ABSTRACT
The estimates having been dealt with by the Legislatures, the next step in the financial proceedings of the year is to give effect to them. The revenue laws become operative, and the revenue has to be collected; and the expenditure is incurred according to the programme accepted by the Executive and the Legislatures. But before we undertake the detailed study of the system of collecting and spending money, it is worth while to break the continuity of narrative, and understand the relation of the central and provincial revenues, which has attracted a great deal of public attention. The importance of placing it on a sound basis is recognized. The problem is not peculiar to India, for the relation of local and imperial finance has agitated the minds and abilities of the British statesmen, while in the Federal States there are three-fold complications of local State and federal fiscal adjustments. The problem with slight variations is everywhere analogous. The fiscal problem of the local bodies is considered in another chapter. The Reforms have, on account of its constitutional importance, thrown the problem of fiscal adjustment between the Provincial and Central Governments into bold relief, and created some complications of their own. There is no difference of opinion that a very large measure of independence of the provinces of outside control must be a sine qua non of the political progress of India. The provincial autonomy without financial autonomy can have no meaning, and the present financial arrangements are based on the recognition of this obvious fact. They have, however, caused great dissatisfaction, and a feeling that some of the provinces have been favoured at the expense of others has given rise to acute inter-provincial jealousies and recriminations. It is held that some of the provinces are getting more than their due share of the national income, and others less, and that the Central Government does not leave enough to the provinces to enable them to find money for the important national needs of education, sanitation, and the development of industries, for which they are responsible. The matter has been subject of discussion in some of the Provincial Councils, and has been thrice brought up in the Central Legislature; and on all these occasions the discussions have not been lacking in warmth or animation. It has been discussed in the press and on the platform, and it would be difficult to find any speech or article among the numerous speeches or the articles which have been written or delivered on the subject, in which the present arrangements have been defended. The general dissatisfaction has not been mitigated by the argument with which the Government has sought to justify their continuance—the argument that they cannot be changed so long as the state of the Indian finances remains what it is. Their revision appears evidently necessary, or at least the question needs fuller consideration than it received at the hands of the Financial Relations Committee, ordinarily knows as the Meston Committee, which in a period of less than seven weeks submitted its report, and laid the basis of the present settlement. 71 The question has got a history of its own, and to understand it, it is necessary to trace the evolution of the present position, and explain it with reference to its historical setting.
