chapter  IX
7 Pages

SEPARATION OF RAILWAY FROM GENERAL FINANCE

On the 2oth September, 1924, the Legislative Assembly adopted an amended resolution regarding the separation of railway from general finance. The resolution was originally moved by Sir Charles Innes-the Commerce Member of the Government of India-on the 3rd March, 1924. The proposal was, however, referred to a committee and its discussion postponed. The committee worked out the details and submitted its report. There were some changes in the form of the resolution, and one or two in its substance. The resolution was redrafted generally in order to remove certain misconceptions and bring out the intention of tho Government more clearly. There was not much difference of opinion regarding the underlying principle of the proposal. But the amendment moved by Sir Parshotamdas Thakurdas, which provided against the transference of the management of the state railways to the companies, and for the rapid Indianization of the services, gave rise to an animated debate. It looked as if this important measure of financial reform was going to be wrecked in tho heated atmosphere of the Assembly, but the good sense of the House asserted itself, and saved the situation. The consideration of the measure was adjourned for a day. The next day a compromise acceptable to all the parties was arrived at, and the amended resolution was duly carried. The text of the resolution as finally adopted by the Legislative Assembly is given in the footnote. 1

It is generally admitted that the separation of the railway from the general finance is in the interest of the railways, the country as a whole, and the tax-payer. The Acworth Committee declared themselves in favour of the separation in the following words which are both emphatic and clear: "We do not believe," they wrote in the para. 58 of their Report, " that it is possible to fit the railway management into the rigid framework of the existing financial system of the Government of India. We do not think that the Indian railways can be modernized, improved, and enlarged so as to give to India. services of which it is in crying need at the moment, nor can the results of the commercial lines (excluding the capital contributed by companies and Indian States) at the end of the penultimate financial year plus one-fifth of any surplus profits remaining after payment of the fixed return, subject to the condition, that if in any year railway revenues are insufficient to provide the percentage of one per cent on the capital at charge, surplus profits in the next or subsequent years will not be deemed to have accrued for purposes of division until such deficiency has been made good.