REVENUE AND EXPENDITURE
Financial Relations with Government of India.—Local governments exercise their financial powers in strict subordination to the Government of India, which alone can borrow, and which requires the submission for its sanction of the annual provincial budgets. To ensure a reasonable amount of decentralization the Supreme Government has made financial contracts with the provinces under which they receive definite shares of the receipts, and are responsible for definite shares of the expenditure, under particular heads. The existing contract dates only from 1911-12 (see Table V).
Income and Expenditure.—Excluding income from railways, post offices, telegraphs, salt, and sales of excise opium, which are wholly imperial, the revenue of the Panjáb in 1911-12 was £5,057,000 (Rs. 758,56,000), of which the provincial share was £2,662,200 (Rs. 399,33,000), to which have to be added £251,800 (Rs. 37,77,000) on account of assignments made by the Government of India to the province. This brought up the total to £2,914,000 (Rs. 437,10,000). The expenditure was £2,691,933 (Rs. 403,79,000). This does not include £983,000 spent from loan funds on irrigation works, chiefly the great Triple Project. The large expenditure on railways is imperial. Of the gross income more than three-fourths is derived from the land (Land Revenue, 46 p.c., Irrigation, chiefly canal water rates, 29 p.c., and Forests, 1¾ p.c.). The balance consists of Excise 8½ p.c., Stamps, 7 p.c., Income Tax over 2 p.c., and other heads 5¾ p.c.
Land Revenue.—Certain items are included under the Land Revenue head which are no part of the assessment of the land. The real land revenue of the Panjáb is about £2,000,000 and falls roughly at the rate of eighteen pence per cultivated acre (Table II). It is not a land tax, but an extremely moderate quit rent. In India the ruler has always taken a share of the produce of the land from the persons in whom he recognised a permanent right to occupy it or arrange for its tillage. The title of the Rája to his share and the right of the occupier to hold the land he tilled and pass it on to his children both formed part of the customary law of the country. Under Indian rule the Rája's share was often collected in kind, and the proportion of the crop taken left the tiller of the soil little or nothing beyond what was needed for the bare support of himself and his family. What the British Government did was to commute the share in kind into a cash demand and gradually to limit its amount to a reasonable figure. The need of moderation was not learned without painful experience, but the Panjáb was fortunate in this that, except as regards the Delhi territory, the lesson had been learned and a reasonable system evolved in the United Provinces before the officers it sent to the Panjáb began the regular assessments of the districts of the new province. A land revenue settlement is usually made for a term of 20 or 30 years. Since 1860 the limit of the government demand has been fixed at one-half of the rental, but this figure is very rarely approached in practice. Between a quarter and a third would be nearer the mark. A large part of the land is tilled by the owners, and the rent of the whole has to be calculated from the data for the part, often not more than a third or two-fifths of the whole, cultivated by tenants at will. The calculation is complicated by the fact that kind rents consisting of a share of the crop are in most places commoner than cash rents and are increasing in favour. The determination of the cash value of the rent where the crop is shared is a very difficult task. There is a large margin for error, but there can be no doubt that the net result has almost always been undervaluation. It is probable that the share of the produce of the fields which the land revenue absorbs rarely exceeds one-seventh and is more often one-tenth or less. A clear proof of the general moderation of Panjáb assessments is furnished by the fact that in the three years ending 1910-11 the recorded prices in sales amounted to more than Rs. 125 per rupee of land revenue of the land sold, which may be taken as implying a belief on the part of purchasers that the landlord's rent is not double, but five or six times the land revenue assessment, for a man would hardly pay Rs. 125 unless he expected to get at least six or seven rupees annual profit.
Fluctuating Assessments.—The old native plan of taking a share of the crop, though it offered great opportunity for dishonesty on both sides, had at least the merit of roughly adjusting the demand to the character of the seasons. It was slowly realized that there were parts of the province where the harvests were so precarious that even a very moderate fixed cash assessment was unsuitable. Various systems of fluctuating cash assessment have therefore been introduced, and one-fourth of the total demand is now of this character, the proportion having been greatly increased by the adoption of the fluctuating principle in the new canal colonies.
Suspensions and Remissions.—Where fixity is retained the strain in bad seasons is lessened by a free use of suspensions, and, if the amounts of which the collection has been deferred accumulate owing to a succession of bad seasons, resort is had to remission.
Irrigation Income and Expenditure.—In a normal year in the Panjáb over one-fourth of the total crops is matured by the help of Government Canals, and this proportion will soon be largely increased. In 1911-12 the income from canals amounted to £1,474,000, and the working expenses to £984,000, leaving a surplus of £490,000. Nearly the whole of the income is derived from water rates, which represent the price paid by the cultivator for irrigation provided by State expenditure. The rates vary for different crops and on different canals. The average incidence may be roughly put at Rs. 4 or a little over five shillings per acre. In calculating the profit on canals allowance is made for land revenue dependent on irrigation, amounting to nearly £400,000.