THE NEW INDIAN DEFICIT.
WE wonder if the Duke of Argyll ever swears. Dignified and Presbyterian as he is, he must have felt grievously tempted towards that lawless method of securing mental relief when a few days since he received the "revised accounts" from the Indian Treasury. The blunders they reveal are just of the kind which would exasperate a financier trained in Euro- pean traditions to the verge of frenzy, not being grave enough to make him fall back on the Christian virtues of patience and resignation, not dangerous enough to rouse him to fighting temper, yet serious enough to upset all his arrangements, throw out all his calculations, and make him look politically like a fool. It is not three months since the Duke received the com- pliments of the House of Lords on the very lucid and tolerably satisfactory exposition which he was able to make of the posi- tion of Indian finances, showing that there was a deficit of £1,500,000 or so last year, but this year there would be a complete equilibrium, if not some trifling surplus. Now, his first duty on the reassembling of Parliament will be to announce that his nice accurate budget was all wrong ; that his equlibrium is a delusion ; that he must immediately raise £3,000,000 more than he expected ; that he has nothing par- ticular, or, at all events, nothing very pleasing to show for the money ; and that he does not know whether the new account is more trustworthy than the former one. If anything could add to the annoyance of such a situation, it would be the facts that a four-per-cent. loan was open in India ; that it was filling very fairly ; that it must now be kept open much longer ; that in all probability better rates must be given a proceeding intensely resented by the local money market, which is thereby fleeced of its little profits—and that for all this the Duke is no more responsible than the Great Seal. His part in the business is to remedy other people's blunders, and give up his own projects of improvement. The Anglo-Indians have only displayed once more, on a good big scale, the appar- ently incurable defect in their training, the total inability to do sums in compound addition, or to collect figures accurately enough to let people do them at home. They used to show it before 1813, when the Company was the greatest single trader in the world, and when its civilians used to ship silk home to be entered as trade receipts, and carried the cost of the silk to the debit of the revenue. They have shown it at intervals ever since, in one case making a literal mistake in addition of a million, in another forgetting that the Home Government must speedily draw on them—that mistake nearly closed the Calcutta Treasury—and again, sending forth an estimate for the year about two millions too favourable. This is the fourth or fifth blunder of the kind within our own recollection, and its causes are, by all accounts, simple enough. The Indian Treasury had made up its accounts for the year which ended 1st March, 1869, and found itself some million or so short. That was clear, if not satisfactory, and it was arranged that the money should be borrowed, and Sir R. Temple consoled himself with glowing predictions as to the future, when, lo ! in tumbled more accounts from public works, and some bills for stores which, having been ordered from India, ought to have been remembered by the Treasury, the additional demands amount- ing to another million in all. An extra and unexpected million of outlay is something even in England, but in India, where the Government cannot ask for another penny on the income-tax, or borrow anything it likes on Exchequer Bills, where the Central Treasury is always drained quite as closely as it ought to be, and where there are the gravest reasons for keeping up the Reserve, such a demand is a disaster. This, however, is not all. Nothing on earth can induce the Indian Treasury to remember the first rule of thrift in large house- holds, namely, that unexpected demands are as certain to recur every year as the expected demands,—that there will always be a plumber's bill for repairs. Everybody who has kept house knows that every year he is called on to pay for something, be it a lawsuit, or a new horse, or a fallen chimney, or a doctor's bill, which he did not anticipate, but cannot avoid, and if he is prudent he leaves a margin for "contingencies." The Indian Treasury does not. We do not believe there ever was a year in which the empire had not some bill to pay which nobody had foreseen, but the officials go on quite cheerfully, confident that they and "the resources" can between them get through anything, a confidence which, no doubt, though unscientific, has often been justi- fied. They think they are quite liberal if they allow a margin of a half per cent., that is, of a five-pound note on an income of £1,000 a:year, and very seldom do even that ; and when the strain comes, fall back on the "Balances," which ought to be rigidly let alone. This year the accidents are the North-West famine, of which they had warning, and a fluctuation in opium, which is always at least as likely as a fluctuation in hops. Therefore, the estimate for the year now half spent is too good by about two millions, and the total deficit to be made up for the two years will be more than £3,000,000 greater than anybody believed. Of course every- thing is thrown violently out of gear. The money market is worried, the India House hardly knows what to do about drawing, the Government "retrenches" everywhere in a style which makes half its best servants feel as if effort were useless —there is a director of schools, for instance, in Nagpore, who has just got his department into order, when—clip ! a fourth of his budget is gone,—and the Secretary of State is employed for a year in repairing damages and providing for future trouble. Moreover, serious though these new demands are, there is a worse feature about them, and that is their uncertainty. There is no proof whatever of any kind that there will not be another bill yet still heavier, a re-revised estimate, with its necessity for borrowing six millions, instead of four and a half. From the tone of the inspired Indian press, from the reports of the famine in the North-West—which are horrible to ghastliness—and from what we know of the overwhelming temptation on the Indian Treasury not to seem more wrong than it can help, we venture to predict decidedly that, unless
some windfall comes on the other side—as, for instance, a rise in opium—there will be such an additional demand to be encountered before March.
Is there no remedy for an evil which threatens to become chronic, and which if not dangerous to the solvency of the empire, owing to the great margin in the public works' depart- ment, is fatal to progressive government ? No thorough cure can, we fear, be expected until the master evil of India can be remedied, and we confess that task daunts us who are irre- sponsible, and may well, therefore, daunt the responsible Secretary of State. No Government in India has the spend-
ing of its own revenues. Madras, for example, raises £7,490,000 per annum, her taxation being much heavier than that of Bengal. Out of that she pays her army and officials, and the balance goes to the Central Treasury, which reassigns her as much as it likes for improvements after the most furious official squabbling. Consequently, Madras has not the slightest interest in taxing herself, or collecting much revenue, or saving money in any way, however easy or obvious. If she does any of those statesmanlike things, the Treasury will give her no more, perhaps will give her less, as being prosperous and less in need of improvement, and the money saved at the cost of much odium will be spent, perhaps, on a "strategic railway" between Lahore and Peshawur, further from her frontier than the Moscow railway is from Paris. Her interest is to get all she can by so committing the Treasury to vast works that it seems cheaper to go on than to draw back, more profitable, say, to borrow to finish the works of irrigation than to let them remain unfinished, and therefore unproductive. This spirit pervades every department, the creation of, for instance, new appointments is practically a saving to Madras of money which would otherwise go elsewhere, and is the first and sufficient cause of the incessant miscalculations in the Central Treasury. It cannot heartily enlist the Presidencies in its plans. The true policy would be to make the central expenditures— the Army, Debt, and Home expenses — the first charge on the local revenues, to be met by a fixed con- tribution, and leave the remaining money to the Presidencies to expend at their own discretion, thus giving them some in- terest in economy; but clear as that policy is from the financial point of view, there are political objections to its adoption which have hitherto made the boldest shrink. The Presiden- cies, which are already jarring States, would instantly become hostile kingdoms, and the empire would be broken up into a group of colonies without the smallest bond of coherence, except a common allegiance to Great Britain. It would be simply impossible to secure prompt obedience to the Viceroy ; and England, which would be obeyed, is still too far off to be an effective centre.
Pending this revolution, however, there are palliatives which might be adopted without too great an effort, and which would mitigate, if not altogether relieve, the existing confusion. The first and most important of these is to insist on a system of accounts so clear, so accurate, and furnished in such good time, say, with the new year, that the Minister of Finance should always know on 1st April pre- cisely what had been spent, and be able to estimate to a shil- ling the ordinary and regular charges. This sine qua' non can only be secured by severity, that is, by exchanging the present system of reprimand for one of summary dismissal. If the local authority responsible is dismissed for blundering, or being too late, his successor will be accurate and prompt ; but supported as he is by his own Government, to which alone he looks for promotion, no milder or less arbitrary punishment will suffice. At present, if the head of public works in Madras spends too much, and is reprimanded by the Viceroy, his repri- mand would be a local reason for promoting him, as an officer of exceptional zeal and fidelity to his Presidency. The accounts of the past year, the regular prospects of the coming year, will then be clear, and contingencies must be met as they are met by well-managed firms. A margin should be allowed. There is one branch of revenue in India which, though safe— as safe, at least, as our own revenue from alcohol—is subject to fluctuations which are really violent, and which appear more violent than they are because each successive Chancellor of the Exchequer frames his estimate upon a different plan. The total amount received for opium varies from £6,000,000 to £9,000,000, and the only safe course is to assume the lower estimate as a fixed datum, and treat all above that as surplus, to be saved, if possible, for the reduction of debt ; but if not, to be employed in meeting unexpected claims from all other departments, whether they come in the shape of remis- sions of revenue on account of distress, or sudden calls
for expenditure on account of anything but war. Such a Reserve would add nothing, of course, to our real
resources, but it would keep the Treasury steady. It may be said that the Government could not do without the whole revenue from opium, but if the Military and Public Works Departments were steadily pruned down, if the absurd expenditure on police were severely revised, and if licences to deal in tobacco were sold upon the French system in every village, the apparent loss created by assuming an arbitrary receipt from opium would be speedily made up, and the Government would then, for the first time in its history, have a margin, would be able every year to add some trifle to its Reserve, which is dangerously low, and would be in a posi- tion to commence, on however small a scale, the reduction of its incessantly increasing debt. No measure less radical than this will, we are confident, suffice as long as it is the interest of the Presidencies to plunder the Empire ; and even when this is done, it will be needful greatly to strengthen the Indian Exchequer. Sir R. Temple has been a very successful adminis- trator in many departments, but no Indian Civilian can count, and the first quality required in the Indian Financial Member of Council is detachment from Indian opinions, usages, and ideas of subordination. The office should be filled by an Englishman, the best procurable, armed with authority to tell all agents, even Governors, that unless their accounts can be made accurate and prompt, they must give way to more efficient men. It is not knowledge, but power which the Indian Treasury requires, the power which is conferred by the support of the House of Commons, and the House in the Indian scheme of administration is represented by the Duke of Argyll.
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