§ Major POLE
asked the Secretary of State for India whether he can make any statement as to the financial implications of the report of the Round-Table Conference?
§ Mr. BENN
I would refer my hon. and gallant Friend to paragraphs 18 and 20 of the report of the Federal Structure Committee of the Round-Table Conference which read as follows18. Finance. Special provisions.—In the sphere of Finance, the sub-Committee regard it as a fundamental condition of the success of the new constitution that no room should be left for doubts as to the ability of India to maintain her financial stability and credit, both at home and abroad. It would therefore be necessary to reserve to the Governor-General in regard to budgetary arrangements and borrowing such essential powers as would enable him to intervene if methods were being pursued which would, in his opinion, seriously prejudice the credit of India in the money markets of the world. The sub-Committee recommend, with a view to ensuring confidence in the management of Indian credit and currency, that efforts should be made to establish on sure foundations and free from any political influence, as early as may be found possible, a Reserve Bank, which will be entrusted with the management of the currency and exchange. With the same object again, provision should be made requiring the Governor-General's previous sanction to the introduction of a Bill to amend the Paper Currency or Coinage Acts on the lines of Section 67 of the Government of India Act. They are further agreed that the service of loans, with adequate provision for redemption, by Sinking Funds or otherwise, and the salaries and pensions of persons appointed on guarantees given by the Secretary of State, should be secured, along with the supply required for the Reserved Departments, as Consolidated Fund Charges.1411W20. The sub-Committee recognise that it may be difficult in existing conditions to set up a Reserve Bank of sufficient strength and equipped with the necessary gold and sterling reserves immediately, and that, therefore, until this has been done some special provisions will be found necessary to secure to the Governor-General adequate control over monetary policy and currency.
The importance both now and under the new Constitution of the financial stability of India and of her credit position cannot possibly be exaggerated. It is in India's own interest that she should retain the position of confidence which she enjoys. It is the considered view of the Government, which indeed is well known, that the safeguards referred to by the Federal Structure Committee, including the powers of the Governor-General in relation to currency legislation, are essential and cannot be abated if a new Constitution is to be established with success.