Vol. 6 · pages 231–235

216 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES the country by partitioning the taxing or borrowing powers. The field for taxation in India being considerably limited, an indiscriminate levy of taxes by a competing authority, it was feared, would have led either to discontent by additions 1 to the Imperial imposts or to a retrenchment of the field for Imperial taxation. The concentration of borrowing powers in its hands, the Government of India urged, was a natural corollary of the statutory hypothecation of all India revenues to all-India needs. The Government of India could not allow its revenues to be mortgaged by a Provincial Government for its own needs. Besides it was afraid 2 that if this freedom to borrow were granted “the temptation to hypothecate revenues in advance might become inconveniently strong, and the future administration of a Province might be starved because a former Government had been in a hurry to proceed with some costly ambitions and non-productive project.” Moreover, the loan market in India, it was said, was as limited as the taxable capacity of the country. Therefore “if many buckets are dipping into one well and drought cuts short the supply of water, obviously the chief proprietor of the well must take it upon himself to regulate the drawings.” 3 In the matter of specific restrictions on spending powers with respect to staff and establishments, the defence of the Government of India was that such restrictions were necessary in the interest of uniformity and economy. It was urged that if each province was allowed the freedom to regulate the remuneration of the Public Service which carried on the actual work of administration the result would probably have been unequal pay for equal work. Such a consequence would have engendered discontent in the servants of the State which it was desirable to prevent in the interest of good administration. Again, if the Provinces had been given full freedom to revise establishments it might have resulted in considerable additions to the recurring expenditure of the Provinces, thereby jeopardizing the stability of the Provincial as well as of the Imperial finance, for in the last resort the Government of India was responsible for maintaining the Provincial Governments. 1 Between 1870 and 18.79, when the Provinces had a freer hand h the matter of local taxation, all of them selected the already overburdened basis of taxation, viz. land for their levy. 2 R.C.D. Mit. of Evid., Vol. X, Q. 45310. 3 Report on Indian Constitutional Reforms, Cd. 9109 of 1918, p. 94, hereafter called Joint Report.

217 THE ENLARGEMENT OF ITS SCOPE In the matter of control over the preparation and execution of Provincial Budgets the Government of India urged that the scrutiny was not motivated by a desire to control an unwelcome policy,1 but was inevitable because of the three important ties by which the Provincial Budgets were bound up with the Budget of the Government of India. These were (1) the incorporation of the income and expenditure of the Provincial Governments into the Budget and the Annual Accounts of the Government of India as an integral part thereof; (2) the system of divided heads of revenue and expenditure, and (3) a common treasury involving a combined “ways and means” for the transaction of the Central and Provincial Governments. The first two points of inter-relation required that the Government of India should examine the Budget Estimates of the Provincial Governments. It was urged 2 that the power to make such alterations was rendered specially necessary by the inveterate tendency of Local Governments to over-estimate their expenditure and under-estimate their revenue. Estimates which departed widely from actuals meant bad finance and also a provision of larger ways and means for the working of the Treasury. But even if this tendency was absent it was incumbent on the Government of India to scrutinize the Provincial Estimates in order to preserve accuracy in the combined accounts. Besides the interests of accuracy, the Government of India had to ascertain by a scrutiny of their estimates that a Province did not impair the stability of its finances by (1) including in its budget expenditure on schemes which had not received due administrative sanction, or was not likely to receive such sanction in time to be incurred during the year; or (2) by entering on an enhanced scale of expenditure a Province was not unduly depleting its balances. But by far the strongest reason why the Government of India needed to scrutinize the Provincial Estimates consisted in the fact that in so far as some of the Heads of Accounts were shared, the ultimate result of the Central Budget, whether there was to be a surplus or deficit, depended upon the accuracy of the estimates. The Government of India, it was urged, was thus directly interested in the Provincial Budgets, and could not have abandoned its right to scrutinize them without exposing its budgetary system to serious 1 R.C.D., Mit. of Evid., Vol, X, Q. 44981. 2 R.C.D., Mit. of Evid., Vol. X, Q. 44863.

218 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES derangement. The third point of inter-relationship necessitated that the Provincial Governments should work within the grants as fixed finally by the Government of India. To have allowed the Provincial Governments the liberty to exceed the grants because they had ample balances to their credit would have been incompatible1 with the responsibility of the Imperial Government to provide the ways and means for the whole administration of the country. A provincial balance, it was pointed out, was not a separate balance locked up in a separate provincial chest. It was a part of the general balances on which the Government of India operated daily. If a sudden demand uncontemplated in the Budget were to be made upon these balances, as would have been the case if the Provincial Governments had exceeded their budget grants, it would have disturbed the ways and means transaction and would have involved the Government into insolvency by causing insufficiency of cash. All these defences of the restrictions on Provincial Governments were plausible defences and could have been decisive if the centralized system of administration in favour of which they were urged could be deemed to have satisfied the ends of good government. But it was not unreasonable to argue as was done by the Provincial Governments 2 that modern tendencies were all moving in the direction of forms of government which placed fullest powers as low down in the administrative scale (i.e. as near the section of population immediately affected) as could be safely arranged. It is reasonable to centralize such powers as could not be efficiently exercised otherwise. But it is equally unreasonable to centralize powers where central control or uniformity is not clearly essential or is impracticable. By centralization all progress tends to be retarded, all initiative liable to be checked and the sense of responsibility of Local Authorities greatly impaired. Besides, centralization involves and must involve a serious sacrifice of elasticity, for it is naturally disagreeable to a central department to have to deal with half a dozen different ways of managing the same branch of administration, and which therefore aims at reducing all types to one. Further centralization conflicts with what may be regarded as a cardinal principle of good government, namely, that when administrative business reached an authority fully competent to deal with it, that authority should deal with it finally. Even when 1 R.C.D., Mit. of Evid, Vol. X, Q. 44865. 2 In this connection see the very trenchant memorandum by the Government of Bombay on Decentralization, R. C. D., Mit. of Evid., Vol. VIII, Appendix II.

219 THE ENLARGEMENT OF ITS SCOPE there is a higher authority equally competent, to pass the business on to it would at best help to transfer power to the hands of the lower ranks of the official hierarchy, by causing congestion of business in the Central Department. Thus centralization, unless greatly circumscribed, must lead to inefficiency. This was sure to occur even in homogeneous states, and above all in a country like India where there are to be found more diversities of race, language, religion, customs and economic conditions than in the whole continent of Europe. In such circumstances there must come a point at which the higher authority must be less competent than the lower, because it cannot by any possibility possess the requisite knowledge of all local conditions. It was therefore obvious that a Central Government for the whole of India could not be said to possess knowledge and experience of all various conditions prevailing in the different Provinces under it. It, therefore, necessarily became an authority less competent1 to deal with matters of provincial administration than the Provincial Governments, the members of which could not be said to be markedly inferior, and must generally be equal in ability to those of the Central Government, while necessarily superior as a body in point of knowledge. To these arguments the only reply the Government of India could make was that it concentrated all power in its hands, not from principle but from necessity. That necessarily arose out of its constitutional obligations. The law had invested it with the superintendence, direction, and control of the civil and military government and the ordering and management of the revenues of the country. It could not therefore relax its control over the powers it had delegated to the Provincial Governments. It was, of course, impossible to deny the force of this argument. So long as the Government of India remained the authority solely responsible to Parliament it was reasonable to hold that it should be the controlling authority in all matters pertaining to the administration of the country. But it was equally reasonable to ask whether it would not have been possible in the interests of cordiality 1 In this connection it may be of interest to draw attention to the semi-serious suggestion made by Mr. A. C. Logan, in which he argued that if decentralization “cannot be effected then there is an alternative method of so remodelling the constitution of the Government of India as to replace the present departments by departments of various local areas each with its own Secretary and Member; thus there should be a department of Bombay with Secretary and Member appointed from that Province dealing with all Bombay questions and the like for other (six) provinces. Thus each Province could govern itself from Calcutta under the supervision of the Governor General,”— Vide R.C.D., Mit of Evid., Vol. VIII, Q. 35531.

220 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES between the Central and Provincial Governments to have relaxed such of the restrictions on the financial powers of the Provinces as would not have been incompatible with the due discharge by the former of its own responsibilities. That it was possible so to enlarge the scope of Provincial Finance by a relaxation of the limitations without injury to the position of the Government of India must be said to be evident from the following analysis of the suggestions made by the Provincial Governments. These suggestions were (i) Power of taxation and borrowing on the security of Provincial Revenues. (ii) Power of sanctioning expenditure on Staff and Establishments up to a limit higher than that allowed by the Government of India. (iii) Separation of Provincial Estimates from the Imperial Budget and Accounts. (iv) Abolition of the system of divided heads of revenue and expenditure and the replacement of it by a system of separation of sources and contributions from the yield. (v) Power to spend part of their balances up to a defined amount, without the previous sanction of the Government of India in meeting an excess of expenditure over Budget Estimates. What objections were there, from the standpoint of the constitutional responsibilities of the Government of India, to the grant of these demands? Clearly it was possible for the Government of India to have marked off certain sources of taxation best suited for provincial levy and unconnected with the imperial imposts. Similarly it was possible to have permitted the Provincial Governments to borrow to a limited extent on the security of the revenues assigned to them. To suggest as did the Government of India, that the Provincial Governments would abuse these powers to the extent of causing discontent or jeopardizing the stability of their financial system, was to believe that such legally recognized polities as the Provincial Governments were run by incompetent administrators unmindful of their obligations. The second demand could have been granted with greater ease. It is to be noted that the Civil Service of the country which deals with revenue and general administration has been divided into (i) The “Indian Civil service” recruited in England by