1948/1949 - How a group of dedicated men facilitated Hyderabad's integration with India

September 1948-February 1949 was an eventful period for Hyderabad. The Indian Army entered the state on 13 September 1948. Maj. Gen. J.N Chaudhuri led the forces from Solapur in the west while Maj. Gen. Ajit Rudra led from Vijayawada in the east. On 17 September, the Nizam surrendered. Hyderabad had become part of India. Maj. Gen. J.N Chaudhuri was appointed Military Governor of Hyderabad.

A file in the National Archives once classified as "Secret" gives a lot of information on the work done by key officers of the government of India in the immediate aftermath of the surrender to ensure smooth integration of Hyderabad with India. The following account is from that file.

The states ministry under Sardar Patel spent the initial couple of months after the surrender to understand the major immediate tasks facing Hyderabad. It was realised that the two major immediate problems were the communist-led "peasant revolt" raging in the state and the poor financial position of the state.

To understand the causes and possible solutions to the peasants' revolt it was necessary to understand the pattern of land ownership and land revenue in the state. M. Seshadri, Election Commissioner, was given the urgent task of preparing a report on the subject. His report, prepared in a mere four weeks, mentioned that about 34,000 sq miles out of Hyderabad state's total area of 83,000 sq miles was "Non Diwani" – meaning it was not administered by the state. Of this, about 8,100 sq miles was sarf-e-khas – land directly owned and administered by the Nizam. The rest was controlled by jagirdars, paigahs, or samsthans who collected revenue and administered the land, though ownership of this land was also with the Nizam. It was the severe oppression of farmers by this aristocracy which had led to the peasant "revolt".

Parallelly, N. Dandekar, joint secretary in the states ministry, and G.K.S Sarma of the finance ministry (states) analysed revenues and expenditure of the state and came up with corrections to the budget prepared by the Nizam government. They also suggested ways to increase revenue.

V.P Menon, advisor to the states ministry (today referred to as the architect of integration of princely states with India), called meetings in Delhi on 16 and 16 January 1949 to define the goals and arrive at a strategy for tackling Hyderabad's pressing problems. Maj. Gen. Chaudhuri was present. So were several other senior officers.

In the context of law and order, Gen. Chaudhuri made an interesting remark in the meeting on 15 January. He said that it was difficult even to distinguish between a Congress worker and a Communist. This is understandable because razakars and private troops of samsthan rajas had also got involved in suppressing the farmers' revolt. Arya Samaj and Congress under Swamy Ramanad Tirth had been opposing communal atrocities by razakars. It was thus natural for them to side with peasants.

Gen. Chaudhuri felt that while more police from other states should be sent to Hyderabad and more police stations set up, a push must also be given to land reforms in the state. He felt that sarf-e-khas must be merged with diwani, i.e., the state government.

On 16 January the group approved Chaudhuri's recommendation. They set a series of goals.

• Nizam to issue a firman by 1 February 1949 announcing that he is giving up sarf-e-khas to diwani.

• Nizam to hand over Rs. 3 crores from his total cash reserves of Rs. 5 crores derived from sarf-e-khas income to the state – partly as reparations for Operation Polo, partly because the state's finances were run into the ground by his government, and partly to give a message to the public that the ruler is taking steps for the public good

• Nizam to loan his other reserves (not derived from sarf-e-khas) to the state, at a nominal interest rate of 1.25%, so that state can use that money without needing to borrow it commercially.

• Nizam to set up trusts to provide for his family.

In return for agreeing to this, the Nizam would continue to get Rs. 50 lakhs per annum (which he was anyway getting from diwani). In addition, he would get Rs. 25 lakhs per annum as compensation for the loss of sarf-e-khas. He would retain his palaces, buildings, and personal belongings (on condition that he makes an inventory of his assets) and a further Rs. 25 lakhs per annum would be paid to him for the upkeep of these properties. A total of Rs. 1 crore per annum.

V.P Menon then wrote to Sardar Patel giving him a description of the discussions. Sardar Patel approved the decisions taken.

Chaudhuri returned to Hyderabad and set to work. He met the Nizam on 22 January and gave him a letter with the government of India's proposals. His report to Menon describes the discussions as "heated". The Nizam claimed that he was being unjustly treated and threatened that if "ill treatment" continued he would disclose it to the international community. Chaudhuri told him that by doing so he would harm himself because his gross mismanagement of sarf-e-khas, the incomes accruing from it, and the suffering caused to the poor because of this would come to light. At another time the Nizam asked if the compensation would continue to be paid to the dynasty after him. Chaudhuri told him that it would be paid only to him during his lifetime and that he should make Trusts to handle the wealth for his heirs and dependents. In Chaudhuri's opinion, the Nizam was a "mental case" as far as money was concerned and wished to keep all money in his hands without forming trusts, even though this would leave problems for his heirs after him.

In the next meeting on 27 January, Chaudhuri discussed handing over balance from sarf-e-khas cash reserves and loaning other reserves to diwani. In a subsequent letter dated 1 February, Chaudhuri informed the Nizam that the government of India would add to the Rs. 1 crore per annum already offered by paying up to another Rs. 25 lakhs per annum to the two princes, two princesses, two grandsons, and the Nizam's brother. Chaudhuri requested him to accept the offer and issue a firman. He assured the Nizam that all the discussions would remain secret and that the firman would only say that in view of the changed circumstances, needs of the administration, and to have uniformity between sarf-e-khas and diwani, the Nizam had decided that the state government would take over sarf-e-khas as if it were diwani. The Nizam issued this firman on 5 February. Ordinances merging sarf-e-khas with diwani and abolishing jagirdari were promulgated soon after.

Thus, through the dedicated and sincere efforts of several men, a recalcitrant Sovereign was integrated into the Indian Union while preserving his dignity and enhancing his reputation, money was ensured for a new state's development, and the peasants' movement was brought to a satisfactory end.