any statutory prescription to that effect is required. Where the Council have reduced a provision for a reserved subject which the Governor considers essential to the proper administration of the subject concerned, he will have a power of restoration. The Committee wish it to be made perfectly clear that the power is real and that its exercise should not be regarded as unusual or arbitrry; unless the Governor has the right to secure supply for those services for which he remains responsible to Parliament, that responsibility cannot justly be fastened upon him."

It will thus be seen that the resolutions of the Council on the budget of the transferred subjects are binding; but those on the budget of the reserved subjects are of a recommendatory character only.

Fresh taxation.

134. It is necessary to understand clearly the case of fresh taxation. There is one essential difference between the system of taxation prevailing in the United Kingdom and that in vogue here. In India a considerable part of the revenue is raised under the head of Land Revenue and Excise and though there are statutes relating to these branches of administration, the power of imposing taxation and adding to the existing burden is vested in the executive and does not require legislative sanction. In the United Kingdom on the other hand, taxes can only be imposed by legislation passed in Parliament after full discussion. Now the Excise Department is a transferred subject and thus its fiscal aspect is under the control of the Council. Though Land Revenue is a reserved subject, the Joint Committee has declared that its process of enhancement should be made more and more amenable to the control of the Council. There will thus be little chance of taxation being imposed or enhanced by mere executive authority in the case of the Excise or Land Revenue. But whether a fresh

tax fell upon a reserved subject or a transferred subject the proposal for it should be thrashed out, as the Joint Committee recommend, by both parts of the Government in consultation together, and it is especially important that in this matter both parts of the Government should, if possible, be in agreement when the proposals of the Government are laid before the Legislature.

But as the subject of taxation is a reserved subject, in the case of the Council opposing fresh taxation, the Governor has the ordinary right of 'certifying' a fiscal Bill like any other Bill, and thus carrying it through.

135. After having explained the new principle, let us next summarise the procedure which The new prothe Budget has to follow.

cedure.

The Budget is presented to the Council on a day which the Governor appoints. This is done by the Finance Member, who in his speech, takes a review of the finances of the province, refers to any new Schemes of expenditure which Government propose, and generally explains the broad principles underlying the Budget. No discussion is allowed on this day.

Then the Council proceeds to deal with the Budget in two stages, (a) general discussion, and (b) voting of demands for grants.

On a day appointed by the Governor subsequent to the day on which the budget is presented, and for such time as the Governor has allotted for this purpose, the Council discusses the Budget as a whole or any question of principle involved therein. At this stage no motion is. moved, nor is the budget submitted to the vote of the Council. At the end of the discussion the Finance Member has a general right of reply.

The Second Stage begins with the voting of grants. The rules under the Act require that a separate demand will ordinarily be made in respect of the grant proposed for each department of the Government. Demands affecting reserved and transferred subjects are, as far as possible kept distinct.

Not more than twelve days can be allotted by the Governor for the discussion of the demands, and not more than two days can be allotted for the discussion of any one grant. As soon as the maximum limit of time is reached the President forthwith puts every question necessary to dispose of the demand under discussion-Similarly on the last day of the allotted days, at the specified time the President puts every question necessary to dispose of all the outstanding matters in connection with the demands.

At this second stage motions are moved to omit or reduce any grant or any item in a grant. But no motion can be made to increase or alter the destination of a grant. The Budget is passed when all the demands have been thus disposed of by the appointed time on the last day.

136. Such briefly are the various functions of the Council-interrogatory, legislative and deliberative. In each case

Summary.

the powers of the Council have been greatly augmented and their proper use ought to invest it with an effective control over the executive which is the essence of responsible government.

The financial and legislative functions of the Council. are by far the most important of the whole lot and we must next refer to certain devices that have been adopted to enable the Council to discharge them satisfactorily. It must exercise a rigorous control over provincial finance; it must pass provincial laws after due deliberation. Let us see how it does this in practice.

137. The necessity for this check becomes all the greater when we recall to our mind the financial position

nance.

of the provinces. As already explained, Checks over the provinces have been made largely Provincial Fiindependent of the Central Government in the matter of finance. We have just now seen how the Council is to enjoy a more effective voice in the settlement of the budget of transferred as well as reserved departments. These two forces render it all the more necessary to have an effective supervision over provincial finance within the province itself. This has been secured in three ways. By

(1) the reconstruction of a Finance Department in each Province;

(2) the control of a strong Audit System;

(3) the control of the Legislative Council.

138. There was a Finance Department under the old System also; but it was merely the agent of the Central Finance Department and had little scope The Finance for initiative or advice of its own. Department.

It has now been wholly reconstructed by Rules under the Act and endowed with extensive powers of advice and control in all matters bearing upon provincial Finance. It is in the hands of a Member of the Executive Council who has subordinate to him a Financial Secretary and a Joint Secretary. The Joint Secretary is specially charged with the duty of examining and dealing with financial questions arising in relation to transferred subjects and with proposals for taxation or borrowing put forward by any Minister.

Its functions have been thus enumerated by Rules. The Finance Department is to (a) be in charge of the account relating to loans granted by the local Government, and advise on the financial aspects of all transactions relating to such loans; (b) be responsible for the safety and

proper employment of the Famine Insurance Fund; (c) examine and report upon all proposals for borrowing by the local Government, take all the steps necessary for the purpose of raising such loans, and be in charge of all matters relating to them; (d) examine and report upon all proposals for the increase or reduction of taxation; (e) be responsible for seeing that proper financial rules are framed for the guidance of other Departments and that proper accounts are maintained by them; (f) prepare an estimate of the total receipts and disbursements of the Province in each year and be responsible during the year for watching the state of the local Government's balances; (g) in connection with the budget and with supplementary estimates, to prepare the statement of the estimated expenditure and revenue to be laid before the Legislative Council, to obtain the requisite information from the Departments for that purpose, and to examine and advise on all new schemes of expenditure projected in the budget; (h) on receipt of a report from an Audit Officer to the effect that expenditure for which there is no sufficient sanction is being incurred, to take steps to obtain sanction or to immediately stop the expenditure; (i) to lay the audit and appropriation reports before the Committee on Public Accounts and to bring to the notice of the Committee all expenditure which has not been duly authorised and all financial irregularities; (j) to advise Departments responsible for the collection regarding the progress of collection and the methods of collection employed.

Previous sanction of the Finance Department is necessary for reappropriation of grants voted by the Council.

Previous consultation with it is necessary to incur extra expenditure in connection with the heads detailed in 72-D (3), of the Act, to increase or decrease any office in the Public Service, or to change the emoluments of any