§ Sir J. Wardlaw-Milne (by Private Notice)asked the Under-Secretary of State for India whether His Majesty's Government propose to proceed with the programme for the modernisation of the Defence Forces in India recommended by Lord Chatfield's Committee, and whether the outbreak of war has affected the financial arrangements between the two Governments in respect of Indian defence expenditure?
§ The Under-Secretary of State for India (Sir Hugh O'Neill)As announcedon 5th September last. His Majesty's Government had agreed to recommend to Parliament assistance amounting to some £34,000,000 (a quarter of which was to be treated as a loan to India) over a period of five years to meet the capital costs of modernising the Forces in India as recommended by the Expert Committee on Indian Defence under the chairmanship of Lord Chatfield. It is the intention of His Majesty's Government that this modernisation should be proceeded with during the war in so far as strategic priorities and considerations of 2256 supply permit. In the conditions brought about by the war His Majesty's Government have been led to reconsider the whole field of financial arrangements with the Government of India in respect of defence expenditure. The respective Governments propose that the Indian Budget should provide during the war for:
In addition a contribution as recommended by the Chatfield Committee will be made towards the extra costs of certain troops while employed outside India. All defence expenditure over this amount incurred by the Government of India will be met by the British Exchequer. This arrangement will be made retrospective to 1st April, 1939, and will take account of sums issued from grants-in-aid provided for re-equipment in the Estimates of the current year. The annual grant-in-aid of military expenditure from Indian revenues made in accordance with the recommendations of the Garran Tribunal will be continued and stabilised for the duration of the war at the 1939 level of £2,000,000.
- (a) the normal cost of India's pre-war Forces whether they are employed within or outside India, adjusted from time to time in accordance with the trend of prices, etc.; and
- (b) the cost of special defence measures undertaken by India in Indian interests during the war.