Revised Estimates, 1901-2.-In the Budget for 1901-2 the Revenue was estimated 71,900l. in excess of the Revised Estimate of the previous year. It was anticipated that there would be an increase under the heads of Land Revenue, Railways, Provincial Rates, and Tribute from Native States amounting to 1,086,500l., and a decrease of 1,014,600l. under the heads of Opium, Customs, Irrigation and Minor Departments. The Expenditure showed an increase of 4,446,9007. under the heads of Army, Public Works, Railways, and Civil Charges, but owing to a decrease of 3,245,000l. on account of Famine Charges, and small reductions under other heads, the net result was an increase in Expenditure of 1,131,900. The estimated surplus was 690,000l. The Revised Estimates show an increase in the Revenue of 4,354,8001. and in the Expenditure of 371,800l., or a net increase of 3,982,000l. The surplus of 690,900l. is thus raised to one of 4,672,9007.

Revenue. The greater part of the total increase of 4,354,8007. occurred under the following heads :—

The increases in Land Revenue, which is only 1.65 per cent on the original Estimate, and in Irrigation require no special explanation. As stated last year, almost the whole of the profits on coinage is credited to the gold reserve, and the entries both of Revenue and Expenditure under the head of Mint are merely for the purposes of account. The increase in military receipts is fortuitous, and due almost entirely to the purchase by the Home Government of the horses of two cavalry regiments for South Africa. The increases under the heads of Salt, Stamps, Excise, Post Office, and Telegraphs are due to no special causes, and may be taken as proof of an increase in the general prosperity of the people. The same may be said of the increase in the revenue from railways, which have now become a source of profit to the State. As was anticipated last year, the opium market has been steadily falling, but the fall has not been so great as was expected. The consequence has been a considerable increase in opium, not over the actual revenue of the previous year, but only over the Budget Estimates. The Customs receipts are 643,9007. more than the Budget Estimate, and 460,000l. more than the actuals of the preceding year. The lowness of the Budget Estimate is justified by a review of the

figures of the preceding ten years. The greater part of the increase of 460,000l. is thus accounted for: cotton manufactures, 86,000l.; silver, 109,000l.; petroleum, 47,000l.; sugar (ordinary 5 per cent. duty), 11,000l.; do. (countervailing duty), 99,0007.; manufactured articles, 25,000l. total, 377,000l. It is pointed out that a very small portion of cotton, petroleum, silver or sugar is imported to meet the wants of Europeans or of the Government, and the increase under these heads may therefore be regarded as further proof of the increasing prosperity of the indigenous population of India.

Expenditure. The Expenditure shows a net decrease of 1,026,8007., the details of which are given in the following table:

The increase in the railway expenditure is the consequence of the expansion of traffic, which has caused the still greater increase in the receipts already noticed.

The decrease in direct demands on revenue is mainly due to the decrease in the opium charges, and that on interest to the fact that the loan raised in India was reduced from two to one crore and issued at a good price. The saving under the head of Public Works is one which must occur almost annually, as many works, which have to be budgeted for in full, cannot be completed within the year. The large saving under the head of Army Services was due to the continued employment of Indian troops in South Africa and the non-delivery within the financial year of stores ordered from home.

Budget Estimates, 1902-3.-Revenue. In estimating the revenue the receipts from land revenue are put at 679,8001. less than those given by the revised Estimates for 1901-2. This is due to the decision of the Government to finally remit arrears in the districts affected by the famine to the extent of 1,321,500l., of which 738,300l. will fall on the revenues of the coming year. There is a similar decrease of 675,100l. in the opium revenue, as the steadily falling market and the disturbed state of China do not warrant the hope of a higher average price than Rs. 1,100 per chest. Under the head of Customs it is not expected that the high figures of 1901-2 will be maintained, and as the great increase in the railway receipts of the previous year

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occurred on two lines only, the North Western and the Great Indian Peninsular, and was due to causes not likely to be permanent, a falling-off of 228,7001. is allowed for. A moderate increase is anticipated under salt, excise and stamps. The increase that might have been expected from the Post Office has been almost entirely lost by the reduction granted in the commission charged on money orders of small value, and there is a decrease of 58,500l. in the telegraph, owing mainly to the reduction in the rates for foreign messages.

Expenditure. There is a considerable increase in expenditure under several heads, regarding the most important of which the following explanations are given. An increase of 546,000l. in the direct demands on revenue is due partly to the creation of the new Frontier province, partly to the extension of survey and assessment operations, and partly to general administrative improvements. Of the increase of 964,800l. in the salaries and expenses of civil departments, 118,300l. is on account of courts of justice, 146,500l. on account of police, 358,500l. on account of education, 156,800l. on account of medical, and 222,000l. on account of political; the last sum includes the cost of the proposed Coronation Durbar at Delhi. The provision for famine charges is left at 1,000,000l., and out of the increase of 252,9001. for irrigation, 166,700l. is for minor village irrigation works. The increase of 848,4007. for public works is necessary for the completion of works which had been stopped, or which could not be commenced during the period of financial pressure. The increase of 1,535,400l. in the Army charges only raises these to what they would have been during the present year but for the reasons already explained.

The net result of the Budget is an estimated surplus of 837,7001.

Capital Account.-In addition to the charges to be paid out of the revenue of the year, a sum of 10,705,1007. is required by Government for the following purposes:

It is proposed to procure this sum: (1) by using the surplus of 837,7001.; (2) by a loan of 3,813,300l. to be raised by railway companies; (3) by an addition of 2,500,000l. to the Permanent Debt, of which 1,000,000l. will be borrowed in India; and (4) by an addition of 543,100l. to the Unfunded Debt. These sums amount in the aggregate to 7,694,100l., and the remainder will be obtained by a reduction of 3,011,000l. in the closing balances

in India and England, which will then stand at 10,832,3817. in the former, and at 4,050,7261. in the latter, country.

Remission of Taxation. In answer to a possible objection that the large surplus of 1901-2 should have been utilised for the remission of taxation, Sir E. Law pointed out that the land revenue, opium and Customs, which together contributed more than one-third of the total revenue, are either inelastic or precarious. The land revenue, apart from the necessity of suspending or remitting it in times of exceptional distress, can expand but slowly, and to a very limited extent. Opium must always be precarious, and is becoming more so owing to the disturbed condition of China. In the Customs there is likely to be a falling off, not only in consequence of the decision of the recent conference on sugar bounties, but also in consequence of the development of the sugar, cotton and petroleum industries in India itself. The Government has, in fact, granted relief in the form most appreciated by those who really need it. The provision in the Budget for a remission of 738,300l. of arrears of land revenue, the abolition of the Pandhari Tax in the Central Provinces at a cost of Rs. 70,000, the reduction of the Patwari Rate in Ajmir by Rs. 23,000, the grant of twenty-five lakhs for village irrigation works, and of ninety lakhs to Local Governments for education, sanitation and general improvement of the administration, constitute a relief amounting altogether to 1,511,200. But for this relief the surplus for 1902-3 would have been greatly in excess of the estimated 837,7001.

Exchange. A stable Exchange has been satisfactorily maintained; the maximum rate obtained for Council drafts was 16.154d., the minimum 15.905d., and the average was 15·991d. The extreme variation was thus less than 1 per cent.

Gold Reserve. The hope expressed last year that the profits from coinage which should have been credited to this fund, but which have been used under financial pressure to meet current expenses, would be in time recovered from loans repaid by native States and Takavi advances has been more than realised. The whole sum due has been repaid in full during the current year, and the Reserve now stands at 3,455,2821., the whole of which has been invested in British Consols.

Coinage. During the year Rs. 4,32,32,590 were coined for Government, and Rs. 52,75,010 for native States, making a total of Rs. 4,85,07,600. Experience has shown that the large addition to the coinage made last year was in no way in excess of the actual requirements of the country.

Currency Notes.-The question of extending the circulation of currency notes by making their encashment at out-stations more easy has been fully discussed and considered during the year, but the opinions of experts on the subject differ so greatly that a final decision has not yet been arrived at.

Presidency Banks.-The idea of establishing one general central Bank has, for the reasons given in the published papers,

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been abandoned, at any rate for the present. sentations of the existing Presidency Banks, that their business is unduly hampered by the present restrictions, are under consideration. The maintenance at the Banks by Government of large balances during the busy season of the year, that is, during the winter months, has continued to prove a great advantage to the mercantile community, and the Bank rate of interest has not exceeded 8 per cent. since June, 1897.

Army Services.-India is defraying the whole cost of the rearmament and re-organisation of the Army out of current revenue, a feat not attempted by the more wealthy European countries. A portion of the cost of the scheme, which was explained in detail in the Budget of last year, falls on the revenue of the present year. There has also been an unexpected demand for 226,000l. on account of the increase in the pay of British soldiers serving in India, ordered by the Home Government. The whole military expenditure for 1902-3 is estimated at 16,775,500l.

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Railways. The provision made in the Budget for expenditure on railways, both from current revenue and from capital, has already been explained. Capital is required for (1) the improvement of existing railways, (2) the completion of lines under construction, (3) the development of the country by new lines, Both in India and in England the amount of money that can be raised in the money market on reasonable terms is very limited, and is almost entirely absorbed by the first two of the purposes named. Until new means of raising money can be devised, the work of extending railway communications must be greatly restricted.

Countervailing Duties.-These duties have now been levied for three years, but whilst they have brought in a handsome sum to the Indian exchequer, they have had little or no effect in checking the importation of sugar. It is difficult to foresee what will be the effect of the Brussels Conference, but it is pointed out that in addition to the direct bounty foreign Governments assist the exporters of sugar in many other ways, and that the sugar manufacturers, by combining to keep up unnaturally high prices at home, are enabled to export sugar at a price considerably less than the cost of production.

Famine Results.-The monsoon of 1901 was only moderately favourable, and there was considerable scarcity of rain in many parts of Central India, especially Rajputana. The Government recognises the duty of relieving distress in Native States as well as in British Territory, and for this purpose it advanced to those States during the year 597,500l., whilst it granted to Local Governments 556,2001., of which Bombay received 533,800. The total expenditure was thus 1,153,600l. The 1,000,0001. entered in the Budget for the coming year is intended to provide 423,2001. for direct famine relief, 93,900l. for the construction of protective irrigation works, 474,2001. for the avoidance of debt,