CONFIDENTIAL
In these circumstances, it is clear that for 1972/73 and the following years the framework paper at present before the Defence and Overseas Policy Committee does not provide the right basis for our development effort. Alec Douglas Home has therefore agreed to withdraw it for revision. My officials will shortly be putting to yours, and to the rest of Whitehall, a revised draft framework for resubmission next month to the Committee.
I have meanwhile considered what could be done to bring the likely outturn for 1972/73 within closer reach of the approved programme. We have identified possible cuts of between £20-25 millions in individual allocations. I do not think that we can reasonably go further than this, because the new financial year is only a month away and we are left with very little room to manoeuvre. The continuation of existing commitments and policies has meant that a very large part of the programme is firmly committed. I am satisfied that this revised programme represents all the cuts that can be made without running out on definite commitments or creating. political or economic disturbance which would be disproportionate to the financial cut involved.
The situation naturally has serious implications for my previous proposals for finanong further relief and rehabilitation in the Indian Sub-Continent. In your letter of 21 January, you asked if we can make available from the year's programme not £20 millions (which I had proposed) but £30 millions for this purpose. In the changed circumstances, I am distressed to find that I have instead to withdraw my offer altogether. The revised framework figures shown to your officials provide a total of £66.2 millions of aid for the Sub-Continent. The circumstances described below make it unlikely that this total will be sufficient for ordinary aid requirements, let alone the exceptional demands for relief and rehabilitation which we must expect to receive.
The Indian programme of £58 millions broadly combines project aid to which we are committed and about the same amount of programme aid as for the present year. This is likely to be as little as India can fairly expect from us, and cuts in the amount of programme aid would adversely affect the tied licensing system. In the recent past, this has greatly contributed to the large increase in our exports to India. Moreover, these £58 millions provides us with no margin to use if the Indians accept our offer of £10 millions in mitigation of the textile tariff.
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The sums in the revised framework for Pakistan and Bangladesh represent minimal commitments. They take no account of our share in what may be a general international commitment
CONFIDENTIAL
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