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Vol. 6 · pages 96–100

The Evolution of Provincial Finance in British India; The Problem of the Rupee; other economic writings

This text was extracted automatically from the official PDF of Dr. Babasaheb Ambedkar: Writings and Speeches, so it may contain small errors. Always check the original page before quoting.

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81THE IMPERIAL SYSTEM may, perhaps be argued on the other hand that much of the military expenditure, large though it was, went back into the coffers of the Indians themselves as they formed the bulk of the forces employed in the country. The Indians of course, formed a very large portion of the military, 1 and if the scales of salaries fixed for the European and native forces were equal the result would have been favourable to the natives of the country, though it cannot be said to have excused that huge military expenditure. But the scales of salaries for the Europeans and natives were so grossly unequal 2 that one European drew on an average more than the salaries of four natives put together. So this expenditure, whether from the standpoint of public utility or private employment, did not benefit the population which contributed to the revenues of the State. 1 This may be seen from the following figures :— STRENGTH OF THE INDIAN ARMY BEFORE THE MUTINY* European Native Total Artillery ... 6,419 9,138 15,577 Sappers ... 110 3,043 3,153 Cavalry ... 3,456 30,533 32,989 Infantry ... 29,760 188,660 218,420 Total ... 38,745 231,374 270,119 *Report of Major-General Hancock on the Reorganization of the Indian Army, Parliamentary paper of the year 1859, p. 21. 2 This is indicated by the following table :— COST OF AN INFANTRY REGIMENT PER MONTH EUROPEAN Details Total OfÀ cers Rs. As. Ps. Rs. As. Ps. 37 Officers … … 14,734 14 3 Staff and Establishment … … 4,515 12 4 21,779 2 7 Command and other allowances 2,528 8 0 Men 117N.CO.S. … … 2,289 4 5 950 Privates … … 11,203 8 4 Rations, clothing and other charges 12,506 11 3 25,999 8 0 Total 47,778 10 7

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82 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES The civil and political charges which absorbed nearly 10 per cent. of the revenue can hardly be said to be recuperative in their effect. This part of the expenditure again was not shared by the native population which bore its burden. As a result of conquest the natives naturally came to occupy a secondary position; but the conquest had done more than merely degrade their status. It had engendered a certain sense of distrust for the natives in the minds of Englishmen. Conquered and distrusted the natives since the commencement of British rule had come to be excluded from the higher administrative posts of the country.1 It was to remove this injustice that Parliament in the Act of 1833 provided “that no native of the said territories, nor any naturalborn subject of His Majesty resident therein, shall, by reason only of his religion, place of birth, descent, colour or any of them be disabled from holding any place, office, or employment under the said Company” (sec. 87). NATIVE Details Total OfÀ cers Rs. As. Ps. Rs. As. Ps. 26 Europeans … … 9,861 2 1 20 Natives … … 940 0 0 13,527 8 7 Staff and Establishment … … 1,209 1 4 Command and other allowances … 1,517 5 2 Men 140 N.C.O.s. … … 1,780 0 0 1,000 Sepoys … … 7,000 0 0 9,606 14 0 Charges … … 826 14 0 Total 23,134 6 7 It is evident from this table that if we deduct the salary of 26 European officers and command and other allowances shown under the heading “Native” which amounts to Rs. 11,378 7. 3. we shall find that 1,104 Europeans drew Rs. 47,778 10. 7. while 1,160 natives drew only Rs. 11,755 15. 4. 1 Before 1833 the very meagre scale on which they were employed is disclosed by the following figures :— Native Civil Servants of the 1st Class attached to the Secretariat of the 3 Precidencies Receiving per Month Salaries of :— Bengal Madras Bombay Total Total Salary Drawn Total Salary Drawn Total Salary Drawn Total Salary Drawn No. No. No. No. Rs. 500 and upwards 5 2,700 … … 5 2,500 Rs. 400 ” 2 800 … … 1 400 Rs. 350 ” 4 1,400 1 350 1 350 Rs. 300 ” 3 900 … … 2 600 Rs. 250 ” 5 1,250 … … 1 250 89 20,690 From Rs. 250 to 200 17 3,460 5 1,155 1 200 From Rs, 200 to 150 10 1,590 4 682½ … … From Rs. 100 to 150 5 550 5 525 5 330 Below Rs. 100 6 470 1 87½ 2 140 Total 57 13,120 16 2,800 16 4,770

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83THE IMPERIAL SYSTEM But, as a matter of fact, till after the Mutiny not one of the natives was appointed to any office except such as they were eligible for before this Statute was passed, because the Court of Directors in interpreting it advised the Government of India at the very start that by this enactment “practically......no very marked difference of results will be occasioned. The distinction between the situations allotted to the convenanted service and all other situations of any official or public nature will remain generally as at present.” 1 The Judicial and police charges, which together absorbed something like 10 per cent. of the total revenue raised, can only be regarded as protective in their character. Thus the bulk of the money raised by injurious taxes was spent in unproductive ways. The agencies of war were cultivated in the name of peace, and they absorbed so much of the total funds that nothing practically was left for the agencies of progress. Education formed no part of the expenditure incurred and useful public works were lamentably few. Railways, canals for navigation or irrigation and other aids to the development of commerce and industry for a long time found no corner in the Imperial budget. For a total area of 837,000 square miles there were constructed a few miles of railways, 2,157 miles of land ways, 580 miles of waterways and 80 miles of telegraph. Or speaking in terms of money spent, we find that for the entire period of fifteen years from 1837-8 to 1851-2 the average expenditure of a productive character amounted only to £ 299,732 1 Despatch to Bengal No. 44 dated December 10, 1834, para. 107. *Report of the Civil Finance Committee on Native Establishment at the three Presidencies,—Bengal Financial Consultations dated April 13, 1830. India Office Records. The subordinate establishments of uncovenanted Christian and native servants attached to the several presidencies were divided by the Committee into four classes, (1) comprehending Head clerks, Registrars, Managers and their assistants, Examiners, Investors, etc., employed under the Secretaries in superintending and conducting the business of the office; (2) Current Business Writers, and permanent Copyists; (3) Sectioners or copyists paid by piece work, and (4) all inferior servants. The Committee found that Para. 35. The salaries received by the Current Business Writers in Calcutta vary from Rs. 20 to Rs. 300 per mensem, an average for each individual Rs. 104; in Bombay they vary from Rs. 15 to 120, an average Rs. 48; at Madras it is an established rule that the average remuneration to servants of this description in the Secretariat at that Presidency is Rs. 27½ , which is distributed at various rates from 10½ to 87½, rupees, according to the claims of the individuals from length of service and utility...... Sectioners in the Secretariat office, Bengal, were paid at the rate of 750 words per rupee; while at the other two Presidencies it was about 1333 words for a rupee. Para. 51. The present charge for servants attached to the Secretariat in Bengal is Rs. 1,142 per month; at Madras, including mochies (cobblers), Rs. 455; and at Bombay, Rs. 261. In Bengal there were 186 servants; in Madras 56; and in Bombay 42.

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84 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES a year.1 There is a principle well known to farmers that constant cropping without manuring ends in the exhaustion of the soil. It is, however, capable of wider application, and had it been observed in the State economy of India the taxing capacity of the country would have grown to the benefit of the treasury and the people. Unfortunately it was lost upon the financiers of India to the detriment of both. But if the chance of augmenting the resources by judicious taxes and productive expenditure to cover the chronic deficits was forfeited, there was at least the way open for economy in expenditure. As might be supposed, a strong Central Government of the kind established in 1833 was capable of effecting economy wherever possible. As a matter of fact, the centralization was of the weakest kind. De jure there was an Imperial system of administration, but the de facto administration was conducted as though the primary units of executive government were the Provinces and that the Government of India was only a co-ordinating authority. This was obvious from a variety of circumstances. Legislation was, it is true, centred in the Government of India; none the less the laws that were passed by the Government of India were passed for the different provinces as though the initiative in legislation still lay in the Provinces and that the Government of India was only a sanctioning authority. Each Province had its own customs, internal as well as external, a survival of their sovereign status. Each Province continued to have its own Army. Notwithstanding centralization, the account system still remained provincial, sustaining the sense of their financial independence. The work of administration and collection of revenue being still conducted by them, the provinces behaved as though they were the lawful authorities charged with the responsibilities of Government. This spirit of independence bred insubordination, and some of the Provinces, particularly Bombay and Madras, endeavoured to resist the attempts of the Government of India to tax the people under their jurisdiction when the cost of the mutiny compelled it to levy fresh burdens. The point to be borne in mind is that the Act of 1833 made an unfortunate divorce between the legal and administrative responsibility. The Imperial Government were responsible in law but did not administer the country. The Provincial 1 Statistical paper relative to British India. Edited by Thornton, 1853.

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85THE IMPERIAL SYSTEM Governments administered the country but had no responsibility in law. This divorce had a fatal effect on the economy in the finances of the country. As was inevitable extravagance in expenditure had become the rule in practice and it was inherent in the Imperial system itself. Economy is begotten of responsibility, and responsibility is obtained where a government has to find the resources to meet the charges it desires to incur. Prior to the inauguration of the Imperial system the Provincial Government had the obligation to raise money for the charges included in their budgets. Consequently they had to be economical. But under the Imperial system, while the budgets for the various services were prepared by the provincial authorities, the responsibility for finding the ways and means rested on the Government of India. Formerly they knew the limits of the purse they had to draw upon, but under the Imperial system they “had no means of knowing the measure by which their annual demands upon the Government of India ought to be regulated. They had a purse to draw upon of unlimited because of unknown depth. They saw on every side the necessity for improvements, and their constant and justifiable desire was to obtain for their own provinces as large a share as they could persuade the Government of India to give them out of the general revenues of the Empire. They found by experience that the less economy they practised, and the more importunate their demands, the more likely they were to persuade the Government of India of their requirements. In representing these requirements, they felt that they did what was right, and they left to the Government of India, which had taken upon itself, the responsibility of refusing to provide the necessary means.” 1 To these extravagant demands the Government of India had often to yield; for, till very late, it did not possess the machinery to appraise the demands and to control the expenditure on them. It is not usual to expect much efficiency from any Imperial system of administration, much less when it covers not a department, not a province, but a country as big as a continent. Merely from being huge it is slow to move. Much slower would it necessarily be if it were a system as unorganized and unconsolidated as the Indian system was. First of all, the Imperial system in India was without 1 The Administration of the Earl of Mayo, as Viceroy and Governor-General of India— a Minute by the Honourable John Strachey, a member of the Council and late acting Governor-General, dated April 30, 1872. Calcutta Office of the Superintendent of Government Printing, 1872, p. 46.