the 1962 attack by Communist China.

In contrast with the situation in Pakistan, where Kashmir is a burning issue, we found that Indian Government officials with whom we met do not see Kashmir as a major issue. India's relationships with Communist China were of much greater concern to Indian officials.

At the time of our visit to India, there were encouraging signs that India was beginning to recover from the shock of a 2-year drought in the 1965-66 and 1966-67 agricultural years, a drought so severe that the United States shipped the equivalent of a fifth of its wheat crop to India for 2 successive years.

There were some indications that the drought, because of its severity, was not without positive results. Several officials-both Indian and American stated that the shock of two successive disastrous droughts was so great that many people were convinced for the first time that the old, traditional ways would no longer suffice.

FOOD PRODUCTION

We saw more progress than we had expected in the crucial area of food production. The bumper crops we saw in the fields are now being harvested. A new record of perhaps 100 million tons of food grains is expected. While much credit must go to a favorable monsoon, the record production also demonstrates the success of new seeds, fertilizer, and new production practices.

To understand the significance of a record food crop in India, we must remember that famine has never been far away in that country. In fact, the United States shipped 47 million tons of U.S. food grains to India from the start of the food-for-peace program in 1954 through mid-1967 to help prevent famine during that period.

Today, India is beginning to demonstrate progress in the area of economic and agricultural development. If this progress is continued, it will enable India to achieve self-sufficiency in food grain production by the early 1970's.

This hopeful situation is a direct result of AID's efforts in India, coupled with India's new emphasis on taking the self-help steps necessary for real development to occur.

With the active encouragement of AID, the Indian Government has begun to liberalize imports and to permit market forces to make more of the decisions.

India increased its budget for agricultural development by onethird in 1966-67, and is now using the equivalent of nearly one-fifth of its foreign exchange earnings to import fertilizer and raw material for fertilizer manufacture. Total imports of fertilizer amounted to $315 million this year against $156 million 2 years ago and only $80 million in 1964-65.

Incentive price supports, which were adopted in 1965, were raised in 1967. Along with higher prices resulting from food shortages, the price supports offered a strong incentive to farmers to try out the new miracle seeds and spend extra money on such inputs as fertilizer, pesticides, etc.

AID's efforts tie into an overall development strategy, so as not to scatter or waste resources. The results of this approach are reflected throughout India's development. Fertilizer use has increased to over 2 million tons, a rise of more than 300 percent in 4 years. In 2 years the planting of new miracle seeds has increased to 13 million acres.

Private investment in tube wells has increased at an accelerating rate. Annual installations averaged 8,700 in the early 1960's, but last year alone about 26,000 were installed.

Three large fertilizer plants with foreign private participation (one American) have begun construction. Together with the private Indian-American plant which opened in December 1967, the new plants will nearly double India's fertilizer production capacity.

The results of a coordinated approach to development are readily seen in the Tanjore District of Madras State. At the intensive agricultural development program in Tanjore, AID, Ford Foundation, and the Indian Ministry of Agriculture cooperated in launching a package program that brought to bear all of the inputs needed for a breakthrough in rice production. These included not only the use on a double cropping basis of a new hybrid rice seed (ADT-27), which was developed in India, but the proper use of fertilizer and pesticides, and improved irrigation techniques. Also, rice dryers were built to handle the increased volume of rice.

The result in the Tanjore District was a threefold increase in the land planted to ADT-27 and a net increase in rice production of 450,000 tons.

As in Pakistan, India's farmers are responding to economic incentives. The difficulty now is to provide enough improved seed and

fertilizer. Also, improved credit programs must be implemented so that the desire for change is not blocked by lack of credit at reasonable rates of interest.

FAMILY PLANNING

While India is beginning to demonstrate significant progress in food production there continues to be an imperative need for effective family planning programs. India's population is now increasing at the rate of approximately 2.5 percent a year.

India has set for itself the ambitious but possible goal of a one-third reduction of the annual birth rate to 25 per 1,000 by 1975. This will require the involvement and understanding of 45 million married couples in the cities, towns, and 550,000 villages of India.

Thus far, nearly 10 percent of the 1975 goal has been reached. As a measure of its determination, the Indian Government has allocated over $41 million for this program in 1967-68, which compares with $18 million in 1966-67 and only $2 million in 1963-64.

RECOMMENDATIONS

As Pakistan and India progress in growing enough food for their people, both countries should work toward improved nutritional standards, still very low for most people. Experimental work is going on in India in introducing new fortified foods. This work needs to be extended. Furthermore, Pakistan and India should give increased emphasis to adaptive research so new seed varieties and techniques can continue to be developed to sustain the agricultural revolution.

Both countries have started to reduce administrative controls over their economies. We believe that further movement in this direction would be desirable. There is more room for greater reliance on market forces rather than Government direct controls to stimulate the whole development process by energizing individual initiative and involvement in development.

India's export performance is disappointing. It has not been successful in capturing its share of the growing world market. It must do better in the future, if it is to reduce its reliance on aid. Other underdeveloped countries-Taiwan, Korea-have found the right export formula and India must continue its search to find a set of policies to produce similar results.

Defense expenditures in Pakistan and India continue to be a matter of concern. Any upward trend in expenditures or any substantial purchase of major equipment by one country is likely to stimulate the other to respond in kind. We are persuaded that the strength and safety of both nations rest as much on the vitality of their societies and economies as on their inventories of military equipment. We would urge that each rupee of expenditure for defense be weighed on this scale.