Vol. 6 · pages 181–185

166 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES amends for this the Government of India re-distributed the shares in the Land Revenue to the advantage of the NorthWestern Provinces. In addition to this the Government of India gave to that Province a grant of 4 lakhs for the year 1897-8, to enable it to establish district funds on a financially independent footing, a result accomplished long ago in every other Province in British India. To give an equitable treatment to the backward as well as to the advanced Provinces, it realized that an unequal treatment was the only properway. It therefore adopted a less liberal attitude in revising the terms of the settlements with the more advanced Provinces of Bengal, Madras and Bombay. It allowed them a proportionately smaller increase of expenditure than the backward Provinces, as may be seen from the figures given above, and reduced slightly their shares in the revenues. On the occasion of this revision the gain to the Imperial exchequer was practically negligible. In 1877 its total gain by retrenchment amounted to 40 lakhs a year; in 1882 the Imperial Government was so very prosperous that instead of contriving for a gain it surrendered to the Provinces 26 lakhs of the annual imperial revenue. But in 1887 it resumed 63 lakhs and in 1892,46 lakhs. On this occasion however its gain was nil, for what it got from the advanced Provinces it gave to the backward ones. Just and liberal as the terms of the settlement were, the abnormal circumstances which disturbed the entire period of the settlement made such heavy demands on the Provincial resources that, ample though they were, they fell far short of the requirements of the Provinces. The famine of 1896 and 1897 affected all the Provinces, although in unequal degree. In the North-Western Provinces and Oudh, the Central provinces, and Burma the effect was most severely felt. In Madras, Bengal and the Punjab it was serious, and in Burma it was slight. On the other hand, the famine of 1899 and 1900 affected Bombay and the Central Provinces most severely, the Punjab very seriously and the rest of the Provinces slightly. And Assam, though unaffected by either of the two famines, suffered very severely from the great earthquake of June, 1897. Besides famine the plague was also making its ravages and taking its toll. As a result of these unforeseen calamities all the Provinces were forced to incur extraordinary expenditure on preventive measures, for which no provision was made in the standard of revenue fixed for the period of settlement. The expenditure on these unforeseen calamities being of an extraordinary nature was treated as imperial and

167 BUDGET BY SHARED REVENUES defrayed from the Imperial exchequer, but even this much succour did not prove equal to the necessity and the Government of India was obliged to make special grants-in-aid of the Provincial Revenues as shown on page 168. Thus the Government of India was not only obliged to pay for the cost of the famine, but to grant funds to restore equilibrium and to provide for useful public services held up or curtailed by the Provincial Governments owing to the extraordinary circumstances of the time.. All this aid from the Imperial Government was made available because of the very prosperous condition of the Imperial finances throughout this period. While it is better that governments in general should always be in penury, the surpluses in the Imperial Finance proved a timely resource, the utility of which was doubled by the commendable way in which they were spent. Besides giving them grants for useful public works the superfluous funds of the Imperial Government were utilized in carrying out the following additional measures to the relief of the Provinces : (1) Remission of Imperial Land Revenue Rs. 50,94,000 and reimbursement to the Provinces for their share remitted Rs. 59,81,000; in all Rs. 1,10,75,000. (2) The abolition of the pandhari tax in the Central Provinces, costing Rs. 7,000 a year. (3) The reduction of the patwari rate in Ajmere, from 10 per cent. on land revenue to 6¼ per cent.; the amount of the local revenue remitted was—Rs. 13,000, but the contribution paid to the local fund was Rs. 23,000. 1 Taking into account these various contributions in aid of Provincial Revenues, the following table is presented as indicative of the condition of the Provincial Finances during this period of settlement :— Provinces Provincial Surpluses or Deficits 1897-8 1898-9 1899-1900 1900-1 1901-2 1902-3 1903-4 Rs. Rs. Rs. Rs. Rs. Rs. Rs. C.P. ... (a) 12,288 —1,22,883 (a) 22,42,408 —705 —7,40,742 Burma ... 1,69.435 4,11,494 26,14.312 15,16,220 7,55,285 ... ... Assam ... —45,580 86,742 —8,15,488 —86,829 1,47,353 10,08,393 11,40,517 Bengal ... —3,03,250 2,19.449 7,01,899 4,43,224 6,44,170 6,23,640 87,23,496 N.W.P. ... (a) 3,28.562 7,53,815 8,04,789 ... ... ... Punjab ... —2,278 1,15,379 —16,53,794 (a) 14,96,350 10,28,770 6,74,880 Madras ... —1,57,707 1,60,706 —17,58,029 —3,21,013 40,41,297 —15,810 52,40,809 Bombay ... —1,29,663 1,00,427 —15,04,271 (a) 58,23,235 —24,23,235 —1,23,000 U.P. of Agra and Oudh ... ... ... ... —9,63,788 —64,372 37,11,281 (a) No closing balance left because of Budget equilibrium. Compiled from the Annual Finance and Revenue Accounts of the Government of India. 1 Financial Statement of the Government of India, 1902-3, para. 146.

168 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES IMPERIAL SPECIAL GRANTS-IN-AID TO PROVINCES* Year India C.P. Assam Bengal N.W.P. and Oudh Punjab Madras Bombay Burma Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. 1897-98 ... ... ... ... 7,72,000 8,00,000 10,27,000 ... ... 12,18,000 ... 1898-99 ... ... ... ... 5,00,000 18,00,000 17,00,000 10,00,000 5,00,000 16,96,000 48,75,000 ... 1899-1900 ... ... ... 19,32,000 ... ... ... 95,000 3,49,000 34,37,000 ... 1900-01 ... ... ... ... 34,15,000 ... ... ... 5,98,000 ... 64,79,000 ... 1901-02 ... ... ... 26,89,000 2,00,000 ... ... 12,40,000 32,14,000 91,00,000 ... 6,50,000 ... ... ... 4,00,000 10,00,000 19,50,000 ... 1 2,00,000 1,00,000 10,00,000 5,00,000 4,00,000 8,00,000 6,00,000 4,00,000 1902-03 ... ... 2 A 70,000 2,00,000 2,80,000 6,00,000 4,50,000 5,00,000 5,50,000 5,50,000 ... 3 B 1,00,000 2,00,000 1,50,000 ... 3,50,000 3,00,000 3,50,000 3,50,000 ... 1 ... 2,00,000 1,00,000 10,00,000 5,00,000 4,00,000 8,00,000 6,00,000 4,00,000 1903-04 2 ... 5,00,000 5,00,000 2,00,000 3,00,000 10,00,000 5,00,000 10,00,000 ... 3 ... 1,90,000 1,11,000 ... 2,26,000 2,76,000 3,50,000 3,50,000 ... 1. For education (recurring). 2. For use Public Works. 3. For improving district and other establishments. A. Allotment for Public Works in Baluchistan, Rajputana and Central India. B. Amount taken the “India” estimates for subsequent distribution to the provinces. * Complied from the annual Financial Statements of the Government of India.

169 BUDGET BY SHARED REVENUES Revision of 1902-3 Settlements made with the Provinces in 1897 should have ended in the ordinary course of time in 1902-3. The central operation in the periodic revision of the settlements was to arrive at the standard provincial expenditure for the ensuing quinquennium and as a rough and ready method of decision the average expenditure during the expiring quinquennium was taken as a standard expenditure for the opening quinquennium. There is nothing grossly erroneous in such a procedure, provided the preceding and succeeding quinquenniums are equally normal with respect to the course of their events. But as we have seen, the events of the past quinquennium were entirely abnormal and could not have been made the basis of any calculations worthy of trust. To be on the safe side the Government of India thought it desirable to await the return of normal times before undertaking wholesale revisions of provincial settlements. The occasion of 1902-3 for revision was therefore postponed save in the case of Burma. For, the last settlement had become unduly favourable to that Province in comparison with the other Provinces, notwithstanding the very nice and equitable calculations on which the settlements of 1896-7 were based. The extent to which the revenues had exceeded its expenditure is indicated in the following table :— Burma Estimated Standard for the Settlement of 1897-8 to 1901-2 Estimates for 1902-3 Difference Rs. Rs. Rs. Revenues ... ... ... 2,93,81,000 3,73,86,000 80,05,000 Expenditure ... ... ... 2,93,81,000 3,31,86,000 38,05,000 Surplus ... ... ... ... 42,00,000 ... The continuance of such an outcome was deemed unfair to the Imperial and unjust to the other Provincial Governments. The financial settlement of the Province of Burma was accordingly revised notwithstanding the established canon of simultaneous revision, when the occasion presented itself in 1902-3. The revision resulted in the resumption by the Government of India of this surplus by readjusting the shares of the Province in the joint revenues. The share in the Land Revenue was reduced from two-

170 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES thirds to one-half and that in the Excise from one-half to one-third, and a few minor heads were added to the already provincialized heads of expenditure. By these changes the standard revenue and expenditure of Burma for the new settlement of 1903 to 1906 assumed the following totals :— Revenues Rs. 2,78,31,000 Adjusting Assignment Rs. 53,02,000 Total Revenues Rs. 3,31,33,000 Total Expenditure Rs. 3,31,33,000 Another province whose settlement was revised was the Punjab; but the reason of it was different. The territory covered by the North-Western Provinces was divided into the North-Western Frontier Provinces and the United Provinces of Agra and Oudh, usually styled U.P. Along with this some of the districts of the Punjab were separated from it and joined to the newly created North-Western Frontier Province. This caused a readjustment of the provincial revenues and expenditure, but not any wholesale revision of the settlement. The changes were confined to the necessary alterations in the adjusting assignment. Quasi-Permanent Revision 1904-5 With the exceptions noted above the settlements of 1897 were extended up to the end of the year 1904. The primary cause of the postponement of the revision as explained above was the abnormality of the conditions prevailing in the year 1901-2. But there was also another reason why the Government of India was so very anxious for the return of normal conditions before taking any steps towards revision. It was about this time that the Government of India contemplated to introduce permanency in Provincial Finance. The five-year budget system which in 1881 replaced the annual budget system as the basis of Provincial Finance, though a marked improvement in the direction of continuity and stability, was not deemed to be quite sufficient. Under it the Provincial Governments were left free to enjoy the fruits of their economy in expenditure and of the successful nursing of their resources for the period of five years. Beneficial as far as it went, this time-bar was found to exercise a most pernicious influence on Provincial Finance. Under the quinquennial budget system it so happened that the provincial Governments as the result of feeling their way under the new conditions were parsimonious in the first few years lest their expenditure should prove too much for their revenues,