developed, and a revision took place under normal conditions, an opportunity will rise for smoothing out inequalities. Bat the unfairness of the unequality of the proposed provincial contributions was too glaring to escape criticism. It was no answer to say that the scheme merely brought to notice a disparity which always existed; and the assurance of a rectification of the inequaility ten years hence would not satisfy those who were immediate sufferers.

The Financial Committee pointed out another defect in the Reports' proposal which was even more fundamental than the first. The gross surplus upon which the contribution was based was illusive. Though the revenues of a province are a sufficiently definite sum, its expenditure cannot be anticipated with the same accuracy; and the difference between the two. therefore i. e. the gross surplus, being variable and even nonexistent, is unsuited to being the basis of calculation.

The Financial Committee adopted the following method to arrive at the initial contributions. They calculated that the net increase in the total income of all the provinces as a result of the new distribution was 1850lacs of rupees; and they assessed the initial contribution on this increase of spending power of each province, taking the case of each on its own merits. Devolution Rule No. 17, based upon their recommendations, prescribes the following contributions payable by each local Government to the Governor-General in Council in the financial year 1921-22. Of course the Committee arrived

at 983 lacs as the deficit in the Central Budget in 1921-22 after a careful examination and adjustment of the relevent statistics. On a general view of the table the heavy contributions of Madras, the United Provinces, and the Punjab, which together make 78% of the whole, and the light assessment of Bengal and Bombay call for comment. But if the character of the transaction as described above is properly understood, it really amounts to the requirement that Madras is called upon to content itself in the initial year with an improvement in its revenue of 228 lacs instead of a possible maximum of 576, the U. P. with an improvement of 157 lacs instead of a possible 397 and so on. Just because immediately they are substantial gainers, they can best afford to postpone the full enjoyment of their ultimate advantages. On the other hand provinces like Bombay and Bengal contribute less because they have gained less and in addition to the direct contributions, they feed the central purse through customs and income-tax,

To proceed next to the Standard Contribution :

As already explained the ideal basis for determining the standard contribution is the capacity of each province to contribute. Now the total contribution of a province will henceforward consist of its direct. contribution towards the deficit and its indirect contribution through the channels of customs, income-tax, duty on salt &c. Evaluation of the amount of this indirect contribution is difficult because of the absence of requisite statistics. Nor is the capacity of a province to contribute easy of measurement; it depends upon a variety of economic inquiries of a complex nature. After a full consideration of the available evidence, the Financial Relations Committee recommended the following standard ratio—and it was to be reached within seven years by regular gradations so that each province might have sufficient time to adjust its finances to the growing burden.

It will be seen from this scale that there is a gradual reduction in the initial proportion in the case of Madras U. P., Punjab; a gradual increase in in the proportion in the case of Bombay, Bengal, Bihar and Orissa, Central Provinces and Assam, and Burma was to pay the same proportion throughout. But the Joint Committee did not like the idea that some provinces

should be called upon to pay an increasingly larger pro-portion of the deficit every year. They declared that in no case should a province pay more than what it paid in the first year. Bihar and Orissa, as it had to pay nothing in the first year, thus escapes altogether; and Burma's initial proportion remains the same throughout. And the standard ratio is now to be reached by a gradual reduction in the proportion of the deficit in the case of Madras, the United Provinces and the Punjab.

Devolution Rule 18 thus lays down the process of transition: From the financial year 1922-23 onwards a total contribution of 983 lakhs, or such smaller sum as may be determined by the Governor-General in Council, shall be paid to the Governor-General in Council by the Local Governments mentioned in the preceding rule (i. e.. all Governments except Bihar and Orissa). When for any year the Governor-General in Council determines as the total amount of the contribution a smaller sum than that

payable for the preceding year, a reduction shall be made in the contributions of those local Governments only whose last previous annual contribution exceeds the proportion specified in the margin of the smaller sum so determined as the total contribution; and any reduction so made shall be proportionate to such excess. It will be seen that the proportions are the same as those recommended by the Meston Committee except for the change required by the elimination of Bihar and Orissa from the list.

The principle then that in no case should "the initial contribution

payable by any province be increased but that the gradual reduction of the aggregate contribution should be the sole means of attaining the theoretical standard recommended by the Financial Relations Committee" was laid down by the Joint Committee to emphasize the first principle of the Meston Committee that the contributions of the provinces to the Central Government should cease at the earliest possible moment. "The Committee attach great importance to the fulfilment of this intention, and they are convinced that the opposition which the proposals of the Financial Relations Committee have evoked would be much diminished if it becomes possible to the Government of India to take steps to ensure the abolition of the contributions within a reasonably short period. They trust that the Government of India and the Secretary of State in Council will, in regulating their financial policy, make it their constant endeavour to render the Central Government independent of provincial assistance at the earliest possible date."

42. Further Rules about financial arrangements Rules about are as follows:

Provincial Con

tributions.

(19) Excess contributions in case of emergency-In cases of emergency the Local Government of any Province may be required by the Governor-General in Council, with the sanction of, and subject to conditions approved by, the Secretary of State, to pay to the Governor-General in Council a contribution for any financial year in excess of the amount required by the preceding rules in the case of that year.

(20) Priority of contributions-The contributions and assignments fixed under the preceding rules shall be a first charge on the allocated revenues and money of the