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31. INDIA. In 1948 the Government of India purchased tapering annuities from the British Government out of its sterling balances at a cost of £148m. In 1955 Britain and India agreed that Britain would assume responsibility through a lump sum settlement for paying the bulk of India's expatriate pensions. Some pensioners who retired after 1955 were excluded from the agreement, together with some who though they retired before 1955 resided, and still reside, in India: it is difficult to estimate the cost of these pensions, but it may be of the order of £100,000 a year.
32.
It seems equitable that the £100,000 paid to pensioners not covered by the 1955 agreement should be taken over by HMG as part of any general take- over, and it is proposed
that this should be done. This leaves the question whether India would expect Britain to hand back a proportion of the £83m effectively transferred to HMG in 1955, representing the reduced capital value of basic pensions as at 1 April 1971, and whether HMG could agree to restore such a sum.
33. While the ODM recognise that the Indians might feel that they would be suffering from having paid, under the 1955 arrangements, for what was now to be offered "free" to others, it is thought that they could be reconciled to a decision not to disturb those arrangements. It could be pointed out that
though India's neighbours (Pakistan, Ceylon and Burma) would not be excluded from the scheme, they would not receive large benefits under it; that the ODM would certainly take into account the extent to which a country might benefit from the scheme in assessing its other aid "allocation", and conversely that in considering future aid to India, especially when additional resources were available, ODM would take into account that India had not benefited under the
pension scheme.
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34. The present view of the High Commission in New Delhi is that the 1955 arrangements should not be disturbed, that it is doubtful whether the Indians would seriously attempt to claim a transfer back to them of any of the capital sum acquired by HMG under the 1955 arrangements, and that any representations
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CONFIDENTIAL