that Britain should honour her financial commitments. The question
remained as to how quickly the balances would be released, in what form
and at what exchange rate. The last question was resolved by retaining the
exchange rate link between the rupee and the pound that had been set by
imperial statute (the rupee–sterling link, in fact, outlived Nehru); but the
rest was the subject of much hard bargaining.
Inevitably, it was Stafford Cripps, who became Chancellor of the
Exchequer in November 1947, who had to negotiate with India. The
cordial relationship between Nehru and Cripps had by now been replaced
by irritation on Nehru’s part. ‘[T]he India Office crowd and the British
Cabinet still move in the old grooves,’ Nehru had remarked in May 1947.
‘They are completely out of touch with recent developments in India, but
they consider themselves experts who can lay down the law, especially
Stafford Cripps.’^31 Both in 1942 and in 1946, Cripps had appeared not
to have dealt with him honestly, and attempts now to put pressure on
India to accept British terms were not appreciated. During the bargaining
over the balances, Britain threatened to expel India from the sterling
area, but it was always doubtful whether this was a plausible threat.
India would then have had no compunctions about spending in dollars,
and Britain would have had no authority to prevent this. Moreover, it
became clear that British military and strategic considerations required
India to remain in the Commonwealth, which meant that an overuse
of blackmail was counterproductive. (At the time, Britain was looking at
the possibility of having airbases in Northern India as ‘forward bombing
centres’ to target the Soviet industrial heartland; eventually, Peshawar in
Pakistan won the privilege of hosting these.) The eventual agreement in
June 1948 indicated the superior bargaining power derived from actually
holding the money in one’s hands: the gradual release of a scaled-down
sum from the balances, with only a small part of this to be in dollars
was secured by the Indian finance minister, Shanmukham Chetty, and was
widely criticised.
The British still needed the Commonwealth as an international power
centre and an economic bloc, remodelled in the ways suggested by
Conservatives like Leo Amery so as to appear to be a partnership of equals
(this was a difficult task while many countries remained formal colonies,
but sought to be achieved by the claim that these colonies were to be
‘developed’ before they were fully trained for and capable of freedom).
By 1943, it was realised that a post-war Commonwealth was the only
INTERLUDE – ENVISIONING THE NEW INDIA 163