EAST INDIA LOANS (RAILWAYS AND IRRIGATION) BILL. (Hansard, 11 April 1922)

§ VISCOUNT PEEL
My Lords, it is probably not unknown to your Lordships that the Government of India require the authority of Parliament to borrow in the United Kingdom. The Government of India is free to borrow money in India without authority from Parliament, but under Statute money can only be raised in the United Kingdom by the Secretary of State in Council on behalf of the Government of India to such an extent as is authorised by Parliament. There is a long series of Acts called the East Indian Loan Acts which have been passed by Parliament. The last was passed in the year 1910, and it authorised the borrowing of £25,000,000 for the purposes of irrigation and railways. In ordinary times the amount of money for which leave to borrow was then sought would not have sufficed until the present day, but as your Lordships will understand the necessity during the war of reducing capital expenditure to a minimum has made it unnecessary until now to seek fresh powers from your Lordships. It is, however, necessary now to come before your Lordships with a Bill seeking these fresh powers.
I should like to say that it is usual to ask for Parliamentary authority to borrow money for general purposes and for railway and irrigation purposes, but at the present time we have unexpended borrowing powers for general purposes amounting to about £12,000,000. It is unnecessary, therefore, to borrow at the present time under the head of "general purposes," and I do not come before your Lordships asking for powers to borrow money for general purposes. This Bill asks your Lordships to permit the Government to borrow up to £50,000,000 sterling in the United Kingdom for Indian railways and irrigation.
At the present time there are unexpended borrowing powers of about £7,000,000, but that is much less than the amount of the last loan which was offered. It is not likely that any of this money will be used for purposes of irrigation, because in the greater part of India irrigation has been dealt with by the local Governments, and any borrowing for this purpose would probably be conducted by the Government of India and not by borrowing in this country. 184 As, however, it is not possible to be quite certain on this point, power is taken in the Bill to borrow for irrigation, as in the loans of 1908 and 1910, but really the main purpose of this Bill concerns itself with railway matters. I may, perhaps, remind your Lordships, as it is ten or twelve years since a Bill of this kind came before your Lordships' House, that the railways in India are in the main State-owned, either managed directly by the State or by companies. The companies provide only a comparatively small proportion of the capital.
I think that perhaps it is necessary to give your Lordships very shortly some figures about railway capital and profits. The total amount of State-provided capital expended on Indian railways is roughly £340,000,000. If we take the exchange at a rupee worth 1s. 4d., the capital raised by the guaranteed companies amounts to about £65,000,000. The average net profits obtained by the State from railways, after paying all interest and sinking fund charges, was, during the five years ending March, 1915, about £3,500,000 per annum. During the following four years of war about £8,000,000 per annum was the figure of profit, but during the three years since the war, ending March 31, 1922, about £4,000,000 per annum was the profit. When financial relations between the Central Government and the Provinces were discussed by the Committee presided over by Lord Meston in 1920, of which Committee the Financial Secretary to the Treasury was a member, £7,000,000 was taken as a reasonable figure for the average annual profits on the railways. The Indian railways, besides their regular economic use, are also, as your Lordships will see, a source of profit to the State.
Next I would like to give your Lordships one or two figures as to the extension of the railways since 1910. Since 1910 the mileage of the railways in India had, by March 1, 1920, increased from 32,099 miles to 36,735 miles—that is, by 14 per cent.— while the number of passengers carried annually had increased from 371,000,000 to 533,000,000, or 44 per cent., and the tonnage of goods carried annually from 65,000,000 tons to 99,000,000 tons, or an increase of 52 per cent. These figures show clearly that the Indian public responds rapidly to increased facilities both for travelling and the carriage of goods, and there is, at the present moment, very urgent 185 necessity to meet their growing requirements.
Your Lordships who are interested in these matters may remember, and no doubt have read, the Report of the Acworth Committee. That Committee sets out very fully and clearly the present deficiencies of the Indian railways, and the nerd for considerable sutras to be spent upon them not so much for development as to bring them up-to-date by providing bridges, rolling stock, etc. I do not think that I need trouble your Lordships with any quotations from that Report, because it-has been before your Lordships already. That Report was emphasised by a Committee consisting of sixteen members, both official and non-official, of the Indian Legislative Assembly and the Council of State, presided over by the Finance Member of the Viceroy's Council. This Committee entirely endorses the views expressed by the Acworth Committee as to the condition of the railways, and reports that there is urgent need for additional rolling stock, for doubling lines, for strengthening bridges to carry heavier loads, for heavier types of engines, remodelling of the yards, improvement in third-class passenger accommodation, etc.
I think the case may, be taken as fully established for the necessity of borrowing this money for improving the condition of the Indian railways. There is also ground to hope that, these loans will result in some direct profit to the State. In any case, they are absolutely essential for providing adequate transport facilities for the requirements of trade in India. These facilities are, of course, essential for the general prosperity of the country, and may produce also a very good effect on the general Revenue of India, for trade activity reflects itself in higher Customs and higher income, and in a general increased yield under all heads of taxation. I trust, therefore, that your Lordships will give a Second Reading to this Bill. I beg to move.

§ LORD SYDENHAM
My Lords, I desire to ask the noble Viscount one or two questions. Will this large loan be raised all at once, or will it be spread' over a large number of years? And will this £50,000,000 be devoted entirely to the improvement of the railway traffic in 186 India which, of coarse, is in very great need at the present time? I understand that no part of it is to be applied to irrigation. Therefore, I assume that none of this loan can go to the great irrigation project in Sind which has been overdue for a very long time, and which is very much needed at present. As the noble Viscount is aware, the railways of India have ceased to be nearly as remunerative as they used to be, and we may hope that with this expenditure of capital for equipping them better and enabling them to have greater carrying power, the disproportionate result in profits will probably be removed. Would the noble Viscount say whether it is now settled that the management of all the railways of India is to be transferred to boards in India?

§ VISCOUNT PEEL
I think I answered the noble Lord's first question in my opening statement. I said that though these powers are taken it is very unlikely that any of the money will he used for irrigation purposes, because that has become a Provincial subject over the whole of India. As regards the raising of the £50,000,000 it is not intended that all of it should be raised this year. I do not suppose he will press me to say the exact amount to be raised, because it depends largely on the market and other conditions. As regards his third point, I understand that the future management of the railways is under consideration.