Sardar‘s greatest role in the integration of states was his able handling of the Hyderabad crisis. Most of the states acceded to India, Hyderabad was a landlocked state that stretched over 82,000 square miles (over 212,000 square kilometres) in southeastern India. While 87% of its 17 million people were Hindu, its ruler Nizam Osman
Ali Khan was a Muslim, and its politics were dominated by a Muslim elite. The Muslim nobility and the Ittehad-ul-Muslimeen, a powerful pro-Nizam Muslim party, insisted Hyderabad remain independent and stand on an equal footing to India and Pakistan. Accordingly, the Nizam in June 1947 issued a firman announcing that on the transfer of power, his state would be resuming independence. The situation deteriorated further in 1948. The Razakars (“volunteers”), a militia affiliated to the Ittehad-ul-Muslimeen and set up under the influence of Muslim radical Qasim Razvi, assumed the role of supporting the Muslim ruling class against upsurges by the Hindu populace, and began intensifying its activities and was accused of attempting to intimidate villages.
The Hyderabad State Congress Party, affiliated to the Indian National Congress, launched a political agitation. Matters were made worse by communist groups, which had originally supported the Congress but now switched sides and began attacking Congress groups. Attempts by Mountbatten to find a negotiated solution failed and, in August, the Nizam, claiming that he feared an imminent invasion, attempted to approach the UN Security Council and the International Court of Justice.
India now insisted that if Hyderabad was allowed to continue its independence, the prestige of the Government would be tarnished and then neither Hindus nor Muslims would feel secure in its realm. The date for the attack was fixed as 13 September, even though General Sir Roy Bucher, the Indian chief of staff, had objected on grounds that Hyderabad would be an additional front for the Indian army after Kashmir.
On 13 September, the Indian Army was sent into Hyderabad under Operation Polo on the grounds that the law and order situation there threatened the peace of South India. The troops met little resistance and between 13 and 18 September took complete control of the state. The Nizam was retained as the head of state in the same manner as the other princes who acceded to India.He thereupon disavowed the complaints that had been made to the UN and, despite vehement protests from Pakistan and strong criticism from other countries, the Security Council did not deal further with the question, and Hyderabad was absorbed into India.
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