GOVERNMENT OF BURMA (COR- RUPT PRACTICES AND ELECTION PETITIONS) ORDER, 1936.

HL Deb 24 June 1936 vol 101 cc205-22

THE MARQUESS OF ZETLAND

My Lords, I beg to move that the Burma Draft Order be now considered.

Moved, That the Draft Government of Burma (Corrupt Practices and Election Petitions) Order, 1936, as presented to Parliament and reported from the India and Burma Orders Committee on the 11th instant, be now considered.—(The Marquess of Zetland.)

On Question, Motion agreed to.

THE MARQUESS OF ZETLAND

I beg to move that the Amendments on the Paper be agreed to.

Amendments moved— In paragraph 4, Part IV, page 8, line 7, leave out (" any ") and insert (" that ") In paragraph 6 of Part I of the First Schedule, page 10, line 10, after the first (" of ") insert (" this Order or of ").—(The Marquess of Zetland.)

On Question, Amendments agreed to.

THE MARQUESS OF ZETLAND

I beg to move that the Draft Order be approved as amended.

Moved, That the Draft Government of Burma (Corrupt Practices and Election Petitions) Order, 1936, as presented to Parliament and reported from the India and Burma Orders Committee on the 11th instant, be approved as amended.—(The Marquess of Zetland.)

On Question, Motion agreed to.

GOVERNMENT OF INDIA (COMMENCEMENT AND TRANSITORY PROVISIONS) ORDER, 1936.

GOVERNMENT OF BURMA (COMMENCEMENT AND TRANSITORY PROVISIONS) ORDER, 1936.

GOVERNMENT OF INDIA (DISTRIBUTION OF REVENUES) ORDER, 1936.

THE MARQUESS OF ZETLAND

My Lords, I now have to commend to your Lordships' notice the three Orders which deal with the bringing into operation of the Government of India Act, 1935, and the main object of these Orders is, of course, to lay down the date, which Parliament is required to do before the Act can come into operation. These Orders provide that the Act, with the exception of Part II, which deals with Federation and with certain other provisions about which I shall say a word in a moment, shall come into operation on April 1, 1937. Those parts of the main body of the Act which we do not propose shall come into operation on that date are substantially these: the provisions for setting up the Railway Authority, which will not be required until nearer the time when Federation comes into operation, and the provisions for setting up the Federal Court. It is more than likely that we shall require to set up the Federal Court soon after the new Constitution comes into operation in the Provinces, but I shall in any case have to ask your Lordships to agree to an Order dealing with the salaries and appointment of the Judges of the Federal Court; and, since it is not necessary that the Court should come into existence until some little time after provincial autonomy has started, that particular provision of the Act is excluded from this Order.

In the case of India, if your Lordships agree to this Order, the new Constitution will have come into operation by this time next year. A great change will have been brought about in the system of government in that country. In the case of Burma not only will the people be starting upon a new form of government, but they will be weighing anchor and sailing forth under their own pilot, for the effect of this Order will be to separate Burma from India. Of course, though Burma is setting forth on a new voyage under her own pilot, she will still remain in contact with this country and with the Government of this country through the agency of what will then be the Secretary of State for Burma. It is proposed that, to start with at any rate, the Secretary of State for India and the Secretary of State for Burma should be the same person. I noticed that in another place my right honourable friend Mr. Winston Churchill at once likened the future occupant of these two offices to that immortal character created by the late Sir W. S. Gilbert, Pooh Bah. Well, I always enjoy the frolicsome humour of my right honourable friend, but I would suggest that in this particular case the closer analogy would, as a matter of fact, be that of the Colonial Office and the Dominions Office in this country when they were first constituted as two separate Departments of the Government. For some time after the creation of the two Departments the offices were held by the same individual.

May I return for a moment to the India Order? Besides bringing the main part of the Act into operation on April 1, 1937, the Order provides for certain provisions of the Act to come into force in advance of that date. The reason for that is, of course, that if you are to start your new Constitution on April 1 you must have carried your elections through before that date. Certain provisions of this Order enable the Government, therefore, as at present constituted, to complete the electoral rolls and to hold the elections so that the new Governments may actually come into existence on April 1. Perhaps I might give your Lordships a brief picture of what the procedure will be. The electoral rolls are even now being drawn up. By August I should hope they will be ready for scrutiny, and objections can then be made. After that process has been gone through, a little later in the autumn, the final rolls will be published, and before the end of the year I should hope the primary elections in the case of the Scheduled Caste elections will be held. If that is so, it will enable us to hold the General Election in India about February, and once the General Election has been held the Governors in the different Provinces will be in the position to select their Ministers and appoint their Governments so that they may take over on April 1—that is to say, at the beginning of the new financial year.

It will, of course, be obvious to your Lordships that in these circumstances the new Governments will not be in a position to present Budgets at the normal time at which Budgets in India are presented—that is to say, in February or March; and in order that no inconvenience may be caused on that account the Governors of the Provinces are given power to arrange for the necessary expenditure in the Provinces for a period of six months or until the new Governments are able to present their own Budgets, whichever is the earlier. What will probably happen in most cases will be this. The new Ministries, as soon as they take over the reins of government, will consider the financial position. They will probably arrange for a meeting of the new Legislatures in July or August, 1937, and by that time they will be in a position to lay before the new Legislatures their proposals with regard to finance for the remainder of the year.

In the case of Burma, there is necessarily some variation of that timetable. For climatic and agricultural reasons there are very few periods in the year when it is conveniently practicable to hold an election in Burma. Broadly speaking, the only times at which an election can be held in Burma are late October or November or in February; but February is an inconvenient month, partly because a large part of the poorer population at that time are migrating with a view to obtaining employment for the hot weather, and partly because the collection of the revenue is at that time at its height, and Government would be hard put to it, therefore, to spare the necessary staff to carry out the election. In the case of Burma, therefore, it is proposed that the election should be held next November, and that in the case of Burma is possible because, happily for that country, they have not the difficulties which exist in India in connection with special elections for representatives of Scheduled Castes and so on. That being so, it would obviously be absurd if the new Legislature came into existence in November and did not meet before the following July. In the case of Burma, therefore, it is proposed that the new Legislature should meet in February and that it should consider a Budget presented to it by the old Government. We contemplate, of course, that the old Government will probably contain amongst its Ministers some who will be Ministers in the new Government, but, be that so or be it not so, the new Legislature will consider a Budget presented to them by the old Government towards the end of the financial year—that is to say, in February or March; but until April 1 they will only function with the existing powers under the Act of 1919.

Now I turn to the question of finance, and, after all, that is the main question which your Lordships will have to consider, for it was common ground both by those who supported and those who opposed the Government of India Bill last year that before the new Constitution came into operation there should be a financial settlement between the Centre and the Provinces and they should be satisfied that the finances of India were such that that financial settlement could conveniently be made. Indeed I gave an undertaking in the course of the discussions on the Bill last summer that I would supply your Lordships, before I asked you to agree to the commencement of the new Constitution, with material provided by an expert financial inquiry which would enable your Lordships to decide whether or not the financial position was such that the new Constitution could safely be brought into operation. In pursuance of that pledge I was fortunate enough to persuade Sir Otto Niemeyer to undertake during the past winter an expert financial inquiry in India. I should like to take this opportunity of expressing my profound gratitude to Sir Otto Niemeyer for having undertaken this very difficult and arduous task and for the admirable manner in which he discharged it. Sir Otto Niemeyer, it will be universally agreed, is a man not only of very high standing in the financial world in this country, but a man who has had immense experience of finance in many parts of the world. He has, for example, surveyed the finances of Australia, of Brazil, and of the Argentine, he is a director of the Bank of International Settlements, and I think he was at one time Chairman of the Finance Committee of the League of Nations. Over and above all that, for this particular purpose, Sir Otto had the supreme merit that he was wholly divorced from the Indian controversy. So far as I know, until I invited him to undertake this task, he had taken neither part nor interest in the question of the future government of India.

Sir Otto Niemeyer's Report has been before your Lordships for some little time, and those of your Lordships who are sufficiently interested and who have studied it will see that on the main question upon which he was asked to report—namely, whether there was or was not any obstacle on financial grounds to the bringing of the new Constitution into operation—he has reported that he considers that there is no obstacle. On that point he is sufficiently definite. It will be for the convenience of your Lordships who wish to refer to his Report that I should call your attention to what he says in paragraph 8 of his Report on page 6. He says: On a general review of existing tendencies, I should conclude that the budgetary prospects of India, given prudent management of her finances, justify the view that adequate arrangements can be made, step by step, to meet the financial implications of the new Constitution. Finally, on page 12, as the end of paragraph 18, he says definitely that: From the financial point of view, I conclude that His Majesty's Government may safely propose to Parliament that Part III of the Government of India Act, 1935, should he brought into operation a year hence. But there were three other main questions upon which Sir Otto Niemeyer was asked to report. He was to make recommendations with a view to establishing the Provincial Governments on an even keel from the financial point of view—that is to say, he was asked to make recommendations which would start the new Provincial Governments with balanced Budgets. Then he was asked to make recommendations in connection with Section 138 of the Government of India Act, which lays it down that in the future the proceeds of Income Tax shall be divided between the Centre and the Provinces. And thirdly, he was asked to say in what proportions the proceeds of the Income Tax which were eventually allotted to the Provinces should be distributed amongst the Provinces inter se. I will say a few words with regard to the first of these three main heads for it is obvious that unless the Government of India are in a position to grant to the Provinces the aid which in Sir Otto's view is necessary to enable them to start their new careers with balanced Budgets, we should not be justified in passing this Order this afternoon.

If your Lordships will look at page 12 of the Report you will find that after a careful inquiry he has come to the conclusion that the financial aid which the Government of India will be required to grant to the Provinces amounts approximately to 4½ crores of rupees or 450 lakhs. Since I have to deal for a few moments with figures, may I remind your Lordships that a lakh is 100,000 rupees, the equivalent approximately in sterling of £7,500, and that a crore is 10,000,000 rupees, the equivalent approximately of £750,000 sterling. The Centre has to find 4½ crores for the Provinces. But that is not the end of the bill. Since Burma is to be separated from India, India stands to lose financially as the result of the separation a sum which is estimated at approximately 2¾ crores of rupees. The whole sum, therefore, which the Government of India have got to find amounts to 7¼ crores of rupees. What ground have we for assuming that the Government of India can find this sum of money? Sir Otto Niemeyer has no doubt whatsoever that in, say, two years time the increased resources which he foresees in the case of the Central Budget will be adequate to produce that sum. But we have to find this sum, not in two years time, but next year, and the crucial question therefore is this: Can the Government of India provide a sum of 7¼ crores of rupees in time to start the Constitution on the first of April next? I think that the answer to that question is that they can.

To begin with, the Government of India have provided in their Budget of this year subsidies for three of the Indian Provinces, in other words, the North-West Frontier Province, Sind and Orissa, and the amount of the subsidies provided for these Provinces is something more than 2½ crores of rupees, leaving a sum of 4¾ crores to be found. Fortunately, as a result of the more rapid improvement in the finances of India than at one time seemed in the least probable, the Government of India have a large surplus in respect of the accounts for the past year, and of that surplus they have put into a suspensory account to be used in the year 1937–38 a sum of 2 crores of rupees. That, therefore, now leaves the sum of only 2¾ crores to be found to complete Sir Otto Niemeyer's sum. What justification have we for supposing that this 2¾ crores of rupees will be forthcoming? Sir Otto Niemeyer estimates that they will be covered by the expansion in the net revenue of the Government of India by next year, and we have good grounds for supposing that in that estimate he will prove to be correct. During the past few years the average annual increase in the proceeds of Customs and Excise duties in India has been approximately 2 crores of rupees, and during the same period the average natural increase in the proceeds of Income Tax has been three-quarters of a crore per annum. Such expansion may be expected to account for at all events a large part of the 2¾ crores which are required.

But I am not relying merely upon an increase in the proceeds of taxation. I am also relying upon a considerable reduction in the interest charges which the Government of India at present have to meet. I cannot hope, of course, to carry through a conversion scheme on anything like the scale of that which was carried through by the Chancellor of the Exchequer in this country not so very long ago, but I do expect to pay back next month a loan of some £17,000,000 which is at present running at a rate of interest of 5½ per cent. A short time ago, not long after Sir Otto Niemeyer's Report was published, India was successful, for the first time I think in her history, in floating a loan at par at a rate of interest of 2¾ per cent. Other loans will be coming to maturity in the near future and further savings may, I hope, be made in that way. I hope I have said enough to satisfy your Lordships that this sum—a large sum for India—of 7¼ crores of rupees is in sight and will be forthcoming by April 1 of next year.

May I just say a few words as to the method by which this money is going to be distributed to the Provinces? Part of the financial settlement between the Centre and the Provinces consists of a scheme for the decentralisation of balances and the consolidation of the provincial debts. The details of that scheme are not included in the Order in Council. They are of a technical nature and they can be carried out by the Government of India under their existing powers. I am prepared to give your Lordships an undertaking now that these proposals shall be given effect. As a matter of fact they form an integral part of the whole scheme of financial settlement. When the decentralisation of balances and the consolidation of the provincial debts has been made, we shall know exactly what the Provinces owe to the Centre, and, as Sir Otto Niemeyer points out, the most obvious way in which a creditor can grant financial aid to a debtor is by cancelling the whole or some part of his debt, and that in fact is what we propose to do. There will be a cancellation of provincial debt, which will result in a recurring benefit to the Provinces of over one crore of rupees. The second method by which aid will be given to the Provinces will be by allowing to those Provinces in which jute is grown an additional proportion of the proceeds of the Jute Tax. At present they benefit to the extent of 50 per cent. under the Act of last year, but in future they will benefit to the extent of 62½ per cent. That will provide them with approximately another half crore of rupees. The third method is the actual grant of annual sums by the Central Government to the Provinces. That will be approximately three crores.

With regard to the provisions of Section 138 of the Act, I admit that the section is somewhat technical and is a little difficult to follow, but I will try to explain in as simple language as possible what it is that Section 138 contemplates. The underlying intention of the section is that at some time in the future some proportion of the proceeds of Income Tax shall be allotted to the Provinces. The date is left to be prescribed by Order in Council. The proportion of the proceeds of Income Tax to be allotted to the Provinces is also left to be so prescribed. In accordance with the recommendation made by Sir Otto Niemeyer, the proportion which will eventually be payable to the Provinces is to be 50 per cent. The date when, not the whole of that 50 per cent., but some part of the 50 per cent., shall become payable will be after a period of five years from the coming into operation of the Act. It is contemplated therefore that for the first five years the Central Government may (except in certain circumstances) retain the whole of the proceeds of Income Tax, but that after the first five years the Provinces will be allocated for a period of another five years step by step the amount of Income Tax to which they will eventually be entitled. That is to say, in the sixth year, if all goes well, they will receive one-sixth and in the seventh year one-third, and so on until, at the end of the ten years period, they will be receiving the whole of the proportion of the proceeds of Income Tax to which they are entitled.

The other point upon which Sir Otto Niemeyer was required to advise was as to the distribution between the Provinces of their share of the amount of Income Tax to which they are entitled. In regard to that I would suggest to your Lordships that you should do what the Government have done, and that is accept Sir Otto Niemeyer's suggestions as a quasi-arbitral award. You will find the percentages set out on page 19. I need hardly say that there is not a Province in India which is not dissatisfied. That, I think, was almost inevitable. Those Provinces which enjoy a high standard of administration to-day are disappointed because they are not being awarded further sums. Other Provinces which do not enjoy a high standard of administration are disappointed because they are not receiving larger sums than they have been promised. But, as Sir Otto Niemeyer himself said, he was out not to give tips to the virtuous but to distribute alms amongst the needy. I would suggest that it would be quite impossible for your Lordships to vary the percentages which, after careful inquiry by an obviously entirely impartial authority, Sir Otto Niemeyer, have been arrived at. I think that explains broadly the financial implications of the Orders.

May I say what satisfaction it is to me, and also I am sure to all those who, for a good many years past, have been devoting a great deal of their time and their thoughts to the planning of the new Constitution in India, to feel that to-day we are actually giving the word for the new Constitution to come into operation, that we are authorising the throwing open of the new edifice—or at any rate those rooms in the new edifice which have been prepared for them—to the new Governments in the Provinces in India? It is, as I say, with feelings of satisfaction therefore that I commend to your Lordships the three Draft Orders which are now before you.

Moved, That the Draft Orders, as presented to Parliament and reported from the India and Burma Orders Committee on the 11th instant, be now considered.—(The Marquess of Zetland.)

LORD SNELL

My Lords, it is with very great gratification that one takes part in what is really an inaugural proceeding for the future government of India. What we are doing to-day is, as it were, the culmination of ten years of Very earnest thinking and concentrated work and preparation. I should like to remind your Lordships, in the few moments for which I shall address you, of the attitude which I and my friends who were my colleagues on the Joint Committee, as well as the Party which I represent, have taken on this great and important matter. We—as no one knows better than the Secretary of State himself, whom we troubled greatly and incessantly—desired greatly to extend the provisions of the Government of India Act. We exhausted our own strength, his patience and a good deal of time in trying to convince the majority of the Joint Select Committee of the wisdom of our cause. But the Report was made and the India Act was passed. We are realists in politics, and we accept that Act as having been passed; we do not quarrel to-day with its limitations. At the same time the House, I am sure, will forgive me and allow me to say that we do not retract in the least degree any of the propositions which we then made.

To-day, my Lords, we accept this Act as a basis of work, and we are gratified that we think we can see most promising signs of co-operation on the part of the people of India for the preparation and conduct of the great task that is before them. We always expected that would be so, and I think everybody is to be congratulated and comforted that, so far as I can see without having any official information, the various sections in India are looking forward with great anxiety and with a desire to co-operate with each other in the work that is before them. We agree also that these Rules are necessary and that it is right that they should be accepted at this time, so as to give as much opportunity as possible for the proper preparation which has to be made. I do not propose to-day to enter into any discussion of the problems that are indicated, at least, by Sir Otto Niemeyer's Report. We are enormously fortunate in having a Report from one of his great experience and authority, and because of that Report I think that we can pass these Orders with a certain comfort that they have the approval of a very distinguished and competent examiner. I should have hoped for a better outlook in regard to railway finances, but even so I think probably the conditions may be better in a short time than they are to-day.

We on these Benches—as we say—support the passing of these Orders to-day, and those of us who took the part that I have mentioned would like to commend them to the Indian people: and we are entitled to expect that all persons in India will work honestly and loyally together to get the best out of what Parliament has tried to do for them. Also I think we ought to expect everybody in England, the Act having been passed, to sink their differences, as we have sunk ours, and to give every encouragement that the united voice of Parliament can give to the Indian people in their great task.

THE MARQUESS OF LOTHIAN

My Lords, I want to add a few words only in support of what has just fallen from the noble Lord on my left, and to congratulate the Government on being able to take the first practical step to bring the new Constitution into operation in April next. There are, however, two general observations I should like to make. The first is that I hope that, when the Act comes into operation in the promised April next, it will be on the basis of the full responsible government which the Act itself provides. Whether that will be possible will depend no doubt mainly upon the decision which the Congress Party will take, in those Provinces in which it may obtain majorities, as to whether it will or will not accept office. But it may also depend a little on the attitude of British authority to that problem in the meantime.

I should like to observe that, much against our will, during the last six or seven years India has had some of the characteristics of what has sometimes been described as a "police State"—that is to say, a State in which the repression of certain political opinions has been a central and a cardinal fact. That this has been so has been the inevitable result of the adoption by Congress of the policy of civil disobedience. Such a policy is a challenge to the existence of Government, and any Government worthy of the name must meet it. As a consequence, my noble friend who leads this House, one of the most humane and sympathetic Viceroys which India ever had the fortune to enjoy, had, I believe, under his control at one time in the prisons of the country no less than 50,000 political prisoners, while his successor the Marquess of Willingdon had at least 30,000. That kind of repression was, as I have said, inevitable; but there is no use disguising from ourselves that many years of that kind of police repression, however much it may be forced on us, and its correlative government by certification, inevitably tend to produce abuses in police administration, to create estrangement between the political classes and the Government, and to give rise to deplorable psychological and political consequences on all sides. If the new Constitution is to come into operation with a real chance of success, it is essential that that era of Indian Government should come to an end when provincial autonomy is inaugurated. The only way of doing that is to place full responsibility for law and order on the shoulders of those who have a majority; that responsibility should be assumed by the parties with a majority.

Once Provincial Government represents the majority of politically-minded people in India or a Province, the major cause of that political crime which has caused most of the police action in recent years will automatically disappear. The Provincial Governments will be able to maintain order, so far as the major political issues are concerned, without police repression, because they will represent the people and not a distant and an alien authority. That is the central virtue, the cardinal virtue of the system of responsible government for which we on these Benches have persistently stood once the effective demand for self-government became apparent in India. I am sure the Secretary of State will do everything in his power to pave the way for the transfer of responsibility in the Provinces on that date, and to make it clear that the quickest way of getting rid of those aspects of Indian government which have been unfortunately forced upon us in the last six years will be that the majority in the new Legislatures should assume full responsibility for law and order in the Provinces, subject only to the special responsibility of the Governor to intervene if in his opinion there is a grave menace to the peace and tranquillity of the Province.

The second observation I would like to make concerns finance. It a little surprised me that my noble friend Lord Snell did not claim that the Report of Sir Otto Niemeyer is one of the first instalments coining from the National Government of Socialist finance, for it is a well-known Socialist doctrine, "from each according to his ability, to each according to his need "—a principle which I should like to observe has recently been thrown over in the new Soviet Constitution, for "each according to his labour" is a very different principle. I think we should all feel deeply gratified that Sir Otto Niemeyer has felt able to recommend that the financial condition of India does make it possible to bring in provincial autonomy so soon. The central fact is that, while he feels that the financial situation makes possible the inauguration of the Constitution, there will be singularly slender financial resources available to the new Governments during the first five years of the Constitution, even taking the temporary grants which he recommends from central sources into account. If things go well after that the Provincial Governments may, I think, have not inconsiderable resources to spend on social reform, and, as it is called in India, national development; but for the first five years they will be very short.

I think the Secretary of State will agree with me that one of the reasons, though not by any means the only reason, why the Montagu-Chelmsford reforms did not work more successfully was that the Ministers then responsible for the transferred services had very little money to spend on those aspects of Indian reform in which they were most intimately concerned. They could do very little for social reform and national development, because of the financial stringency which followed the great extravagance of the War period. I hope it will be possible for him to do something to prevent a repetition of that experience when the new Constitution comes into being. Nothing would send it off under worse auspices than that the new Provincial Ministries should have to sit and maintain law and order for the first five years, and be unable to inaugurate any substantial part of that programme of social reform or nation building, which India so urgently needs, during that period. Is it not possible by some means, by loan or otherwise, to give to the Provincial Governments during that first period of stringency some revenues which they can spend on social reform at the start? I do not think that anything would do more to smooth the way for the working of the provincial parts of the new Constitution, or prepare the way for the inauguration of the second and far more difficult part of it, Federation. India has profited greatly from the point of view of her credit by the orthodoxy of her finance, but there are times when human and political considerations may make a temporary lapse from the strictest tenets of Gladstonian Treasury rectitude an even higher form of finance.

The National Government have not hesitated to throw over certain tenets of British fiscal and economic orthodoxy. They have, I think, thrown them over too completely, and been unduly extravagant in their abandonment of principles which have served this country so well in the past. I think, however, they might in this case, with advantage, consider whether a little temporary laxity from those standards in the first few years of the new Constitution might not be the greatest wisdom. I am not a bit afraid of the great battle waged between Socialism and Individualism here or in India, provided it is fought out on democratic and constitutional lines. We shall then work out a wise and practical compromise. What is fatal is that it should be fought out as a battle between Fascism and Communism. And nothing will do more to show that there is no need to resort to these revolutionary and despotic methods than that the new Governments in India, when they do come into being, responsible as they will be to the people, should be able to bring about almost at once, within the Constitution, great social and economic reforms which are of lasting benefit to the people. That means, as I see it, that by some means or other the new Provincial Governments should have placed at their disposal for a time a larger measure of revenue than will clearly come to them under the Niemeyer Report, excellent as that Report may be. I do not expect that the Secretary of State will be able to make any remarks in reply to my suggestions to-day, but I recommend these points of view to his sympathetic consideration.

THE MARQUESS OF ZETLAND

My Lords, the noble Marquess has just said that he did not expect me to make any remarks in reply to his observations. There is one remark that I should like to make in reply to what he said in regard to starting the new Constitution off by giving to the new Governments real responsibility. Of course the Act contemplates that they will be given real responsibility; that is assuming, of course, that they show that they are intending to act in a responsible manner. But I would like just to make this observation. If the policy which is advocated in some quarters of Congress is to be the policy generally adopted in India—namely, the policy of entering the new Constitution in order to destroy it from within—then there will be a grave risk of the Governor having to exercise, to an extent which I hope will not be necessary, the special powers conferred upon him by the Act.

Then, with regard to what the noble Marquess said on the subject of finance, of course I agree with him that it is desirable that the new Governments should find themselves in a position to spend money on the social services. I think it is possible, if the improvement in the economic situation continues, that even before the passage of the first five years the Provinces may draw something from the proceeds of Income Tax, because it is also laid down in these Orders that if the proceeds of the Income Tax, plus the net surplus of the railways, amounts to more than thirteen crores of rupees, then there shall be allocated to the Provinces during the first five years any sum in excess of the thirteen crores which may be brought in. There is also hope that the provincial taxes themselves may show an increased yield.

May I say one word about the railways to which the noble Lord opposite referred? He said he could wish that the prospects of the railways were brighter than they at present appeared to be, though he admitted, I think, that they did show some signs of improvement. It is admittedly the case that during these years of depression the railways of India have been very disappointing, but we have had a similar experience in other parts of the world. In this country our railways have had similar difficulties; in Canada, in the Argentine, indeed to whatever part of the world you turn you will find that during this period of depression railways all over the world have been suffering grievously. I am not satisfied that it may not be possible to do something to make the railways of India more productive than they are at the present time. They are up against the same problem which railways in this country have been up against—competition with road transport and so on—and I am in communication with the Government of India in connection with matters of that kind.

But, even apart from possible improvements in efficiency, and so on, that may be made, the prospects are not quite so gloomy as they have sometimes been painted. Let us remember that since the railway finances were separated from the main finances of the Government of India in 1924, during the first seven years they contributed to the central revenues of India a sum amounting in all, I think, to over £31,000,000 sterling; and it was only when the severe trade depression came along that that happy state of affairs came to an end. I am grateful to your Lordships for the manner in which you have received these Orders.

On Question, Motion agreed to.

THE MARQUESS OF ZETLAND

My Lords, I beg to move that the Draft Orders be approved.

Moved, That the draft Orders, as presented to Parliament and reported from the India and Burma Orders Committee on the 11th instant, be approved.—(The Marquess of Zetland.)

On Question, Motion agreed to.

House adjourned at thirteen minutes past six o'clock.