Vol. 6 · pages 191–195

176 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES The only Province which was outside the pale of the quasi permanent system was Burma. The last quinquennial settlement made with it in 1902-3 having expired, the Government of India decided to bring it in uniformity with the other Provinces by giving it a quasi-permanent settlement from April 1, 1907. In a spirit of perfect impartiality it was also given an even share in the principal joint heads of revenue and expenditure, salt being imperialized as in other provinces. It was given an adjusting assignment of Rs. 90,68,000 a year to cover the deficits in its standard expenditure and an initial grant of Rs. 50,00,000. By the year 1907 all the Provinces were brought within the pale of the quasi-permanent settlement, and we would have expected the scheme of Provincial Finance to run its course undisturbed by any further changes. But it so turned out, as must have been noticed, that the quasi-permanent settlements made with Madras and U.P. in 1904 had become a little unfair to them in comparison with the terms offered to the Provinces subsequently dealt with. To remove this ground of injustice, which was one of those recognized for subjecting the quasi-permanent settlements to revision, the shares of the two Provinces in the joint heads were raised with effect from April 1, 1907, to one-half, with the following exceptions :— Madras United Provinces Revenue Revenue 1. Registration. Wholly Provincial, 1. Land Revenue. 3/8 Provincial. Minimum of 240 lakhs guaranteed. 2. Land revenue. Minimum receipt of 308 lakhs guaranteed if the provincial share fell below that amount. 2. Irrigation. Minimum receipt of 60 lakhs from major irrigation works guaranteed, if the provincial share fell below that amount. Expenditure 1. Registration. Wholly provincial. 2. Land Revenue. Wholly provincial. The fixed assignments to cover the difference between the excess of standard expenditure over standard revenue were :— To Madras ... ... Rs. 22,57,000 To U.P. ... ... Rs. 13,89,000 Thus the scheme of Provincial Finance in British India had advanced by gradual but distinct steps of assignment budgets, assigned revenue budgets and shared revenue budgets to a stage the terms of which were regarded by the parties concerned as

177 BUDGET BY SHARED REVENUES sufficiently final. How far their expectations were fulfilled may be judged from the annual surpluses and deficits in Provincial Finance and from the range in their deviations as indicated in the following table :— PROVINCIAL SURPLUSES AND DEFICITS Province 1904-5 1905-6 1906-7 1907-8 1908-9 1909-10 1910-11 1911-12 Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. C.P.* ... —701000 3235000 1750607 — 930617—3097865 721755 280556 1214573 Burma ... —1591796 —2613890 1890516 —3129590—2060678 2515371 1900297—1260040 Assam† ... —269316 —3720027 —200140—25966 82—2357687 5492 70 5539698 5218802 Bengal ... —1252818 —1952312—1877455— 2256994—1330371 3274065 3960612 6296233 U.P. ... —869099 —2879192 795600—3587066 1007260 2045221 3635904 144240 Punjab ... 4794387 —2796052 —661214— 2408818—1576981 1300559 4199121 3398055 Madras ... —1402344 220328 1217745 —44992 2025109 1266326 2316383 2938502 Bombay... 4396000 —42892 1752202 — 308925—2618926 7137996 7585460 —541411 * Includes Berar since 1906. † Eastern Bengal and Assam since 1906. Compiled from the Annual Finance and Revenue Accounts of the Government of India. In judging of these results account must also be taken of the various benefactions made by the Government of India to the Provinces by way of grants-in-aid during the same period. These grants were as follows :— IMPERIAL GRANTS-IN-AID TO THE PROVINCES Province 1904-5 1905-6 1906-7 1907-8 1908-9 1909-10 1910-11 1911-12 Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. C.P.* ... 2853710 6957793 110500 2752010 2903668 3588270 3465500 2080845 Burma ... 567500 1845000 7219000 682000 215253 1820952 4232742 3605164 Assam ... ... 3362916 327294 280030 2358947 4464435 4608965 6100732 Bengal ... 24794 4806984 475548 1362634 4157393 5753692 6137013 11131276 U.P. ... 136600 4036307 7641697 9879667 8770345 1624329 4513729 3136107 Punjab ... 7526436 2467579 4209531 5541529 6037990 5839014 9592844 3101681 Madras ... 700946 4430714 9980400 9473304 704885 612941 3691426 5008889 Bombay ... 10312928 3427325 4024512 4574284 5726162 5797603 12009360 4935159 Total ... 22122914 31334618 34982982 34543458 30874643 29502286 15475360 39099853 * Includes Berar since 1906. Compiled from the Annual Finance and Revenue Accounts of the Government of India. But in taking account of these benefactions it must not be supposed that, barring a solitary case or two, they were necessary in order to preserve the solvency of Provincial finance as it was defined by the terms of the settlement made with the different provinces. Far from being insufficient, the revenues settled upon the different Provinces proved quite ample for their needs if we take the last years, and they are the most typical years, into consideration. Permanent Settlements of 1912 Soon after the series of quasi-permanent settlements were concluded with the different provinces, the subject of Provincial and

178 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES Central Finance in British India among others of a like nature was investigated by the Royal Commission on Decentralization. In its Report issued in 1909 the existing method of allocating revenue and charges between the Imperial and Provincial Governments was upheld in principle. Of the many-adverse criticisms passed by witnesses who appeared before the Commission only two were regarded by it as worthy of consideration : (1) The adjusting assignment and (2) Grants-inaid, or doles as they were cynically termed. It was urged, and with some truth, that the adjusting assignments impaired the elasticity in provincial revenues by reason of the fact that while charges grew, that part of the provincial resource, which was made up by assignments, and in some cases it formed quite an appreciable part, remained unaltered. Secondly, it was argued that doles were demoralizing and that it would be better to replace them by shares in growing revenue. The Commission seems to have been completely impressed by the disadvantages of large adjusting assignments, but it demurred, and rightly so, to the criticisms with regard to the doles. Every one extolled the benefits of decentralization to the Provinces, but few realized the anxieties that it involved to the Government of India. It must have been clear that by the process of decentralization the Government of India had given the Provinces more or less complete freedom in distributing their funds in any way they liked upon the services delegated to their management, while it had remained responsible for their efficient upkeep by the provisions of the law which governed its constitution. But the freedom which the provinces had obtained in carrying on the financial management of the services made over to their particular control, involved the possibility of their fostering certain services deemed to be of immediate utility to the people of the Provinces, and neglecting others the utility of which, though remote to the Provinces, was nevertheless real to the country as a whole. Neglect of nationally important services such as Education, Sanitation, Police, was especially to be avoided during periods of plague and famine. But the Government of India could not enforce distribution of provincial funds on such services; for one of the vital conditions of Provincial Finance was freedom of appropriation on provincialized services, which were not distinguished into obligatory and optional as is the case in the continental system of local finance.

179 BUDGET BY SHARED REVENUES The Government of India was indeed not as powerless as the Central Government in England which, as is well known, cannot rectify cases of neglect by local authorities without resort to a writ of mandamus. But the way to bring a recalcitrant province to order, if easier, was not pleasant. For, the only way to mend such a situation was to end it by suspending the operation of Provincial finance. Rather than resort to such a grave measure the Government of India happily hit upon grants-in-aid of particular services as a powerful and well-tried 1 corrective to the negligence of the Province, and require it to maintain a “national minimum” in those services which it regarded as onerous rather than beneficial. 2 Convinced of the virtue of grants-in-aid as a brake on decentralization degenerating into disintegration, the Commission only recommended that measures be taken to give Provincial Finance the greatest elasticity possible by diminishing the assignments to the smallest magnitude possible. Following the recommendations of the Commission the Government of India decided to make certain modifications in the existing allocation of revenue and charges and to make the quasi-permanent settlements permanent settlements from the year 1912. The permanent settlements did not differ from the quasi-permanent settlements which they superseded in any material point so far as the principle of allocation was concerned. The only point of difference between them in that respect was a partial replacement of the fixed adjusting assignments by increased shares in the following joint heads of revenue and expenditure :— Modifications in Shares Revenues Expenditure Heads of Account Provincial Share Heads of Account Provincial Share 1. Land Revenue including the portion credited to Irrigation. 5/8 to Burma ½ Punjab 1. Land Revenue 5/8 Burma ½ Punjab 2. Excise Wholly in Eastern Bengal and Assam, Bombay. In C.P., Bengal and U.P., 3/4 2. Excise Same as in revenue column. Assessed Taxes 3. (P.W.D.) ½ ... ... 4. Forest Wholly. 4. Forest Wholly 5. Major Irrigation works (excluding portion of Land Revenue credited to it). ½ in Punjab, minimum of 4 lakhs guaranteed. 5. Major Irrigation ½ 6. Major and Minor Irrigation. ½ in Bengal 6. Major and Minor Irrigation. ½ in Bengal 1 It is possible that the system was borrowed from England. 2 S. Webb, Grants-in-Aid, 1911, p. 25.

180 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES The effect of these modifications in the shares in the joint heads of revenue and expenditure was to reduce the adjusting assignments to the following figures :— Province Assignments in Lakhs of Rupees from Imperial to Provincial From Provincial to Imperial Central Provinces ... ... ... ... 21.40 ... Burma ... ... ... ... ... 13.12 ... Eastern Bengal and Assam ... ... ... ... 13.55 ... Bengal ... ... ... ... ... ... 18.40 U.P. ... ... ... ... ... ... 19.26 Punjab ... ... ... ... ... 6.77 ... Madras ... ... ... ... ... ... 21.43 Bombay ... ... ... ... ... ... 9.38 During the permanent as during the quinquennial and quasi-permanent settlements the grants-in-aid of specific services, unobjected to as they were by the Decentralization Commission, were continued to be given to the different Provinces throughout the period although, as may be seen from the following figures, in a continually diminishing magnitude :— Special Grants-in-Aid (in rupees) Provinces 1912-13 1913-14 1914-15 1915-16 1916-17 1917-18 1918-19 CP. ... 4790480 2643264 5138256 4407802 3795784 3817540 2726008 Burma ... 8538948 2263939 3849763 3869472 216979 —2478482 2490 Assam ... 5530991 3283011 7533878 6577619 2497861 1922252 2444730 Bengal ... 15401885 6480800 7594894 7186436 6538732 7074773 9889717 Bihar & Orissa 6379420 4761028 3526567 4278854 3262214 4235205 4179425 U.P. ... 11470603 8542279 3842624 3229924 2453969 2706164 3590530 Punjab ... 6700924 2424404 3988117 5908923 4925830 4862616 5563665 Madras ... 12277591 5066343 1697803 1220785 1099165 1483708 1577446 Bombay ... 11192723 3996729 1468837 1200254 1065964 1154725 2479510 Total ... 82283565 39461797 38640739 37880069 25856498 24778501 35453521 Compiled from the Annual Finance and Revenue Accounts of the Government of India. It was natural that the results of the permanent settlement should have been more anxiously awaited for with great interest by the Provinces, for the permanent settlement had the potentiality of a permanent gain or a permanent loss. That their anxiety on that score could not out have been completely allayed is amply supported by the repeated surpluses that meet the eye as it passes over the following figures of annual additions to and deductions from their balances during the