The Division of Provincial functions into 'Reserved' & Transferred.

31. The second division is that of the Provincial subjects into those that are 'Transferred' to the Ministers, and those that are 'Reserved' to the Council. Here the Report laid down the guiding principle "to include in the transferred list those Departments which afford most opportunities for local knowledge and social service, those in which Indians have shown themselves to be keenly interested, those in which mistakes that may occur though serious, would not be irremediable, and those which stand most in need of development. But Departments primarily concerned with the maintenance of law and order, and matters which vitally affect the well-being of the masses who may not be adequately represented in the new Councils, such as the questions of land revenue or tenant rights should not be transferred."

The list of subjects for transfer as finally adopted is given in Appendix B. It is impossible to explain here why a particular subject was or was not transferred and the extent of transfer. But subjects like Land Revenue, Education, and Industries, are sufficiently important to deserve examination.

Land Revenue.

32. The transfer of land revenue even under limitations was opposed by the Government of India on the ground that it was against certain well-defined principles of administration. "It has come to be regarded as settled policy that in justice to its subjects. at large the State ought not to forego its share in the unearned increment of the land revenue as it would do if settlements of Land Revenue were to be made permanent."

If land revenue were transferred, attempts would be immediately made both to extend the duration of settlement which is now 30 years, and to cut down the natural increment of assessment, and thus to approximate to the 'permanent settlement."

Mr. Feetham thus stated the case against the transfer of land revenue. 'Land Revenue' was specially mentioned in the Report as a subject which was not suitable for transfer at the first stage. In the provinces which are not Rayatwari, that is where the questions of Landlord and Tenant are very important, it was felt that until these new Councils had been elected and until some experience had been obtained of their work, and of the way in which parties and interests would be represented, it was inadmissible to bring that subject into the political arena. In the Rayatwari provinces, on the other hand, the transfer of land revenue was of course a very big question; it would involve a far-reaching change; and it was thought that at the outset such a far-reaching change should not be introduced until experience had been gained of the working of the Reform Scheme. Again, the present system of dealing with Land Revenue is a system which is peculiarly unsuited to conditions of Parliamentary control. In the Rayatwari settlement, the revision is based upon a set of elaborate rules issued by the Executive. And it is difficult for a Parliamentary Body to deal with the question of land revenue as long as it depended, to the extent it does to-day, on executive order, that is, as long as the reassessment of particular areas depended simply upon executive order and not on legislation. To alter that arrangement of dependence on excutive order by requiring a separate Bill to be introduced when there was a reassessment would be an undesirable plan, because it wonld set the interests of one District against another, and it would be inviting a popular body to do work which a popular body is not by its nature fitted to do. Land revenue must be put on a statutory basis more completely than at present before it could be transferred."

But some members e.g. the (Hon. Dr. Sir Chimanlal Setalwad, the Hon. Dr. Sapru, and Sir Rahim Baksh) of the Functions Committee were for transferring Land Revenue and Irrigation in Bombay though they did not press the point against the majority which opposed it. The argument for transfer has been most forcefully put by Sir Shankaran Nair. "Indian Poverty

is attributable to the Land Revenue Policy and the Industrial Policy hitherto followed by the Government of India. The chief defect is that, in the case of land revenue, it has been increased by executive action. The land revenue or land rent should be treated as revenue pure and simple to be imposed by the Legislative Council. At present, outside the permanently settled Jamindars, the theory maintained by the Executive Government is that land is the private property of the Crown, the land-holder being bound to pay any assessment that may be fixed by Executive Government at their discretion; India is the only country in the world where neither law nor custom nor competition determines the revenue or rent. This has been responsible to a great extent for the increasing poverty of the country. It has certainly tended to keep away labour and capital from land."

This view was mainly accepted by the Joint Committee. "The Committee are impressed by the objections raised by many witnesses to the manner in which certain classes of taxation can be laid upon the people of India by executive action without, in some cases, any statutory limitation of the rates and, in other cases, any adequate prescription by statute of the methods of assessment. They consider that the imposition of new burdens should be gradually brought more within the purview of the Legislature. And in particular, without expressing any judgment on the question whether the landrevenue is a rent or tax, they advise that the process of revising the land revenue assessment ought to be brought under closer regulation by statute as soon as possible. At present this statutory basis for charging revenue on the land varies in different provinces; but in some at least the pitch of assessment is entirely at the discretion of the Executive Government. No branch of the administration is regulated with greater elaboration or care; but the people who are most affected have no voice in the shaping of the system, and the rules are often obscure and imperfectly understood by those who pay the revenue. The Committee are of opinion that the time has

come to embody in the law the main principles by which the land revenue is determined, the methods of valuation, the pitch of assessment, the periods of revision, the graduation of enhancements, and the other chief processes which touch the well-being of the revenue payers. The subject is one which probably would not be transferred to Ministers until the electorate included a satisfactory representation of rural interest, those of the tenantry as well of the land-lords. And the system should be established on a clear statutory basis before this change takes place."

Accordingly, land revenue as described under certain heads has been kept a reserved subject (see 8 in the list) of provincial subjects. Again, the "Reservation of Bills" Rules declare that the Governor shall reserve for the consideration of the Governor-General any Bill, not having been previously sanctioned by the Governor-General, which has been passed by the Legislative Council of the Province, which affects the land revenue so as to (1) prescribe a period or periods within which any temporarily settled estate or estates may not be reassessed to land revenue (2) limit the extent to which the assessment to land revenue of such an estate or estates may be made or enhanced or (3) modify materially the general principles upon which land revenue has hitherto been assessed, if such prescription, limitation or modification appears to the Governor to be likely seriously to affect the public revenue of the province."

33. The provincialization and also the transfer of this subject were opposed by the Government of India. Their arguments against provicialization briefly were these. (1) that the Central Government cannot possibly divest itself of the responsibility for

Industries.

the industrial development of the country which is necessary to secure its military safety, its freedom from outside econo

mic aggression, and its social and political stability. (2) Its existing control over railways, tariffs, foreign trade relations, scientific industries and geological survey etc. shows that it should also direct industrial development. (3) It alone can finance costly establishments for research and experiments, often of great value to the nation. (4) A Central Agency equipped with full scientific and industral staff, is needed to help and advise Local Governments, to coordinate their efforts, to pool their experience, and to set the pace of the advance.

But even supposing that Industries were made provincial, the Government of India wanted to have them 'reserved.' They pointed to certain practical difficulties in the way of transfer. (1) The Departments of Industries were either new or nonexistent in most provinces and it was impossible for a Minister, untrained in administrative work and inevitably devoid of industrial experience, to essay this initial work with success. (2) The difficulty of finding Indian industrialists practically qualified to fulfil the duties of the Ministers of Industries. (3) Indian opinion is generally opposed to the investment of British Capital in India and to giving opportunity or Scope to British enterprise; and therefore there is strong ground for apprehension that an increasing degree of Self-Government would bring with it an increasing degree of racial discrimination.

Sir Thomas Holland, emphasised the above arguments and complained that the kind and magnitude of the foundations that have yet to be laid before any appreciable progress can be made towards the development of modern technical Industries were not realised. The cottage and village industries, though useful in their way and deserving encouragement would not supply that foundation. India is deplorably deficient in many things that are essential for a self-sufficient national life. A technical staff has to be created and organised; an enormous amount of research work has to be done; a reconnaissance-survey of the hydro-electric power resources