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268 Minute from Shaw to Casey

Canberra, 3 June 1954

Colombo Plan—Future Planning

In February this year (Minute of 22/2/54)1 it was estimated that our total disbursements for Economic Development under the Colombo Plan would be �9,800,000 by 30th June, 1954. It now appears that the actual figure will be somewhat lower at about �9,300,000. This means that in order to spend our total pledge of �31,250,000 in the time originally estimated we would have to accept commitments totalling �21,950,000 falling due between 1st July, 1954 and 30th June, 1957.

2. Spending at such a rate may prove to be impracticable because of the limiting factors such as—

(a) uncertainty that recipient governments will frame requests which we consider worthwhile to that magnitude within the period;

(b) our own capacity to supply within the period the capital goods required because of manufacturing delays or other factors;

(c) budgetary appropriations authorised by the Government in the future.

3. So far as point (a) is concerned, recipient governments are planning their economic development more actively, and we may well expect an increasing volume of properly investigated, worthwhile requests. On point (b) we must expect an increasing momentum whereby requests which have been received, processed, approved and in the course of supply, require a much greater volume of expenditure than in the early years of the Plan's operation. As to (c), there is justification for our budgetary appropriations for international aid being substantially higher than for the year 1953/54. We should be careful, however, not to seek appropriations in excess of our estimate of worthwhile requests within our physical capacity to supply. Since our minute of 22nd February we have received further requests from Indonesia and there has been some modification of the Indian requests which involve an increase in total possible expenditure for that country.

4. On such a basis, our rough estimate would be that we should not seek for economic development more than perhaps �5,700,000 for 1954/55 as compared with �3,000,000 for 1953/54. However, in order to allow for the inevitable momentum of the programme, and for us to plan ahead with recipient countries for an increased programme over the coming years, we should have some understanding that economic development needs in the years 1955/56 and 1956/57 would require about �6,000,000 a year. Even then, a further extension of the period of the Colombo Plan would be required for us to expend our original pledge.

5. The following table gives details of the total forward programme at the present time including those items for which we have no firm commitments as yet as well as a number of items which we' have not previously submitted for your consideration. These latter are indicated by footnote references. The years in which commitments would need to be liquidated are also shown.

PROJECTYEARS IN WHICH FUNDS
ARE REQUIRED
TOTAL
Pakistan1954/51955/6
& LATER
Diesel Locomotives600,00050,000650,000
Telecommunications/ Broadcasting750,000-750,000
Thai pumps500,000-500,000
Thai pumps — screens400,000400,000
E. Bengal pumps110,000110,000
Tube Wells — Punjab350,000650,0001,000,000
Pipe Manufacturing Plant180,000180,000
Tractors (Freight)25,00025,000
India
Ramangundam Steel Rails100,000100,000
Ramangundam Switch Gear98,00098,000
*1 Tungabhadra Earth Moving1,150,0001,000,0002,150,000
All India Radio50,000500,000550,000
Diesel Rail Cars100,0001,100,0001,200,000
Ceylon
Machinery & Irrigation Equipment250,000250,000
Indo-China
Livestock & Agricultural Equipment200,000200,000
Indonesia
Marine Diesel Engines210,000200,000410,000
*2 Diesel Hydraulic Locomotives150,000850,0001,000,000
Civil Aviation Equipment85,000-85,000
*3 Transport Buses200,0002,600,0002,800,000
*4 Telecommunications75,000145,000220,000
*5Trucks and Cranes60,000-60,000
*6Small scale cottage industry projects70,000200,000270,000

Note *1 Note India have now withdrawn their request for Hydro-electric equipment valued at �1,000,000 replacing it by a request for additional earth moving equipment valued at �1,500,000. Preliminary examination indicates that we should be able to supply.

*2 This item is not firm but we expect to receive a request by about September 1954.

*3 This request is for 600 diesel engined 45 passenger buses

*4 Telecommunications equipment
This equipment is required for use with the Shipping Service of the Ministry of Communications. It includes 15 miles of armour plated ground telephone cable, 30 telegraph/telephone sets, 5 medium wave telegraph senders, 5 short wave telegraph/telephone sets, teleprinters morse transmitters and morse keyboards.

*5 Trucks and mobile cranes
The Ministry of Communications also requires trucks and mobile cranes for its Harbour Service. The request is for 10 fork lift trucks and 15 motor trucks ranging from � ton to 5 tons. Two mobile cranes have been requested.

*6 Small-scale industries
The request for equipment needed to set up these six factories is the result of an investigation by a United Nations Technical Assistance mission and follows the adoption by the Government of a plan to increase industrialisation in thickly populated areas by the introduction of improved techniques in small-scale industries already established. The equipment requested includes, in addition to more or less specialised milling, grinding, cutting and shredding machines five 35–40 KW generators and one 25 KW.

6. On the basis of the above programme the country positions would then be:

SPENT TO 30/6/541954/51955/6 & LATERTOTAL
India4,488,0001,498,0002,600,0008,586,000
Pakistan3,688,0002,915,000700,0007,293,000
Ceylon958,000250,000-1,208,000
Indo-China-200,000-200,000
Indonesia201,000850,0003,995,0005,046,000
9,325,0005,713,0007,295,00022,333,000

7. The following table2 indicates the residual sums for which further expenditure needs to be planned based on the theoretical partition of our aid which was discussed in our minute of 22nd February referred to in paragraphs 1 and 3 above.

THEORETICAL PARTITIONEXPENDITURE
EFFECTED &
PLANNED
BALANCE OF
FUNDS
OUTSTANDING
India36%11,1608,5862,574
Pakistan28%8,6807,2931,387
Indonesia28%8,6805,0463,634
Ceylon6%1,8601,208652
Indo-China2%620200420
31,00022,3338,667

(Note: this calculation allows for a contingency reserve of �250,000)

8. With reference to the balance of funds outstanding according to the above calculation it may be added that:

India may be expected to formulate requests within its development programmes which would absorb the residual �2 � million;

Pakistan is in the process of presenting further requests for rather more than �1� million although all of these maybe acceptable to us; all the indications are that liquidation of the residual amount will present no problem however;

Ceylon, we know, would seek a higher allocation than the theoretical figure shown in the above table and are formulating lists of equipment now for further expenditure;

Indo-China is a doubtful case for consideration at this stage but the total of the items Vietnam alone would like to obtain from us would easily absorb the outstanding balance;

Indonesia has been slow to seek aid but information from the Australian Embassy in Djakarta suggests that this situation will change after September when overall planning of development is expected to reach better definition.

Future budget appropriation

9. Our tentative estimate of funds required for the financial year 1954/5 is �5,700,000 leaving a balance for future years of �15,260,000. Of this probably �6,000,000 will be required in each of the years 1955/6 and 1956/7 leaving a carry over of �3,250,000 for the succeeding year 1957/8 against contracts made but against which deliveries will not have been effected.

Technical Co-operation Scheme

10. Our total pledge under this scheme is �3,600,000 of which it is estimated that �730,000 will have been disbursed by 30th June, 1954 leaving a balance of �2,770,000.

11. If this amount were to be expended over the remaining three years of the Plan we would need to find worthwhile projects at an average rate of �920,000 each year. This is not going to be a feasible rate at least in the near future. It is estimated that possible expenditure during 1954/5 will be approximately �485,000. The components of this estimate are as follows:

Training, individuals
groups and special visitors
�200,000
Experts40,000
Equipment
India
Mobile Cinema Vans�12,000
Cuttack Rice Research2,600
Kharajpur Institute9,500
Motor Launch — Nicobar Islands50,00073,100
Pakistan
Wireless Training Institute67,000
Thai Farm — Veterinary Hospital3,200
Hatching eggs100
Microscopes2,00072,300
Indonesia
Mobile Cinema Vans21,000
Trades School Equipment33,00054,000
Malaya and Borneo
Text Books — Sarawak3,700
Kuala Lumpur Technical College9,000
Ceylon
Clay boring and ceramic
laboratory equipment5,400
Radio transmitters22,50027,900
Miscellaneous
Bureau for Technical Co-operation
and publicity
5,000
�485.000

12. This would leave a balance of �2,285,000 for the remainder of the period of the scheme. The programme is expanding of course and taking into account the probably increasing demand on our resources by Indonesia and Burma we might aim at an expenditure of about �700,000 in 1955/6 and �850,000 in 1956/7. This would leave an amount of about �750,000 to cover commitments which would still be outstanding at 30th June, 1957 in respect of trainees still in Australia experts whose assignments were not completed and equipment on order by undelivered.

13. Summary of forward budgetary requirements

1954/51955/61956/71957/8
�m�m�m�m
Economic Development5.7006.0006.0003.250
Technical Co-operation485.700.850.750
Total6.1856.7006.8504.000

14. Your concurrence is sought to a departmental approach to the Treasury with a view to securing estimates for the financial year 1954–55 of such a nature as would cover a programme on the general lines of that set out above.

[NAA: A10299, C15]

1 Not published.

2 Figures for this table are: A '000.

Last Updated: 10 January 2017

Category: International relations

Topic: History