When India sent a ₹6 crore bill for the annexation of Hyderabad

The road into Hyderabad forks just outside Chandanagar, where a gleaming flyover now carries impatient motorists toward Miyapur. Traffic slows, then surges, as cars and scooters climb onto the bridge and speed into the city. Few among today’s motorists would guess that this exact spot once witnessed the dramatic finale of a princely State.

On a hot September afternoon in 1948, a line of Indian Army tanks and jeeps halted here. A jeep bearing the Divisional Commander’s pennant rolled ahead. From the opposite direction came a Buick staff car, stopping within 30 yards of the column. The war, if it could be called that, was over. At 4.30 p.m. on September 18, Commander of the Hyderabad State Army Major General Syed Ahmed El Edroos surrendered unconditionally to Major General J. N. Chowdhury, leading India’s forces.

The two men, once acquaintances when Gen. Chowdhury was posted in Secunderabad, then drove together to the cantonment. At the Secunderabad Club today, portraits of both generals still gaze down from the Colonnade Bar, reminders of the quiet dignity with which the Asaf Jahi dynasty’s 224-year reign ended.

Like the fractured narratives of Akira Kurosawa’s Rashomon, the story of Hyderabad’s annexation appears different depending on who tells it. Some remember betrayal, others liberation, still others the ruthless pragmatism of power. Yet beneath the political speeches, diplomatic manoeuvers, and rhetoric lies the stark military reality — the Indian Army’s ‘police action’ was brief because it had been meticulously set in motion for over six months. The one-year Standstill Agreement was signed on November 29, 1947 but India moved its armed columns within four months in March 1948.

The long wait 

Confidential files preserved in the National Archives reveal that Operation Polo was not a sudden thrust but the climax of a patient buildup. The first unit to reach Hyderabad’s 644-kilometre border on March 1, 1948 was the 740 Goods and Personnel Transport Company. Other units soon followed, pouring in from far-flung corners of India — Miransahib, Nawanshahr, Kirkee, Ambala, Kathua, even Srinagar.

Hyderabad’s Prime Minister Mir Laik Ali dismissed such a mobilisation as impossible. India, he reasoned, was too distracted by war in Kashmir and by the chaos of Partition to spare such resources. He was wrong. So too was General Roy Bucher, the British officer serving as Independent India’s first Commander-in-Chief.

On March 15, 1948, Gen. Bucher had advised caution. “The launching now of a comparatively large-scale and long-range offensive into Hyderabad State, on the lines of Operation Polo, in addition to all existing commitments, will constitute an over-burden, and will be strategically imprudent, to say the least of it.”

But Prime Minister Jawaharlal Nehru and his government pressed ahead. On March 31, 1948, the 1 Bihar Regiment reached the Hyderabad border. On May 5, the 9 Dogra Regiment joined. By May 20, the 2 Sikh Light Infantry, redeployed from embattled Srinagar, were also in position. The massed troops numbered 28,017 by August 1, 1948. 

Defence Ministry and Finance Ministry records show the care with which each troop movement was documented. While the Air Force was deployed, strict instructions forbade targeting civilian airports, including Begumpet. India wanted a swift victory, but not at the cost of civilian casualties.

Razakar menace

Earlier, events within Hyderabad provided India with ample justification for action. The Razakars, a paramilitary force loyal to the Nizam and his Majlis-e-Ittehadul Muslimeen supporters, had spread terror across the Dominion. Their raids and reprisals struck not only rural opponents but also urban residents of Secunderabad and Hyderabad.

One chilling account survives in Defence Ministry records. J. Iyyuloo, a waiter at the upscale Percy’s Hotel in Secunderabad, lived with his family in Nallagutta near fashionable James Street. On May 8, 1947, his three sons volunteered at a public meeting addressed by a leader advocating Hyderabad’s accession to India. Enraged, a mob of 75 Razakars stormed Iyyuloo’s house. They demolished it, looted valuables worth ₹4,000, beat his brother-in-law Anjaiah to death, and grievously injured several other relatives, including his daughter.

Such stories underscored the breakdown of civil order and the brutality of the Razakar campaign. By mid-June 1948, India’s patience had worn thin. ‘Operation Kabaddi’ was quietly set in motion, stationing elements of 1 Armoured Division along the Ahmednagar–Tungabhadra line.

This was also against General Roy Bucher’s May 1948 appreciation that specifically warned: “The move of HQ 1 Armoured Division and 1 Armoured Brigade to the south will weaken considerably our strategic reserves in the event of a deterioration of the situation between India and Pakistan.” Operation Kabaddi soon changed to Operation Polo and which was again changed to ‘Operation Caterpillar’ due to security reasons.

Balancing strategy and morality

For India’s leaders, the decision to act carried both strategic and moral weight. Defence Minister Baldev Singh made the government’s position explicit in a speech at the Indian Military Academy, Dehradun on September 11, 1948: “It was not the intention of the Government of India to wipe out the State. If, however, the State was wiped out, the Nizam’s Government would be responsible for it. What they wanted was a responsible Government in the State, the same way as in other States. All people in Hyderabad should have equal rights.”

Counting the costs

Hyderabad surrendered on September 18, 1948. On September 23, just five days after Maj. Gen. El Edroos laid down arms, the Defence Ministry issued instructions to track extra expenditure linked to Operation Polo.

By March 1949, meticulous tallies were complete. The Defence and Finance ministries together calculated that the “expenditure incurred by the Defence Services in connection with Hyderabad police action” was ₹598.76 lakh. This included ₹23 lakh spent on the Air Force, Nepalese contingents ₹34 lakh, and Provincial Defence Battalions.

The total, roughly ₹6 crore, covered deployments from May 21 to September 18, 1948. In the five days of fighting, 42 Indian soldiers were killed, including one officer. Twenty-four others were reported missing. 

Officials in Delhi argued that Hyderabad, not the Union budget, should bear the cost. The Defence Secretary justified this approach clearly: “In so far as the Hyderabad action is concerned, it seems to me justifiable to charge expenditure on some of the Defence Battalions which had to be raised and also expenditure which we had to incur on the loan of the Nepalese Battalions.”

As this debate was going on the Hyderabad government paid ₹3 crore as per a secret letter dated December 13, 1949. The Military governor of Hyderabad had earlier asked for more time as there was a shortage of Indian Government currency in Hyderabad.

The logic was financial as well as political. If the costs of military integration were absorbed by the Centre, other princely rulers might expect the same. By making Hyderabad pay, the government established a principle — the financial burden of resisting accession would not fall on the taxpayers of the fledgling Republic.

A war that was over before it began

When the final order to advance was given in September 1948, the outcome was never in doubt. The Indian Army’s months-long preparation had assembled an overwhelming force. Hyderabad’s forces, poorly trained and politically riven, could not mount a serious resistance.

Within 108 hours, the Nizam’s Army surrendered. The cost to Hyderabad was more than the ₹6 crore bill it received. The Asaf Jahi dynasty, which had ruled since 1724, lost its sovereignty. The Razakars were disbanded. Hyderabad became part of the Indian Union.

But even in triumph, the Indian government showed its characteristic caution. Its refusal to target Begumpet airport, its swift return of law and order, and its insistence on careful financial accounting all point to a broader vision — integration, not destruction.

Legacy of Operation Polo

The annexation of Hyderabad is often remembered for the drama of its military sweep, the political theater of the Nizam’s appeals to the United Nations, or the communal violence that scarred its aftermath. Less noticed, but equally revealing, are the yellowed files in government archives that show just how far India’s fledgling State machinery had matured in one short year of independence.

The decision to make Hyderabad foot the bill for its own annexation was both symbolic and practical. Symbolic, in that it placed responsibility squarely on a regime that resisted democratic integration. Practical, in that it relieved India’s strained Central budget during the chaos of Partition and war in Kashmir.

Seventy-seven years later, the flyover at Chandanagar thrums with traffic. Few notice the ghosts of the tanks and jeeps that once halted there. Fewer still know that Hyderabad, once the richest princely State in India, was handed a bill of nearly ₹6 crore for the five days that changed its fate.