114 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES
while there was practised a retrenchment in expenditure, the charges for interest on public debt was found to swell enormously. In the midst of such a percarious situation the Government of India decided to reduce the hitherto prevailing rate of the income tax in order to silence the outcry raised against it by the richer classes. As a possible method of ways and means to meet the additional deficit of £1,000,000 that was expected to arise from the reduction in the income tax rate, the Government of India issued another Confidential Circular, dated August 17, 1870, in which a much wider scope was given to the contemplated scheme of provincial Budgets. It was stated in this Circular that
“If the income tax was to be reduced, the ways and means of government must be otherwise recruited..... preferably..... through the agency of Local Governments, and by adopting such methods of taxation as are considered most suitable to each province and least burdensome to the people.”
The method of throwing the burden on Local Governments consisted in making over to them charges of certain departments of the administration more or less local in character with a net grant on them for 1870-1 reduced by a million sterling. [1] It was proposed to distribute this sum among the various provinces in the proportion which the net provincial grant of each bore to the total net grant and leave them free to make up their respective quota of retrenchment either by redistribution, retrenchment, or taxation.
After the concurrence of the Provincial Governments had been obtained to the plan of the Circular, it was announced by the famous Financial Resolution of December 14, 1870, as being adopted for execution from the commencement of the Financial year 1871-2.
We will now proceed to analyse the constitution of the Provincial Budgets as framed by this Resolution. Taking first the expenditure side of the Provincial Budget, it may be noted that the charges for the following Imperial services were incorporated into it:—
*1. Jails.
1 Net grant means total expenditure on a service minus the receipts from the service.
*Appendix B of the Resolution gives a schedule of certain works for which separate
funds were to be provided from the Imperial Revenue. They were Buildings and Offices
of the following Departments :—
Opium (not including the Board of Revenue’s office in Calcutta). Mint and Currency. Post Office. Telegraph. Offices of the Supreme Government. Viceregal Residences. Imperial Museum. Stamp and Stationery Office Calcutta. Treasury Buildings Bhishop’s Palace Godavery Works Reserved as Imperial for the present. Karachi Harbour Improvements Such Military Roads as have been till the current year provided for from the grant for “Military Works”.