EAST INDIA REVENUES (CONTRI BUTION TOWARDS COST OF WAR). (Hansard, 30 June 1932)

§ The SECRETARY of STATE for INDIA (Sir Samuel Hoare)
I beg to move, Whereas, by Resolutions passed on the 16th September and 26th November, 1914, respectively, this House consented to the charge upon Indian revenues, subject to certain conditions, of the ordinary pay and other ordinary charges of British and Indian troops despatched out of India for service in the Great War, as well as the ordinary charges of any vessels belonging to the Government of India that might be employed in those expeditions: And whereas, by a Resolution passed on the 14th March, 1917, this House consented to a contribution of £100,000,000 charged upon the revenues of India towards the expenses of the War: And whereas the Government of India, desirous of affording further assistance to His Majesty's Government, provisionally and subject to the consent of this House met out of the revenues of India in 1918–19, with the concurrence of their Legislative Council, further extraordinary charges in respect of the Indian troops employed in the War to the extent of £13,600,000: And whereas the Government of India are desirous of bearing finally such further extraordinary charges. That this House consents that the extraordinary charges of £13,600,000 aforesaid shall be borne by Indian revenues. This looks a very formidable Resolution. I can, however, assure the House that it is nothing more than an account-keeping transaction. It does not raise any big constitutional issue; it merely regularises an account-keeping transaction which many of us would have hoped might have been regularised a good many years ago. I will explain how this transaction arose, and, secondly, why it is only now that we are regularising it. The constitutional position with the revenues of India is that no part of those revenues can be appropriated without the approval of the Secretary of State in Council. Secondly, no charge can fall upon Indian revenues for the use of Indian troops outside India without the express approval by resolution of this House. That is the constitutional position.
4.0 p.m.
Let me come to the historical events that have led up to this Resolution, During the War India made very substantial and generous contributions to the War effort of the Empire. In the first 2036 year of the War India agreed to meet the expenses of the Indian units that were serving outside India, so far as the normal expenditure of those units went. So far as the additional expenditure went, that is to say the War expenditure outside the normal upkeep of the units, that expenditure in 1914 still fell upon the Imperial Exchequer. Then, as the need of further help increased during the War, India generously responded, on more occasions than one. In 1917 India made a free gift of no less than £100,000,000 to the Imperial Exchequer for the needs of the War. Again in the following year India undertook to carry a series of additional war expenses over and above the normal expenses that it had undertaken to meet in 1914, and it was estimated in 1918 that this additional gift from India would probably amount to no less than a further £45,000,000, over and above the,£100,000,000 of the original free gift; but when this additional gift approximating £45,000,000 was promised certain conditions were attached. It was a gift the extent of which obviously depended upon the length of the War, and when it was made, it was not known that the War was going to end in quite a few months. Again, India, rightly, made other reservations, namely, that if the economic situation made it impossible for India to meet the full amount, there must be an opportunity for reconsideration, and, further, if there was serious trouble on the frontier, and particularly a war with Afghanistan, that again was a condition that would have to be taken into account.
In actual practice all those three contingencies eventuated. The War ended almost at once, we were unfortunately involved in another war with Afghanistan, and India was further faced with a very serious economic situation. But at the time when the War ended a sum of £13,600,000 had already been paid by the Government of India towards the gift that had been estimated at £45,000,000. At the end of the War, therefore, £13,600,000 had been paid, as the Government of India thought, on account of the larger gift of £45,000,000 that had been promised. But at that time there was a whole series of counterclaims made by various Departments here, particularly the War Office, against the Government of India.
2037 The result was that whilst the Government of India regarded the payment of £13,600,000 as a first instalment of the free gift of £45,000,000, the Departments here regarded it as the first instalment of the debts that were due to London, and for the last 12 or 13 years there has been a very complicated negotiation—I would almost say controversy—going on between the British Departments in Whitehall and the India Office and the Government of India; and on that account, whilst this £13,600,000 had actually been paid, it was not possible to come to this House for final ratification of the transaction, owing to the fact that there were big issues between the Departments still unsettled. I am glad to say to-day that these obstacles have now been removed. In the first place, the rival claims of a general character between the Departments in Whitehall and the Government of India have been settled by adopting, as I would say, the very sensible arrangement of a clean slate. Each side, seeing that there was not much in it between the two, have washed their claims out.
But there was another complication, in addition to the general claims, that also delayed the ratification of this transaction. In addition to the general wartime negotiations between the various Departments, there was the very difficult question of what is called the capitation grant,, that is to say, the amount that India pays for the training of the British troops which form a part of the Indian garrison. That question has raised a very long controversy between the War Office and the Air Ministry, on the one hand, and the Government of India on the other. The War Office and the Air Ministry have taken the view that India was paying too little for the training of the British troops serving in India. India, on the other hand, took the view that it was not paying too little and that there were counter-claims against Great Britain, and that in the view of Indians, India was taking too large a share of Imperial defence.
It has now been agreed by the Government of India and my Council that these conflicting claims and others of a similar nature should be referred to an independent tribunal for investigation. The tribunal will be judicial in character and will consist of two members nominated by each party and a chairman. 2038 We are fortunate in having secured, as its chairman,, Sir Robert Garran, for many years Solicitor-General to the Commonwealth Government of Australia. It is expected that the tribunal will meet in November. Its proceedings will, as must necessarily be the case, be confidential, and it will be advisory. It is, however, confidently hoped that in the light of its advice a settlement that will commend itself in all quarters as just and honourable may be reached on the vexed questions referred to it. That is to say, we hope we have now removed the second obstacle in the way of the ratification of the transaction about which I am speaking. It is, therefore,, now possible for the House finally to pass this Resolution and authorise the expenditure that has already been made and, once and for all, put an end to a transaction that has been dragging on for many more years than we should have hoped.
For the foregoing reasons, I move that this House consent to the treatment, as a final charge against Indian revenues, of the gift of £13,600,000 provisionally made by the Government of India in 1918–19. This sum takes no account of additional amounts for which India has accepted liability in order to secure the settlement, but as against these may reasonably be set certain sums accruing to Indian revenues in connection with the War.

§ Mr. ATTLEE
I think the right hon. Gentleman may be congratulated on having described to us a rather complicated financial problem in a very few words. One has, of course, met this question, or parts of it, before. Indeed, the whole question of the financial relationships of this country and India is one which obviously will have to be reconsidered before very long. As I understand it, this is not a matter at the present time of asking India to pay anything, but is in fact an auditing transaction merely, to set India right, because this House is charged with the duty of seeing that the revenues of India are not expended for other than Indian purposes. We on this side of the House agree that this is a fair settlement, and I think it is highly desirable that a settlement should be come to at this juncture. I do not want to go into the matter at any length, but I think one should recall the very great services of India during 2039 the Great War and the very great generosity of her contributions, both in money and in men.
I confess that I have never been altogether happy at the voluntary contributions made to the War by parts of the Empire that have not got self-government. It is quite true that these gifts were approved at the time in India. They were approved in 1920 by the Legislative Council, on which certain Indians sat, but in fact these transactions took place before there was anything like self-government in India. It is more or less a matter of the past, but it was considered that the Indian Legislature was sufficiently representative of the Indian people to make a gift of £100,000,000 to assist the cause of the British Empire during the War, and I think that should be borne in mind by those who sometimes deny the right of Indians to speak for India.
There are two other points that I should like to make. I am glad that the capitation grant question is being referred to what amounts to arbitration, because that is a matter which has hung on too long, and should be got out of the way. While I am glad that this matter should be got out of the way, it does not really, as, of course, the right hon. Gentleman knows, end the question of the liability of this country and of India for the defence of India. When I served on the Indian Statutory Commission we had to consider that matter at some length. I am bound to say that I have always considered that on the whole India has been rather too much charged with her own defence, as compared with other units of the British Empire other than this country, and at the time when the whole question of our relationships with the Indian Government is being considered, there is urgent need that the whole question of Imperial defence responsibilities should be discussed.
It is my view that while, as a result of history and so on, this country has always borne the lion's share of the defence of the British Empire, India has borne a very large share of her own, and sometimes India has had to bear defence expenses that were caused not directly in her interests but occasioned because she was a member of the British Empire, and a vulnerable part of the Empire. I would, therefore, say that while we 2040 approve this Resolution, we hope the Government will, at an early date, take into consideration the whole question of the financial side of Imperial defence. I think they will have to do it when they are trying to deal with the new Constitution for India, and I hope they will take that further, and consider the whole matter from the point of view of all the units of the British Empire. For our part, we consider that the setting off of these various claims which have hung on for so long is satisfactory, that India has been fairly treated, and that, therefore, this Resolution ought to be approved.

§ Earl WINTERTON
I do not wish to delay these proceedings, after the very pleasant speech to which we have just listened from the Front Opposition Bench and the very clear and succinct account given by the Secretary of State for India of this matter. The hon. Member for Limehouse (Mr. Attlee) has mentioned, as he was entitled to do, certain other matters which I do not think directly arise on this occasion, though no doubt they will have to be discussed in the future. These are matters touching a very high question of policy which have been discussed by people in this country for the last 100 years, namely, the relationship between the Government of India and the Government of this country. I was glad that the hon. Member referred, as also did the Secretary of State, to India's contribution during the War. No one in any quarter of the House would wish to belittle that contribution. I believe that, for example, in some parts of the Punjab, the contribution in men to the fighting forces was greater than in any other part of the Empire where voluntary service existed, and I am told on good authority it was greater even than the contribution in some places where there was compulsory service. That is apart from the contributions by other provinces and by the Indian States in men and money and the individual contributions which were made.
Still the fact remains—if I may say so, not in opposition to anything which the hon. Gentleman opposite said, but by way of comment upon his remark that India's position is not that of a self-governing Dominion—that without belittling that contribution, India's participation in the War was no greater than her position as the greatest unit of the Empire in size and population 2041 demanded, and no less than her own need to keep her borders inviolate, entailed. Some Provinces, for reasons which are not in the least dishonourable but are nevertheless conclusive, were not able to make any contribution to the actual man-power in the trenches. Therefore, there was more reason for India as a whole to pay in money as well as in men. This, to my mind, is an essentially fair settlement, and I am glad that the Government have brought it forward for the approval of the House. In regard to the history of the settlement, it would be improper for me or anyone else who has held office and is familiar with the circumstances, to relate in detail what happened. It is true, however, that there has been a long and stubborn controversy which has been finally and satisfactorily settled by this compromise.
It is useful to point out, on this occasion, to those—there are many outside this House and there were some inside the House in former Parliaments—who believe that the India Office, and the Secretary of State and the Council, are mere appanages of His Majesty's Government, that no ambassador or foreign minister could have represented any country's case more strongly than India's case was represented by Lord Birkenhead and the other Secretaries of State concerned. The settlement reflects credit on the successive Secretaries of State and the members of the successive Governments who agreed to it. It has been endorsed by more than one Cabinet and by more than one Government of India. Only time has prevented it being brought forward earlier. I am glad that it has been brought forward now, and I should like to think that it would be passed in this House, as I have every reason to believe it will be, without any opposition.