Vol. 6 · pages 186–190

171 BUDGET BY SHARED REVENUES and extravagant in the last few years lest their expenditure should shrink below the standard and leave large margins to be cancelled by the Government of India on revision of their settlements. No Local Government could be expected to put into execution any carefully matured and well-thought-out scheme of improvement within the short span of a quinquennium. All that it could do was to spend the first two or three years in working out a scheme and utilize the last two or three years in rushing it through, as was done by most of the Provinces. This tendency to undertake such schemes, the only merit of which was that they could be carried through before the revision, and mainly in order to reach the standard expenditure, was a direct consequence of the quinquennial budget system. This is by no means an a priori conclusion. A glance at the annual surplus of the provinces will indicate how they tend to rise in the beginning of the quinquennium and fall at the end of it. To obviate these evils of parsimony and extavagance the only remedy was to do away with the principle of quinquennial revision, and this the Government of India courageously undertook to effect. The right to revise was a much cherished right, and the Government of India had not failed to exercise it in the teeth of all opposition from the Provinces. It was abandoned only because its exercise was deemed to be mischievous. Taking the year 1903-4 as the normal one, the Government of India decided to revise the provincial settlements of all the different Provinces. The idea was to adjust the revenues between the Imperial and the Provincial Governments on the basis of the total expenditure they respectively controlled. It was found that the aggregate provincial expenditure represented less than one-fourth of the whole, while the Imperial expenditure, which included Army and Home Charges, aggregated in excess of three-fourths. These proportions of expenditure were taken as the basis of the division of revenue between the Imperial and the Provincial, and the following standard shares of revenue and expenditure under the joint heads were agreed upon :— Imperial Provincial Bengal, U.P., Bombay, Madras 3/4 ¼ Punjab, Burma 5/8 3/8 C.P., Assam ½ ½

172 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES The reasons for adopting different standard rates of division in the case of the Punjab, Burma, C.P. and Assam was to give the backward provinces opportunities of development in the same proportion as lay within the reach of the advanced provinces. Of the settlements made in 1904-5 the Government of India declared that those made with the Provinces of Bengal, Madras, Assam and U.P. were to be permanent and not subject to revision in future, except when it was found that the financial results were unfair to a Province or to others by comparison, or to the Government of India when it was confronted by an extraordinary calamity. Owing to this proviso their settlements were termed quasi-permanent. To obviate the recrudescence of unfairness during the currency of the settlements the Government of India felt it necessary to enter certain modifications in the standard ratio of division of the joint-heads of revenue and expenditure with regard to the Provinces brought under the quasi-permanent settlement. They were as follows :— Provincial Share Provincial Share Revenue Bengal Madras U.P. Expenditure Bengal Madras U.P. Excise ... 7/16 ... ... Excise ... 7/16 ... ... Stamps ... ½ ½ ½ Stamps ... ½ ½ ½ Registration ... Wholly Wholly ... Registration ... Wholly ... ... Irrigation ... ... ... Wholly Land Revenue ... Wholly Wholly Wholly Compiled from the Financial Statement of the Government of India for 1904-5, p. 57. Besides these modifications the Government of india gave them the following grants :— Bengal Madras United Provinces 1. Addition of 4 lakhs to the assessment to improve the pay of Ministerial establishments. 1. Grant of 20 lakhs for Survey and settlements. 1. Irrigation revenue guaranteed up to 40 lakhs. 2. Further addition not exceeding 2½ lakhs for for strengthening the staff of Deputy Collector. 2. Grant of Rs. 75,000 a year recurring for relief of certain local bodies. 2. Grant of 2½ lakhs a year in relief of local bodies. 3. Rs. 50,000 a year for agricultural experiment. 3. Half a lakh a year to reform District Board Finance. 4. Undertaking to bear charges for reorganizing district administration. Compiled from the same Financial Statement of the Government of India, p. 67.

173 BUDGET BY SHARED REVENUES The standard revenues and expenditure of the quasipermanently settled provinces, after taking into consideration the alterations in their respective shares in the joint revenues, were as follows :— STANDARD REVENUES AND EXPENDITURE (in thousands of rupees). Province Expenditure Revenue Revenues Assignments Total Madras 3,50,48 2,90,82 5,966 3,50,48 Bengal 4,98,87 4,49,84 4,903 4,98,87 U.P. 3,66,64 3,62,64 400 3,66,64 Assam 72,07 60,07 1,200 72,07 The gain to the Imperial treasury on the revenue side brought about by the revision of the quasi-permanently settled Provinces was Rs. 2,06,000. But the revision also over-burdened the Imperial Government with a total charge of Rs. 36,000 hitherto borne by the Provincial Budget. Thus its net gain was only Rs. 1,70,000 a year on the normal. As in the beginning of the scheme of Provincial Budgets, the government of India thought it advisable to make to the quasi-permanently settled Provinces the following initial grants so as to give them a fair start:— To Bengal, Rs. 50 lakhs. (Exclusive of 50 lakhs for Calcutta Universsity.) To Madras, Rs. 50 lakhs. (Inclusive of 20 lakhs for survey settlement.) To U.P., Rs. 30 lakhs. (Exclusive of 1¼ lakhs to compensate forexpenditure on the purchase of encumbered estates.) To Assam, Rs. 20 lakhs. Of the remaining Provinces, Bombay and the Punjab were the next to obtain quasi-permanent settlements with effect from 1905-6. In recasting their settlements the Government of India departed a little from the standard rate of division as applied to the Provinces quasi-permanently settled in 1904-5. With certain exceptions mentioned below the joint heads of revenue and expenditure were

174 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES divided half and half, including Irrigation in Bombay, instead of three-fourths and one-fourth between the Imperial and the Provincial. The exceptions to this rule were the following :— Revenue Heads of Account Provincial Share Expenditure Heads of Account Provincial Share Bombay Punjab Bombay Punjab Land Revenue Guaranteed Up to 189¼ lakhs 3/8 Land Revenue Wholly Wholly Registration Wholly Wholly ... ... ... Irrigation ½ 3/8 Guaranteed up to 28 lakhs Compiled from the Financial Statement of the Government of India The standard revenue and expenditure of these two provinces under the quasi-permanent settlement was as follows :— Province Expenditure Revenue Revenues Fixed Assignments Total Rs. Rs. Rs, Rs. Bombay ... ... ... 4,91,75,000 4,48,98,000 42,77,000 4,91,75,000 Punjab ... ... ... 2,49,50,000 2,46,50,000 3,00,000 2,49,50,000 The raising of the shares and the fixing of assignments on a liberal scale with respect to these famine and plaguestricken Provinces left the Imperial Government a loser on the transaction. On the basis of the new standard of revenues the Government of India lost Rs. 5,95,000 on the two Provinces together. The corresponding increase in the provincial shares of the joint heads of expenditure, however, lessened the Imperial expenditure by Rs. 2,21,000 a year. On the whole, therefore, the Imperial Government sacrificed a normal gain of Rs. 3,74,000 to give permanency and stability to the finances of these two Provinces. This was over and above the initial grant of Rs. 50,00,000 to each of them in order to enable them to set their sails in smooth waters. A year after, the settlement of the Central Provinces was made quasi-permanent with effect from April 1, 1906. The shares in the joint heads of revenue and expenditure were raised, as they were in the case of Bombay and the Punjab, and particularly because of the addition of Berar, which was hitherto administered directly

175 BUDGET BY SHARED REVENUES by the Imperial Government, from three-fourths and onefourth to one-half between the Imperial and the Provincial, the share in the land revenue being guaranteed up to 82½ lakhs. The only exception to this rule of even division was the Registration revenue, which was made wholly provincial. To balance the revenue with the expenditure an assignment of Rs. 27,07,007 a year was fixed and an initial grant of Rs. 30,00,000 was given for a fair start. Along with the settlement of the Central Provinces it became necessary to reorganize the budgets of the quasipermanently settled Provinces of Bengal and Assam owing to certain administrative changes. The two Provinces were reconstituted into (1) Bengal and (2) Eastern Bengal and Assam. In the revision of its financial settlement the new Province of Bengal was accorded the same proportionate share in the joint revenues as were granted to Bombay and the Punjab— namely, a share of a half in all the joint heads. Registration and that portion of the Land Revenue which was derived from Government Estates under the direct management of the Imperial Government were, however, made wholly provincial. In lieu of this favoured treatment the fixed assignment of the Province was reduced from 49.03 lakhs to 5.72 lakhs. In the new Province of Eastern Bengal and Assam the principle of even distribution was applied to all joint heads of revenue and expenditure with the exception of Registration, which was made wholly provincial. This enhancement of shares so greatly augmented the resource side of the Provincial Budget that the balance had to be restored by a negative operation of a fixed adjusting assignment from the Provincial to the Imperial funds. The following figures show the standard expenditure and the standard revenue for the three provinces brought under the quasi-permanent settlements :— Province Expenditure Revenue Revenues Assignments Total Rs. Rs. Rs. Rs. C.P. ... ... ... 1,76,43,000 1,49,36,000 27,07,000 1,76,43,000 Eastern Bengal and Assam ... 2,12,19,000 2,18,42,000 6,23,000 2,12,19,000 Bengal ... ... ... 4,72,73,000 4,67,01,000 5,72,000 4,72,73,000 Some modifications were later on introduced in the settlement of the Province, so that a positive adjustment had to be made by an assignment from the Imperial to the Provincial of Rs. 60,000 a year.