CLAUSE 154.—(Provisions as to relation of Burma monetary system with India.) (Hansard, 28 March 1935)

§ Mr. BUTLER
I beg to move, in page 90, line 20, to leave out from "for," to "made," in line 23, and to insert: defining and regulating the relations between the monetary systems of India and Burma and for purposes connected with or ancillary to those purposes, and in particular, but without prejudice to the generality of this section, such provision as may appear to His Majesty to be necessary or proper for the purpose of giving effect to any arrangements with respect to the said matters. This Amendment deals with an important and rather technical subject. The Clause and the corresponding Clause 428, Part XIV, makes provision for the retention of Burma within the Indian currency system after the separation of Burma from India. As the currency system of India is to be managed in the future by the Reserve Bank of India it is necessary to make provision to enable the Reserve Bank of India to continue to function in Burma after Burma has ceased to be part of India. The arrangements necessary 2189 are being agreed between the Government of India and the Government of Burma. In so far as they can be made by amendment of the Reserve Bank Act, to make it applicable to the changed conditions, the necessary action will no doubt take the form of legislation by the Indian Legislature. There are, however, several matters which may fall outside the scope of such amending legislation and to cover these in India the Clause proposes to take power to issue such Order in Council as may prove to be necessary. As originally drafted the Clause gave power to issue an Order in Council giving effect solely to arrangements agreed upon by the existing Governments of India and Burma. The financial adjustments consequent upon the agreed arrangements do not, however, fall within the scope of the matters to be so agreed between the two Governments, but come within the cognisance of the Tribunal which the Committee will remember was recently set up by the Secretary of State to advise on the formulation of a financial settlement between the two countries. The purpose of this Amendment is to secure that matters connected with the agreement but not actually included in it are dealt with properly.

§ Mr. MORGAN JONES
I gather that the Reserve Bank of India is to operate for the dual purpose explained and that a number of people will be nominated by the Governor-General to act as bank directors. What provision will there be for seeing that the point of view of Burma is adequately represented among those who direct the policy governing this particular matter?

§ Mr. BUTLER
I think that is referred to in Clause 428.

§ Mr. JONES
Yes, but my simple question is this: who will be responsible for seeing that the point of view of Burma is adequately put forward when these things are being discussed?

The CHAIRMAN
The hon. Member will note that that is dealt with in a special part of the Bill, but it is appropriate to raise the matter now.

§ Mr. BUTLER
Rangoon will elect one of their own directors for this purpose. I think that answers my hon. Friend's question.

§ Mr. JONES
I will not pursue the matter further, but we will bear it in mind.

§ Mr. BUTLER
I beg to move, in page 90, line 27, at the end, to add: (2) any sums required by an Order under this Section to be paid by the Federation shall be charged on the revenues of the Federation. This Amendment is designed to meet a possible but not an immediate contingency. Broadly, the effect of the general financial settlement is expected to be the assumption by Burma of a net indebtedness representing her share of India's general debt and of pensionary liabilities, so that Burma will be India's debtor till she has paid off both the capital sum and interest upon it. For several years to come—the period will, of course, vary according to the scheme of amortisation that is adopted—the amount of the annual payments thus due from Burma is expected to exced any profits that may accrue to her as her share of the surplus profits payable to the Government of India, and subsequently to the Federal Government, by the Reserve Bank, so that the latter will be set off against the former, the result being a net payment each year by Burma to India, and no actual payment by India will be involved. But if Burma still remains within the Indian currency system, as is expected, when the time comes that she has paid off her debt to India, India will then be liable to pay to Burma those profits, and it is necessary, in Burma's interests, looking to that future state of affairs, to provide that this payment when it becomes due from India to Burma is a fixed charge on India. That is the reason, in the interests of Burma in the distant or semi-distant future, for including this new Sub-section.

§ Mr. MORGAN JONES
I do not quite understand how the Federation is brought into this matter at all. Burma is now excluded from the Federation, it is a Province on its own. Why should the Federation be brought into it? Could it not be done in a more direct way with Burma as a separate Province.

§ Mr. BUTLER
I thought I had explained that there was a natural connection between Burma and India in the 2191 fact that the Reserve Bank of India is to conduct the currency of Burma. That is the way the Reserve Bank is brought into it.

§ Mr. JONES
Still I do not understand how the Federation has anything to do with Burma under this proposal. Why should it be involved?

§ Mr. BUTLER
As I said in my speech on the first Amendment a Tribunal has been appointed to settle financial and other questions between the Government of Burma and the Government of India. It is in case the interests of Burma are not adequately considered, arising out of the original transaction, that this Subsection is inserted. The two countries are brought into the matter owing to the fact that a Tribunal was appointed to consider the interests of the two countries.