Rulers of India: The Earl of Mayo

by William Wilson Hunter

⁴ Par. 71 of Despatch to Secretary of State No. 240, dated 20th Sept. 1869.

I have mentioned the immediate measures by which Lord Mayo endeavoured to stay the impending deficit. But he felt that such measures strained the whole mechanism of the Government; that to stop public works on a sudden involved waste of material, while the increase of taxation during the current year disclosed in a most undesirable manner the shortcomings of our system, and might prove a cause of perilous discontent among the Indian people. 'We have played our last card,' he once said in conversation, 'and we have nothing left in our hands to fall back upon, except to devise measures which will prevent the recurrence of a similar crisis hereafter.' He accordingly resolved to find a permanent remedy, by removing the causes of the financial misfortunes in past years.

His reforms divide themselves into three branches. First, improvements in the mechanism of the Financial Department of the Supreme Government itself. Lord Mayo thought that it would be vain to ask the Local Governments to set their houses in order, if they could point to confusion or want of prevision in his own. Second, the more rigid enforcement on the Local Governments of economy in framing their estimates, and of accuracy in keeping within them. While thus increasing their fiscal responsibility, Lord Mayo also extended their financial powers. Third, a systematic and permanent readjustment of the revenues and the expenditure.

First, as regards defects in the mechanism of the Financial Department, Lord Mayo found that the disastrous series of fiscal surprises were due in part to unpunctuality in the submission of the yearly estimates by the Local Governments and Departments, so that the Supreme Government had not sufficient time to examine and collate the accounts before the season for delivering the financial statement arrived. He discovered, also, grave deficiencies in the Financial Department itself as regards intelligent observation of the progress of the finances during the year. While, therefore, the Local Governments throughout India were complaining of the number and complexity of the statistical returns required from them, the last act in the process which would have rendered these returns fruitful of results, namely, their careful collation by the Finance Department, was inefficiently performed.

Without such final collation, the gathering of statistics is indeed a thankless task. I merely repeat the statement of the Member of the Government best qualified to speak on the subject, when I say that, up to Lord Mayo's time, no sufficient provision existed for the intelligent use of the statistical materials which daily poured in. It did not seem to be understood that the toil expended by scattered Departments upon the compilation of returns can bear no fruit unless they are intelligently studied by the central bureau for which they are compiled. Statistics as they existed in India before Lord Mayo's rule were sorrowful memorials of faithful subordinate labour, rendered unavailing by the indifference or neglect of higher officials.

The financial collapse in 1869, forming as it did one of a series of similar catastrophes, gave a new impulse to better work. The preparation of classified statistics was undertaken on a systematic basis and with an extended scope. Having thus put his own house in order, Lord Mayo took measures to ensure punctuality in the submission of the Estimates by Local Governments and Departments. He also organised, or to speak more correctly, remodelled a system by which the Supreme Government now obtains full information bearing upon the progress of the finances month by month. Mr. Chapman, the Secretary to the Department and the officer most competent to speak, thus wrote of the results:—'It is not too much to say that it has become impossible for the Government to remain long ignorant of any important fact affecting the finances. Expectation may be disappointed, misfortune or mistakes may occur; but the Government will at least be promptly informed of the event, and it is difficult to exaggerate the importance of promptitude in this respect.'

The second great branch of Lord Mayo's financial reforms consisted in his more rigid enforcement of economy upon the Local Governments. A fertile source of financial difficulty has always existed in the division of the British administration of India into a number of governments, separated from, although subordinate to, the Governor-General in Council. Before Lord Mayo's Viceroyalty the separate governments, while so far independent entities as to be responsible for the civil administration and improvement of their several Provinces at the cost of the imperial revenues, had, in regard to their revenues, no independent financial powers. Towards the end of every year, each Local Government presented to the Governor-General in Council its estimates of expenditure during the coming twelve months. The Governor-General in Council, after comparing these aggregate estimates with the expected revenue from all India, granted to each Local Government such sums as could be spared for its local services.

The system acted in a manner most unfavourable to economy. The Local Governments were under no compulsion to adjust their expenditure to any limited scale of income, and several of them fell into the habit of framing their demands upon the Imperial Treasury, with an eye rather to what they would like to spend than what was absolutely required. 'Practically,' writes one who had the official control of the system, 'the more a Government asked, the more it got; the relative requirements of the Local Governments being measured by their relative demands. Accordingly they asked freely and increasingly. Again, knowing that any money saved at the end of the year was lost to the provincial administration, a Local Government was little anxious to save.' These words, while representing the facts, do not necessarily involve a reproach. In India more money can be spent with advantage on almost every branch of the administration than the revenues will permit.

Lord Mayo clearly discerned that, in order to secure the co-operation of the Local Governments in the work of financial reform, he must invest those Governments with a share of the financial responsibility. After an exhaustive preliminary correspondence with each separate Administration, he issued a Resolution on the 14th December, 1870, which may be called the Charter of the Provincial Governments. By this document, which in due time received the approval of the Secretary of State, a fixed yearly consolidated grant was made to each Government, to enable it to defray the cost of its principal services, exclusive of the Army, but including Public Works. The grants thus made were final, for a period usually of five years, and were liable to reduction only in case of severe financial distress happening to the Supreme Government. They belong absolutely to the respective Local Governments. No savings from any one of them revert to the Imperial Treasury. Their distribution is left to the discretion of the Local Governments, without interference on the part of the Governor-General in Council.

The services thus made over to them included the protection of person and property, the education of the people, the record of changes or transfers connected with landed property, sanitation, Local Public Works, and a number of minor branches of government. For official purposes they were grouped as follows: Jails, Registration, Police, Education, Medical Services (except 'Medical Establishments'), Printing (an enormous item in India), Roads, Civil Buildings, and various Public Works, Miscellaneous Public Improvements, and various minor services.