8. Mr Gandhi's popularity has also suffered because of substantial
increases in the price of fuel and other staples in February.
increases led to widespread strikes.
The
Indo-British Relations
9.
There are deep and historic ties linking Britain and India. The
Indian community in the UK numbers over 700,000. Britain is India's largest bilateral aid donor with a programme of £108 million in
1986/87. All aid is in grant form. Britain is India's fourth
biggest commercial supplier with exports worth £897 million a year. India's exports to Britain were £433 million. Indo-British relations ought to be healthy but the presence in UK of a small group of Sikh extremists who demand an independent Sikh state in Punjab has caused a deep malaise in bilateral relations since the storming of the Golden Temple in Amritsar in June 1984 and particularly since Mrs Gandhi's assassination in October 1984.
Indian concerns are primarily focussed on Dr Jagjit Singh Chauhan,
self-styled "President" of the Sikh "Republic of Khalistan". Dr
Chauhan "predicted" Mrs Gandhi's assassination after the storming of
the Golden Temple in June 1984 and publicly recalled his
"prediction" after her death. These remarks caused deep offence in
India where it is widely believed that Dr Chauhan and other
extremists in the UK are actually involved in terrorism.
Economy
10. India has the second largest population of any country in the
world an estimated 740 million people in 1985 nearly half of
whom live below the official poverty line. It is at the same time the world's 15th poorest country and the 9th biggest industrial
economy. India is 70% self-sufficient in oil, 90% self sufficient
in foodgrain production and has entered the nuclear satellite age.
Mr Gandhi has accelerated his mother's policy of liberalising state controls over the economy, a policy which contributed to a rise in GDP growth from 3.5% in the 1970s to 5.2% over the period 1980-85
covered by the 6th Five Year Plan. The budget of 6 March last year
which made sweeping tax concessions to the corporate sector and
reduced penal taxation on high incomes was followed by a prolonged
boom on the stock exchange.
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