Vol. 6 · pages 206–210

191 LIMITATIONS OF PROVINCIAL FINANCE consideration of exceptional services to the Government of a pension exceeding Rs. 1,000 a year or a gratuity exceeding Rs. 3,000 in any one case. 1 (3) Rules of Expenditure The powers of sanctioning expenditure granted to the Provincial Government were as limited as their revenue powers. While they were free to spend their funds on the services entrusted to them, certain limitations were laid down for the purposes of expressly ruling out certain objects and subjects of expenditure from the provincial domain. With regard to the objects of their expenditure Provincial Governments were required— (i) Not to sanction any expenditure from public money on anything outside the category of objects of expenditure recognised by the Government of India. 2 (ii) To confine themselves to the carrying on of the services particularly entrusted to them by the terms of the settlement. Prior to 1912 they could undertake a “new general service or duty” only if they satisfied the Government of India that they could provide the necessary funds temporarily if it was temporary, and permanently if it was permanent. 3 This provision was altered in 1912 so that a Provincial Government could undertake a new general service or duty provided it was not ( a) of an unusual nature, or (b) devoted to objects outside the ordinary work of administration, or ( c) likely to involve at a later date expenditure beyond its powers of sanction. 4 (iii) Not to spend— (a) On State ceremonies and assemblies, and on the entertainment at the public charge of distinguished visitors to India more than Rs. 1,00,000.5 1 Rule 10 (8) of 1912. 2 Rule 11 of 1897, also embodied in subsequent Resolutions. 3 Rule 4 (2) of 1897. 4 Rule 5 (11) of 1912. 5 Rule 10(11) of 1912.

192 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES ( b) On Railway Carriages especially reserved for the use of high officials otherwise than in connection with the maintenance of the carriage. 1 ( c) On the purchase of a Motor-car or Motor-cycle for the use of an official, or on the maintenance of it otherwise than from the “Contract Grant” with the Head of the province. 2 (d) On the increase of the “Contract Grant” to the Head of the province. 3 ( e) On the construction or purchase of a vessel required for inland navigation and for use at ports, the cost of which exceeded Rs. 1,00,000. 4 ( f) On an Irrigation or other Public Works projects of which the estimated cost chargeable to the general revenues exceeded Rs. 20,00,000 inclusive of establishments, tools and plants. It was however competent for a Provincial Government to spend up to an amount 10 per cent. in excess of the original sanctioned estimate provided such excess was not more than Rs. 12 ½ lakhs inclusive of establishment, tools and plants. 5 As to the limitations respecting the subjects of provincial expenditure, it was ruled that in virtue of the application of the general condition precedent to the delegation of all authority to disburse public money, that it shall be bona fide for a public purpose, Provincial Governments could not spend from their funds for benefiting— (i) Any individual or body of private persons unless in accordance with some declared or established rule or principle recognized by the Government of India. 6 (ii) Native States, directly beyond Rs. 10,000 a year on any one project or Rs. 50,000 if non-recurring. 7 1 Rule 10 (4) of 1912. 2 Rule 10 (6) of 1912. 3 Rule 10 (15) of 1912. 4 Rule 10 (17) of 1912. 5 Rule 10 (18)of 1912. 6 Rule 10 of 1877, also embodied in subsequent Resolutions. 7 Rule 10 (13) of 1912.

193 LIMITATIONS OF PROVINCIAL FINANCE (4) Budgetary Rules Besides being subject to the ordinary rules of the Budget System introduced into India for the first time by Mr. Wilson in 1860,1 by which they were required to submit their budget estimates for sanction to the Government of India, and to observe the rules of appropriation in the execution of the grants, Provincial Governments were further given to understand that without the previous consent of the Government of India they— (i) Could not exhaust their balances in the Imperial Treasury. Prior to 1887 a Provincial Government could propose in its budget estimates to draw upon the whole of its balance. But by the Rules then framed the Provincial Government was required to maintain at all time a certain minimum balance in the Imperial treasury, the amount of which varied with each successive settlement. (ii) Could not budget for a deficit, that is for provincial expenditure in excess of the provincial revenues of the year. The stringency of this rule 2 was a little softened, so that a Province could after 1912 budget for a deficit, if it satisfied the Government of India that the cause was exceptional and non-recurring, 3 but it was at the same time provided that, if this drawing upon the balances to make up the deficits resulted in reducing the balance below the prescribed minimum, the budget for a deficit would be sanctioned only if the Government of India was able to allow the Provincial Government in question an overdraft to the extent necessary to restore the balance to the required minimum from the general balances to be repaid in such rates of interest and instalments as may be prescribed. 4 (iii) Could not exceed during the currency of the year the expenditure on any head of account as finally sanctioned for it, for that year, by the Government of India. 1 Rule 11 of 1892, 13 of 1897, and 19 of 1912. 2 Rule 8 of 1892. 3 Rule 21 of 1912. 4 Rule 21 and 22 of 1912.

194 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES It could increase the expenditure only if the increase was counterbalanced by re-appropriation, that is, reduction by the amount of the excess of the sanctioned grant under some other head of account under its control. 1 The powers of reappropriation of Provincial Governments were very extensive, for it could sanction re-appropriation between the grants for provincial expenditure included in its budget, whether under a Wholly Provincial or a Divided Major or Minor Head provided that the aggregate grant of provincial expenditure was not exceeded. 2 (5) Rules of Audit and Account Though the Provinces were allowed considerable powers of re-appropriation within their budgets there was imposed upon them the obligation of audit and accounts of the money they spent. The important point to note in this connection is the fact that this obligation of the keeping of accounts and submitting them to audit was an obligation which the Provinces did not owe to their legislatures, but was an obligation which they owed to the Government of india, who had conferred upon them the financial power they exercised. Moreover, the Government of India did not leave the Provinces to discharge this obligation according to their own sweet will by employing their own audit and account staff. On the contrary the responsibility of realizing this obligation was entrusted to the imperial officers of audit and account stationed in the different Provinces, who acted as the critics and guides of Provincial Governments in the matter of administration and interpretation of the Rules discussed above. To facilitate their task Provincial Governments were instructed— (i) Not to make any alterations in the form of procedure of public accounts, 3 or direct the division of a charge between two or more heads of account. In all such matters they were to abide by the decision of the Comptroller General—an officer of the Imperial Government.4 1 Rule 24 of 1912. 2 Rule 25(1) of 1912 3 Rule 1 (a) of 1897 also embodied in subsequent Resolutions. 4 Rule 4 (2) of 1897.

195 LIMITATIONS OF PROVINCIAL FINANCE (ii) To transmit the objection of the Imperial audit officer against its appropriation or sanction with regard to expenditure with the explanation of the Provincial Government concerned to the Government of India for final disposal. 1 Such were the limitations on the Financial Powers of the Provincial Governments. Apart from these specific limitations the Provincial Governments were not altogether the free architects of their own destiny within the sphere allotted to them; for it was provided that the power of supervision and control in any Department still rested in the Governor-General in Council, and that the Provincial Governments should keep him fully informed of their executive and financial proceedings so as to enable the former to discharge its obligations for peace, order and good government.2 Their general effect on the finaicial freedom of the Provinces could hardly have been concealed. It must therefore have been a most impervious mind which in face of these paralysing limitations had not lost its faith in the independence of the system of Provincial Finance and had not asked what was after all the nature and advantage of this illusive institution ? zz 1 Rule 30 and 31 of 1912. 2 Rule 5 of 1877; Rule 15 of 1897 ; and Rule 6 and 7 of 1912.