The Sun.
London, England, 1861-06-07 00:00:00

TILE INDIAN BUDGB2 OF 1861-62,

(From the Supplement to the Friend of India of May 2.)
On Saturday, April 27, 1861, Mr. Laing made the fol-
lowing Financial Statement in the Legislative Council of
India, introducing the Budget of 1861-62 :
" I rise, Sir, for the purpose of submitting to the Legisla-
tive Council, on behalf of the Government the Budgekof
India for the year 1861-62. The occasion is too grave for
me to indulge in preface. India has been eagerly watching
for this statement to learn whether she is solvent or bank-
rupt, and England turns an anxious eye to the East to
know whether her Indian Empire is to be a future source
of strength or of weakness:. --inspresence of- shah great"'
interests one sort of eloquence alone is admissible—
that of facts, and to them I address myself. In
the first place, how do we actually stand When my
predecessor, the late lamented Mr. Wilson, brought forward
his budget for 1860-61, little more than 12 months ago, he
showed that Jndia had long suffered from a chronic deficit,
which since the mutiny had increased to a frightful amount.
For 33 years out of the preceding 46 the average deficit had
amounted to £2,500,000 a year, and the three years alone
from 1857 to 1860 had added £38,000,000 to the National
Debt. The prospective deficit for the year 1560-61 was esti-
mated by Mr. Wilson at £6 500,000. He proposed to meet
it partly by new taxes, partly by reductions, and partly by
drawing on the cash balances, which were then unusually
large owing to the success of recent loans. Unfortunately,
of these anticipations the last only was fully realized. The
actual deficit of 1860-61 has been £6,678,000, and, it has
been met by a corresponding reduction of cash balances in
India and England, which, on the 30th of April, 1860,
stood together at £19,600,000, and on the 30th of April,
1861, will have been reduced to about £14,500,000. Let me
explain this more fully. Mr. Wilson proposed in addition to
those augmentations of salt, the Customs and Stamp duties
which had been already enforced, and of which the year
1860-61 had the benefit,—two new taxes, the income tax
and the license-tax. Of these the first was passed into
law, but at so late a period that the year 1860-61 was only
partially benefited by it. The figures of the regular esti-
mate, published in February last, which give the latest
authentic returns, and close the year 1860-61 with a final
deficit of £6,678,000, include £803,550 of Mr. Wilson's
income-tax. No accurate estimate was attempted of the
produce of the new taxes at the time, but it was roughly
stated that the income-tax might produce about £2,500,000
a .year and the license-tax about £1,000,000. I fear these
estimates are greatly over stated. From the returns of the
income-tax, which are now completed, I can hardly
venture to take its total annual net produce at more than
£1,400,000. The license-tax is still a matter of conjecture,
but, looking at the fact that with an average payment of
11 rupees per head, which is as much as we should get with
three classes at 1,2, and 3 rupees, it would require 7,000,000
of tax-payers, representing 35,000,000 of population, to give
us £1,000,000. Ido not think we should get anything like
it. The estimate of the authorities of Bengal would not
make the license-tax yield above £400,000 for all India.
This may be too low, but I believe that £2,000,000 for a full
year's net produce of the income and license taxes together
is quite the outside of what we could safely reckon upon.
Assuming, then, the License Bill to have passed, and Mr.
Wilson's finansial measures to have been in fall operation
for the year, how should we stand ? The deficit of 1860-61
is £6,678,000 but nearly £700,000 of this is occasioned by
payments for compensations on account of the Mutiny,
which will not recur; so that the real deficit is in round
numbers £6,000,000. Mr. Wilson's new taxes would
have given us £2,000,000 in 1861-62, as against
£BOO,OOO in 1860-61, or an improvement of about
£1,200,000 in revenue; but from this must be deducted
about £700,000 for certain windfalls in the shape of the sale
of old stores, repayments by native princes, and so forth,
received in 1860-61, and which will not be received again in
1861-62. The position, therefore left us by the budget of
1860-61 is simply this—deficit, £6,000,000; less £500,000
improved revenue ' • remaining deficit, £5,500,000. Perhaps
some members of Council may have seen a much more
favourable statement, which was recently made by the
Secretary of State to the British House of Commons. It was
stated that whereas Mr. Wilson had estimated the reduction
of expenditure in 1860-61 at £1,700,000, and subsequently at
£2,500,000, they had turned out in reality to be £3,300,000;
so that after saving £3,500,000 in 1859 we had again saved
£3,300,000 in 1860, which, with £3,500,000 of new taxes,
extinguished our deficit, and made us independent cf loans
except to complete our railways. This statement was made
in perfect good faith by the Secretary of State, on informa-
tion which he had a right to rely upon, but unfortunately
that information mistook wishesfor facts, and anticipations
for realities. There was not a reduction of £3,300,000, as
supposed by Sir C. Wood, or even of £1,700,000, as esti •
mated by Mr. Wilson, but a positive increase of £213,000 in
the total expenditure of 1860.61 over that of 1859 .60. The
figures which I read from , the regular estimate, corrected
up to last February, show that the total expenditure was
£46,417,000 in 1859-60, and £46,630,000 in 1860-61. Even
if we allow £700,000 for the mutiny compensation, the ac-
tual reduction of 1860.61, compared with 1859-60, will be
less than £500,000. The difference arose thus—The reduc-
tion of expenditure inlndia was over-estimated by£1,500,000,
owing to a too sanguine expectation that the recommenda-
tions of the Military Finance Commission would be carried
out in 1860-61. The increase of home expenditure for debt,
railways, and army was overlooked. The produce of the new
taxes was taken £1,530,000 too high, and it was forgotten
that £BOO,OOO of the amount had already been received in
1860-61, and was included in the statement showing the
deficit of £6,000,000. No allowance was made for the tem-
perary nature of some of the receipts of 1860-61, such as
the Punjab trade tax and sale of stores. These errors to-
gether amount to upwards 0f£5,000,000, and just make the
difference between the equilibrium announced in England
and the deficit of £5,500,000 which is the real result of last
year's budget after crediting it with a full year's proceeds
of all the new taxes, including the license tax, which is not
yet sanctioned. I will not attempt to conceal from you
that this was an unsatisfactory result. To find that, after
the great effort made last year the income-tax had pro-
duced less than£l,soo,ooo,that reductions had almost stood
still, and that we were approaching a new financial year
with our cash balances nearly exhausted, and our expendi-
ture £5,500,000 a year a-head of our income, was indeed
calculated to inspire gloomy apprehensions. Nor were
these apprehensions relieved by the aspect of the railway
question, which showed at least £20,000,000 to be wanted
in the next three years to complete lines of the first necEs-
sity, for which capital no provision had yet been made,and
which the Home Government would probably be compelled
to borrow. All idea of help from England for general ex-
penditure was therefore clearly out of the question, and it
was even doubtful whether funds could be provided to save
us from the serious disaster of having to suspend railway
works which were approaching completion. Well, there
yawned the deficit of £5,500,000 wide and deep. There was
no chance of craning, no time to look to the right or left,
tor the exhausted cash balances, hungry and inexorable,
were howling in our rear. To stick the spurs well in and go
straight at it was the only plan. Before I ask you to follow
me, let me pause for a moment and make one remark. Ihave
said that this was no occasion for personal observations, but
there is one which I am anxious to make,lest I should be mis-
understood. I have described a gloomy state of things. I
am now going to show you a brighter picture, In making
a lengthened statement, it is not always possible to avoid
speaking in the first person, and thus appearing to claim for
myself individually the credit of acts of the Government. I
wish emphatically to repudiate any such claim. In a Govern-
ment like that of India, it is manifest that the Governor-
General must be, for good or evil, the mainspring of all
policy. It is not for me to speak of Lord Canning. When a
man has filled such a post in such times, his character be-
longs to. history. But this I may say without indiscretion,
that if any one has represented his Excellencey as luke-
warm and indifferent to the cause of reduction, he is entirely
mistaken. From the first time I met him in India down to
the present day Lord Canning's language to me has been the
same—that he would carry out any practicable amount of
reduction rather than inflict any new and oppressive taxes
on the people of India. Nor should Ibe doing Justice to my
colleagues in the Council if I omitted to state that they have
been, one and all, and on all occasions, animated by the
tebsamet
doilpunl
eitsryd. sit.ands
bi
adatsemhe edo
farn, itamocng
oe
pst
Iht asheonawdvmsne:t o reason that so much could
not havebeen done in so short a time if the ground had not
ut
officers
ffiou
concerned
ce riperrns e
aennde
dd havesbey their r
v doneant
s
of the State who have given usananetyehndebialarllielaid and co• operation,
there is one body whose services have been so pre-exinent
that I should be wrong not to mention them. I mean the
Military Finance Commission, whose members have la-
boured, often under difficulty and discouragement, with a
zeal, an industry, and an intelligence which are indeed
beyond praise. It the future historian of India should have
occasion to mention that in the year 1861 India was saved
from a great financial danger, that history will be very im •
perfectlyantwriocewtchteoonmmi: iiitnssoiemoonnitsj
and his colleagues, Mr. E. Tee names:untlictioet of Colonel Balfour
Nor would 1 willingly omitittoismmmunaet
.and Colonel Simpson.
owing
ne
gnhatmh
that
of
we Capt.have
the Civil and Mili-
tary
to effect important reductions nnet
coellenctavtyheand
tbitmaereaeynnrnine. I return now, to my figures.
de-
ficit is £6,000,000 and the problem is how to meet it. In my
experience of public life Ihave always found this maxim-
hold good—that there is no such thing as an art or mys•
tory in state craft. The broad principles of common sense
which apply to private apply equally to public affairs,
and that which is not simple is seldom sound. Well, if a
private individual finds that his balance at his banker's is
running dry, and that he is spending beyond his income,
what dues he do ? He cuts down his expenditure. This is
what we have done. We have reduced our expenditure by
£3,600,000. Recollect in 1859 we reduced our expenditure
from the war standard by £3,500,000, in 1860 by £500,000,
and in 1861 we shall reduce it further by £3,600,000. That
is a great result, and I will now explain how we arrive at it.
The great reduction is of course in the native army. Here
was the greatest excess—here the greatest scope for econo-
my. In April, 1857, or immediately before the mutiny, it
appears from official returns that the total established
strength of the Indian army, including Queen's troops, was
Europeans, 45,522; natives, 266,852. The cost of this army
was in round numbers £11,500,000 a year in India, and
£1,250,000 in England; but this was below the proper cost,
as it was only attained by allowing the effective European
force to roman dangerously below its established strength,