Mahamana Madan Mohan Malaviya

Mahamana Madan Mohan Malaviya
Speeches & Writings

Provincial Contract Acts


In supporting the following resolution of the twelfth Indian National Congress held at Calcutta in 1896 Pandit Madan Mohan Malaviya said:


Considering that the Local Governments are entrusted with all branches of administration, excepting Army expenditure, superior supervision and control hers and in England, and the payment of interest on debt, this Congress is of opinion that the allotments made to the Provincial Governments on what is called the provincial adjustments are inadequate, and that in view of the revision of the Quinquennial Provincial Contract which is to take place in 1897, the time has arrived when a further step should be taken in the matter of financial decentralization, by leaving the responsibility of the financial administration of the different provinces principally to the Local Governments; the Supreme Government receiving from each Local Government only a fixed contribution lived in accordance with some definite and equitable principle, which should not be liable to any disturbance during the currency of the period of contract, so as to secure to Local Governments that fiscal certainty, and that advantage arising from the moral expansion of the revenues which are so essential to all real progress in the development of the resources and the satisfactory administration of the different provinces.


Mr. President and Gentlemen,-The history of the scheme of provincial decentralization has already been told you by my Hon'ble friend Mr. Tilak in a very lucid speech. I will not therefore repeat it. From the time the idea was first put forward by Mr. Laing in his Financial Statement for 1862-63 the main objects he1d in view were to secure certainty to the financial arrangements of the Government, and to give Local Governments the power and the responsibility of managing their own local affairs. Let us see how far these objects have been gained. As the system has been worked, it has no doubt secured certainty to the financial arrangements of the Government of India, in the sense that having made what are called the Provincial Contracts the Governments of India is secure during the period of the said contracts against any demands from the Local Administrations, beyond those provided for by the contracts. But the element of, certainty may be said to be wholly absent under it so far as the finances of the Local Governments are concerned. The Imperial Government binds the Provincial Governments to the terms of the contracts, but does not consider itself bound by them: in the same manner. Being the supreme power it thinks it has a right to levy contributions, as it has done more than once, during the term of the said contracts, over and above the amount stipulated for in them, and to require the Provincial Governments to hand over, the balances in their hands the end of the period of the contracts or at any time when its extravagance may lead to a fresh demand for funds. This does not however seem to be what the authors of the scheme or those who developed it in its different, stages contemplated. What seems to have been intended was that except on occasions of extra -ordinary emergency, the Local Governments also should be secure against any demands from the Imperial Governments beyond those, provided for in the contracts, and that they should be allowed to retain for provincial expenditure, any sums which they may have saved during the term of the contracts, in addition to a fair proportion of the increased revenues of their respective provinces at the renewal of the contract. As regards the other object, it is loudly complained that while the Government of India has made Provincial Governments responsible for carrying out all the necessary internal reforms and improvements in administration, it does not leave them sufficient power, which here of course means money, to enable them to discharge their duties properly. We have seen such a high official as His Honor the Lieutenant-Governor of Bengal complaining that the provincial sheep is shorn too close at each renewal and is left to shiver till the fleece grows again. Now, it is hardly necessary to say that this requires to be remedied. The system as it is worked causes much dissatisfaction, and has been condemned by several high and responsible officials of Government. It is extremely desirable that the whole question should be reconsidered, and the system placed on a sound and satisfactory footing. The solution, it seems to me, will depend upon a true appreciation and proper recognition 'Of the relative extent and importance of the duties and responsibilities of the Provincial Governments on the one hand, and of the Supreme Government on the other. Broadly speaking, it may be said that while the Imperial Government is responsible for maintaining peace in the country, and for safeguarding it against aggression from outside the responsibility of carrying out all domestic reforms and improvements upon which depends the progress of the people in prosperity and civilization, and which constitute the truest test of the success or failure of a civilized administration, has been laid wholly upon the Provincial Governments, they must, therefore be placed in possession of adequate means to discharge their duties properly. I have no quarrel with those who assert that the Provincial Governments are as much interested in the expenditure directly controlled by the imperial Government as the Imperial Government itself. Now would I quarrel with the view that the Imperial Government should be regarded as the master of all the revenues raised in the country and that it should be considered as making "assignments" to Provincial Governments for "Provincial uses" rather than as receiving "contributions" from them for "Imperial" purposes. I am quite willing to adopt the homely metaphor used by my friend Mr. Tilak and to regard the Provincial Governments as house-wiles and the Imperial Government as the master of the house. But will the Government of India, which is so jealous to retain all power in its hands, also recognize the responsibility which goes along with that power? (Hear, hear). Will it recognize that it is responsible for the welfare and progress of the vast population of the various Provinces of India? Will it provide the mistress of the house to whom it must be supposed under this view, to have delegated the care and custody of the children with adequate funds to enable her to bring them up in the standard of a civilized man, properly supplied with the necessaries of life, their minds illumined with the light of knowledge, their surroundings made healthy and clean, and the ordinary comforts and conveniences of civilized life brought within their reach? (Hear, hear.) Or will it leave her with a mere subsistence allowance barely sufficient to keep them in existence and allow them to grow in ignorance with its companions misery and crime, an easy prey to oppression and a disgrace to their guardian? Gentlemen, 1 am sorry to say it, but it does seem to me that the Government of India deals with the peoples of the various provinces in this matter, more like a rack-renting landlord, who leaves just enough to its tenant as would enable him to keep himself and his family alive, and to toil on to raise the revenue for his master, than like a guardian of the people; solicitous to advance their happiness and prosperity. (Cheers). His Honor the Lieutenant-Governor of Bengal speaking with the responsibility attaching to his high position was constrained to observe the other day; "It has at times appeared to me that the Supreme-Government did not always realize that it has as great a responsibility for local administration as the Local Government itself. I have seen or seemed to see a tendency on the part of that Government to wash its hands off this responsibility as regards finance." And in view of the revision of Provincial Contracts, Sir Alexander Mackenzie deemed it his duty to exhort the Hon'ble the Finance Minister, "to enter upon the revision in full consciousness of the fact that the Imperial Government is as much interested in the development and improvement, of Provincial Administration as the Provincial Governments themselves, and that any check on them is a check to the whole Imperial machine." I venture to hope that it will not be necessary for, anyone to repeat this protest and advice, and that the Government of India- will so deal with the matter as to remove all just causes of complaint. (Cheers).


Gentlemen, I will now try briefly to show you how ungenerously my provinces have been treated in the matter of these Provincial allotments. Among the many-defects of the existing system, the inequality of the assignments made to the different Provinces is not the least objectionable. There is no rule or principle underlying the distribution. The original grants were based on the then existing actual expenditure in each Province. The Provinces of Bengal, Bombay and Madras, Which having come earlier under the British rule, had made comparatively greater progress and were spending much more in various useful directions than the other provinces received much large grants than these latter. And as each succeeding contract was based on the ascertained average expenditure of each Province during the period of the proceeding contract, the inequality has been maintained to this day. Its injustice however has become more glaring. A few figures will illustrate what 1 mean. I cull these from Annexure B to the Financial Statement for 1896-97. The total revenue and expenditure for each province are given there as follows:-






Net Revenue





















Central Province
















































N.W.P. & Oudh

















































You will see from this that, with the exception of Madras, which shows a slightly large figure, the North-Western Provinces and Oudh contribute the largest amount of revenue, larger than that of rich Bengal and larger still than that of Bombay. And yet the percent- age of our revenue allotted to us to provide for all internal progress and administrative improvements in these vast Provinces, is smaller than that allowed to any other Province in India, being only 41 per cent of our total Revenue, while Madras receives 48 per cent Bengal, 53, Bombay, 66, the Punjab, 60, and the Central Provinces, 69 per cent of the total Revenues of their, respective Provinces. You may remember that the Hon'ble Mr. Bhuskate, who made a vigorous protest against the existing system of Provincial Contracts in the Supreme Legislative Council last year, prepared a table shewing the incidence of taxation per head in the different provinces. From that table it would appear that we of the North-Western Provinces and Oudh pay Rs. 2-0-7 per head of our population, while Bengal pays only Rs. 1-5-5. Even if the measure of our contribution did not entitle us to a more liberal allotment, our needs at any rate do. (Hear, hear). There is no province of India which has suffered more by reason of these small assignments and which stands in need of more liberal grants than the North-Western Provinces and Oudh. The allowance we have been receiving has sufficed to keep us alive. But it has not been sufficient to provide us with education, with an efficient Police and with other necessary instruments of civilization. In fact we have suffered a double wrong. We have not been given sufficient opportunities to improve. And we have been condemned for our backwardness. Alike during the Hindu and the Mohamedan regime, the North Western Provinces and Oudh constituted the most civilized part of India. They were the home of learning and refinement. But during the British rule, with a special department of public instruction to promote education, my Provinces have had the misfortune of being left behind every other Province in the race of education. We have to bear the reproach of being the most backward Province in India, more backward than even the Central Provinces, the percentage of the total number of scholars to the total population of schools going age, as shown in the last quinquennial review, being only 4 for the North-Western Provinces and Oudh, while it is 6 for the Central Provinces, 8 for the Punjab, 12.9 for Madras, 14 for Bengal; and 15 for Bombay. Apart from some mistakes of policy into which this is neither the time nor the occasion to enter, I think our backwardness is sufficiently accounted for by the fact that while, in Bengal, Bombay, and Madras, the total expenditure from all sources on education in the year 1894-95 was 98, 66, and 66 lakhs respectively, it was only 36 lakhs in the North-Western Provinces and Oudh. Towards this expenditure, the public funds (Provincial and Local) contributed about 20 lakhs only in the North-Western Provinces and Oudh; while they contributed 28 Iakhs in Madras, 30 lakhs in Bombay, and 33 lakhs in Bengal (I have left the fractions out). I think you will have the charity to admit that if the Government had spent more on our education, we should probably have shown better results. (Yes, yes and cheers). I do not wish it to be understood that the entire blame in this connection lies upon the Government of India alone. The North-Western Provinces Government have also been much to blame for not having, given sufficient weight for a long time past to the claims of education But the past is past. And the present Government of the United Provinces, presided over by that liberal minded and far-sighted statesman, Sir Antony Mac Donnell, (cheers) is fully alive to its duty in the matter of education, and is, I believe, anxious to promote it to the best of its power. (Cheers). In reviewing the last Report on Public Instruction in the North-Western Provinces and Oudh, Sir Antony MacDonnell expressed his regret at the backward condition of education in those Provinces, and took the opportunity to declare that "the claims of education are substantial and must not be overlooked" even in the then existing unfavourable able state of Provincial Finance. His Honor desired to make an additional grant for the furtherance of primary education, but, as his Financial Secretary explained, owing to the paucity of funds at the disposal of the Government, the proposed grant had to be curtailed and limited to the small sum of Rs. 75,000. Similarly we require more money for reforms in the Police department. There are loud complaints heard against the Police in all parts of the country. But I doubt it that body is half so bad in any other Province as it is in the North-Western Provinces and Oudh. Appointed as the guardians of the public peace, to prevent crime and to bring offenders to justice, the Police have in too many places come to be a standing source of terror and oppression to peaceful citizens more than to evil-doers. By their acts of omission and commission they are bringing a great deal of discredit upon the administration. Speaking on this subject, His Honor the Lieutenant-Governor has observed that "in regard to Police expenditure, from my experience of the Province, I think there is no department of the Public Service which calls for the expenditure of Public funds more than this department. In the interest of pure and efficient control in our Police Stations we must not only appoint a class of officers qualified by their education to fill such positions, but we must pay them sufficiently to remove them from the temptations to which they are exposed." And His Honor expressed the hope that in the new Provincial Contract he would be allowed adequate funds to carry out the policy of his predecessors in this respect. Our whole case was set forth admirably by His Honor the Lieutenant-Governor in his speech on, the occasion of the consideration of our last Budget. And I cannot do better than quote here the concluding remarks of that speech in which the case has been summed up. Said Sir Antony MacDonnell; "Briefly put, the result of our financial experiences is that we cannot administer this Province for 320 lakhs. The bargain made on the last occasion was no doubt fair and equitable under the circumstances of that time, but the Province has advanced since then with rapid strides; it requires a better judicial establishment, a better-paid Police, a more liberal expenditure on the educational programme, and a fuller measure of local government. There .is no department of our government at the present time which does not suffer from want of money and which would not be improved by an improvement in the finances. Without encroaching upon the assistance of the Supreme Government we have faced our difficulties and striven hard to help ourselves. That being so, I am in hopes that when next March the Provincial Contract comes to be revised by, the distinguished financier who controls the finances of the State, it will be recognized that we have done as much as .could be done with our means, and that unless further means are placed at our disposal, the future of the Province will not be safeguarded." With this declaration from the responsible Ruler of our Provinces before the Government of India, we do hope that at the next revision of the Provincial Contracts an allotment sufficient to meet our various needs will be made to the United Provinces to enable them to make a healthy advance and to come nearer their more fortunate sister provinces as regards progress and enlightenment. (Loud cheers.)


Mahamana Madan Mohan Malaviya