That is quite true but all is not as it seems. It was regarded in intelligent circles as a plan to distance India from USSR and leave us hanging with neither a permanent seat nor a respectable reputation. Read on....
Today, 55 years later, as New Delhi runs from pillar to post for a permanent member seat in the UNSC, a review of Nehrus decision to go by Moscows persuasion and plea in favour of China for a permanent UNSC seat could be of great significance. Perhaps a leader with lesser understanding of the then international scenario would have jumped to the conclusion of saying Yes to the US offer and possibly would have landed up biting dust. The crux of the matter at that point of time was the Cold War. The US, UK and France openly belonged to one block while of the Warsaw Pact countries USSR was the sole member in the UNSC. Moscows gameplan was obviously to have another Communist power as a permanent member in the UNSC to face the challenge of the NATO even within the security council. And hence the pressure on New Delhi to surrender the US offer in favour of China.
Any observer with adequate knowledge of the raging Cold War and the international scenario in 1955 would agree that Washingtons offer of a permanent UNSC seat could never ensure India a cake walk into the Security Council. With every permanent member enjoying veto power it was clear as daylight that any proposal for the fifth members name made by a member of one block would be vetoed by the member(s) of the other block. Accordingly, in the face of a standing US offer, possibly Nehru could see through the Soviet gameplan of vetoing any members name till China made the entry into the Security Council as the permanent member from Asia. Perhaps realizing a near impossible task of making way to the Security Council with the two Cold War blocks calling the shots in tune with their confrontation, Nehru possibly could clearly visualize the ineffectiveness of the US offer and hence turned down the offer.
Another reason why Nehru possibly rejected the US offer could possibly be to maintain friendly relations with all countries, regardless of blocks, or at least not to incur the wrath of any country, more particularly powerful nations. Perhaps Nehru was highly convinced that the American gameplan would come a cropper, leaving India to bite dust while relations with the Soviet Union and China would deteriorate to an all-time low. With the situation ensuring an almost certain fall and ignominy, it was only natural for New Delhi to reject the US offer. After all, any fool can aim for the moon, but the wise and the intelligent would always consider if a greater risk of crash-landing or still worse nose-landing could be on the cards. And certainly Nehru did not want to see India crestfallen after fighting a losing battle.
The Sentinel
You see Nehru, being the shrewd politician he was, politely declined, ensuring we had a trustworthy relationship with USSR and amiable one with China. Never forget that in 1971, the US sent a nuclear carrier into the bay of Bengal to force India to give up the war against Pakistan and the nuclear submarines immediately dispatched from Russia are what sent them packing. This would have never happened if we had even tried to get that seat
The security council seat is something that will smoothly slide into our hands with our current position. We could not have got it that time and even if we did, the world would not have respected a newly independent "third world country" for it. Besides, we had the Russian veto whenever we really needed it. Now India is in a much more powerful place to flex the muscle that comes with a permanent SC seat. we are also quite popular , remember we won the recent non-permanent seat with 187 of the 191 member states in the General Assembly backing us.
Some things taste much more sweeter when we earn them rather than when they are gifted to us. Nehru may have been flawed but his economic policies contributed to our current growth and he was smart enough to help secure our independence. I would certainly not call him one of the worst Prime Ministers we had, he was quite an intelligent lad.