Vol. 6 · pages 91–95

76 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES credit, general information all meet here as in a centre. They support, encourage and give lift to commerce and to the trade of a country. But the direct effect of the town duty was to distract and drive away trade, for under the system every article which was subject to it had, after the payment of transit duty, to pay on entry, in the town, the town duty and, if it underwent any change of form by manufacture within the town of entry, it could not have been furnished to any neighbouring place without a second impost being paid upon it under the transit duty system, enhanced in proportion to the increase of value it might have acquired from the labour and the skill bestowed upon it, The consequence was that towns dwindled both in trade and industry owing to the reason that merchants ceased to frequent them and that no manufactures of articles subject to the transit duty were capable of being established in them except for their own supply. It was in this depressed condition that the Indian industries were called upon to meet foreign competitors. But the external customs cannot be said to have protected, much less fostered them. As a rule commercial tariffs are based upon what is called commodity competition. The import tariffs are designed to check by means of higher duties the importation of such foreign commodities as are likely to interfere in the successful manufacture of the same commodities at home and the export tariffs are framed principally with a view to give bounties to such of the home commodities as have a chance of securing a foothold in foreign markets. But the theory of external customs in India had no connection with the theory of commodity competition. In comparison with the policy actually adopted even a protectionist would have preferred to see trade left perfectly free, for the tariff was based on political rather than economic considerations. The Indian Import Tariff varied not with the nature of the imports but with the origin of the imports and the bottom on which they were shipped. Being political in character it was preferential in design and in its framework. It is to be regretted all the more that the preference involved an unmitigated loss to the people and to the government. It was excusable to have admitted into India goods of English origin and shipped on English bottoms at a rate half of what goods of foreign origin and shipped on foreign bottoms were charged with. But nothing can extenuate the sacrifice imposed upon the Indian industries by letting in British goods at lower rates than what the Indian goods had to pay under

77THE IMPERIAL SYSTEM the internal customs; and this was done when, be it remembered, England was prohibiting by high tariff the entry of India-made goods and India-built ships ! But while the import tariff made it easy for the foreigners to compete successfully with Indian manufactures burdened as they heavily were by the weight of the internal customs, Indian goods found it considerably difficult to compete in foreign markets under the incubus of export duties which formed one of the most lamentable features of the Indian tariff and which endured long into the nineteenth century. 1 Thus the customs laws internal and external blockaded trade and smothered industry. The comparatively paltry revenues derived from them is the best proof of their ruinous effects. 2 When these resources failed the Government resorted to some very questionable means of raising revenue. On an impartial survey of the revenue system as prevailed under the Imperial regime one is constrained to say that justice in taxation was conspicuous by its absence. It was a cruel satire, or at best an idle maxim, for the lancet was directed not where the blood was thickest but to that part of the body politic which on account of its weakness and poverty most meekly bore the pang. The landlords who passed their lives in conspicuous consumption and vicarious leisure on the earnings of the poor tenants, or the 1 It is difficult to cite references to every statement made above. The tariff history of India is yet unwritten, but ample evidence bearing on the point will be found in the Parliamentary Committee on Trade in 1821 and the Evidence submitted to the Committees appointed by Parliament to investigate into the affairs of the East India Company in 1813 and 1853. Particular attention is invited to the Report and Evidence of the Committee on East India Produce, 1846. 2 The following table gives the ratio of the Customs Revenue to the total revenue :— Year Ratio Year Ratio Year Ratio 1792-3 to 1796-7 2.38 1817-8 to 1821-2 8.32 1842-3 to 1846-7 6.02 1797-8 to 1801-2 3.10 1822-3 to 1826-7 7.58 1847-8 to 1851-2 5.40 1802-3 to 1806-7J 4.16 1827-8 to 1831-2 8.12 1852-3 to 1855-6 5.52 1807-8 to 1811-12 5.04 1832-3 to 1836-7 7.19 Average for 64 years 6.22 1812-13 to 1816-17 6.68 1837-8 to 1841-2 6.76 Hendricks, op. cit., p. 286.

78 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES many European civil servants who fattened themselves on pay and pickings, were supremely exempted from any contribution towards the maintenance of the Government whose main activities were directed towards the maintenance of pomp and privilege. On the other hand, the salt tax 1 and the Moturpha, 2 and other oppressive taxes 3 continued to harass the industrious poor. It is indeed true that many petty and vexatious taxes prevalent under the native rule were abolished; there is, however, enough evidence to show that the revenue thus lost was made up by enhancing those that were continued to be levied, particularly the land tax. The latter charge has always been officially denied, 4 but none the less it remains true that the land tax has been consolidated and increased concurrently with, if not consequently upon, 1 The percentage ratio of the salt revenue to the total revenue at different times was as follows :— Year Ratio Year Ratio Year Ratio 1792-3 to 1796-7 14.13 1817-8 to 1821-2 11.25 1842-3 to 1846-7 11.65 1797-8 to 1801-2 12.10 1822-3 to 1826-7 11.87 1847-8 to 1851-2 9.14 1802-3 to 1806-7 11.09 1827-8 to 1831-2 12.03 1852-3 to 1855-6 9.17 1807-8 to 1811-2 11.14 1832-3 to 1836-7 9.72 Average, for 64) years 11.07 1812-3 to 1816-7 10.92 1837-8 to 1841-2 12.37 Hendricks, op. cit., p. 283. 2 In a petition drawn up by the Madras Native Association to the House of Commons in 1858 it was described as “a tax on trades and occupations embracing weavers, carpenters, all workers in metals, all salesmen whether possessing shops which are also taxed separately, or vending by the road-side, etc., some paying imposts on their tools, others for permission to sell, extending to the most trifling articles of trade, and the cheapest tools the mechanics can employ, the cost of which is frequently exceeded six times over by the Moturpha, under which the use of them is permitted.” Quoted by Raghuvaiyangar in his Progress of the Madras Presidency, 1893, p. 113. 3 Dr. Francis Buchanan in his Journey from Madras, Vol. II, notes that” at Sati-Mangalam in Coimbatore, South India, a new stamp duty of 3 4 + 1 3 of a Vir-Raya Fanam, or about 15 4 d , has been levied on every two pieces of fine cloth; and of 33 4 8  of a Vir-Raya Fanam, or of about 32 4 , on every two pieces of coarse cloth. The weavers in consequence have given up work, and gone in a body to the Collector, to represent their case. The tax is levied in place of a duty of 4 or 5 Fanams a year, that was formerly levied on every loom; by the weavers it is considered as heavier”—pp. 240-1. He also notes “at Dodara Pallyam which contains 50 houses of weavers, the weavers are quite clamorous about the new stamp duty; which, they say, will for every loom cost them 20 Fanams in place of 5 which they formerly paid.” Ibid., p. 242. 4 Parliamentary papers, Vol. V of 1831, Minutes of Evidence on the East India Company’s affairs, Q. 3864-66.

79THE IMPERIAL SYSTEM 1 The following is a conspectus of the taxes levied :— Source of Revenue Amount o Revenue raised in Millions Period Locality and Date of CommencementNo. of Years Dates Land Revenue 662.308 64 1792-3 to 1855-6 Throughout the period in Bengal, Bombay and Madras since 1834-5 in N.W.P. and 1849-50 in the Punjab. Sekyer & Abkary 9.729 20 1836-7 to 1855-6 Throughout the period in Bengal, N.W.P., Madras and Bombay, and since 1849-50 in Punjab. Excise 4.987 ,, ,, Bengal accounts exclusively. Moturpha 6.455 ,, ,, Madras accounts exclusively. Salt 135.532 64 1792-3 to 1855-6 Bengal since 1792, Madras 1822, Bombay 1822, N.W.P. 1839. Opium 106.707 ,, ,, Bengal since 1792, Bombay since 1820. Post Office 8.888 ,, ,, Bengal and Madras since 1792, Bombay since 1813, Punjab 1849, N.W.P. 1835. Stamps 16.697 59 1797-8 to 1855-6 Bengal from 1797, Madras from 1813, Bombay from 1819, N.W.P. from 1834, Punjab from 1849. Customs Duties Internal : 1. Transit 76.179 64 1792-3 to Bengal, Madras and Bombay from 1792-3, N.W.P. from 1834-5, Punjab since 1849-50.2. Town External : 1855-6 1. Import 2. Export Mint Revenue 3.221 ,, ,, Bengal from 1792, Madras and Bombay from 1813. Tobacco 1.437 18 1836-7 to 1853-4 Madras 1836 on. Miscel- laneous 194.777 64 1792-3 to 1855-6 Same as under land revenue. the abolition of such other taxes as being raised from the poor cost the Government more than their yield. Under the injurious revenue system described above, the taxing capacity of the people decayed so that notwithstanding its numerous resources1 from which it derived its revenues the Imperial Government was unable to make both ends meet. It ought to serve as an object lesson to all financiers to show that when their revenue laws are harmful to the resources of the people they must blame none but themselves for their empty treasury.

80 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES Was the money raised by such injurious taxes without reference to their effect on the productive powers of the country spent on such public utilities as were calculated to enrich and elevate the economic life of the tax-paying population ? A glance at the following table giving the distribution of the expenditure by decades on the different services will show how the money was spent :— Distribution of the Expenditure* Percentage Ratio of Total Expenditure on In the Year 1809-10 1819-20 1829-30 1839-40 1849-50 1857 Military … 58.877 64.290 53.754 57.721 51.662 45.55 Interest on debt … 18.010 12.805 12.124 9.756 10.512 7.19 Civil and Political … 7.221 8.900 9.575 12.296 8.902 9.62 Judicial … 7.525 6.800 7.107 9.565 7.180 Provincial Police … 1.991 2.093 1.535 2.062 2.062 9.38 Buildings, Fortifications, etc. 1.639 1.756 2.810 1.428 1.661 . . . * “Past, Present and Prospective Financial Condition of British India,” by Colonel Sykes, Journal of the Royal Statistical Society, 1859, Vol. XXII, p. 457. Prominent among this array of figures are those on the military expenditure and though they have dwindled in years they have invariably consumed more than one half of the total revenues of the country. But the stupendous figures opposite military do not represent the true burden of that expenditure. To them must be added the figures for the interest charge on debt, for the debt incurred was entirely a war debt. India was all throughout this period a battle-ground between the Country Powers and the East India Company. The two Mahratta Wars, the three Mysore Wars, the two Burmese Wars, the two Afghan Wars, and the Carnatic Wars, not to speak of the numerous other minor engagements, were fought in the interests of adding India to the dominions of the Company and of the Crown. While Parliament claimed that the dominions of the East India Company were the dominions of the Crown it must be borne in mind that it refused to pay a farthing of the purchase money. On the other hand, the entire cost of these wars was borne by India as so much dead weight on her scanty resources. The charges shown separately under buildings and fortifications must also be included in the military expenditure, to which category they really belonged. On making these needful additions we find the unparalled fact of a country wasting between 52 to 80 per cent. of its precious little money on war services. It