As the Government of India have repeatedly declared that they are fully sensible of the very serious consequences, both financial and political, that may be produced by adding to the taxation of India, it cannot be supposed that they would sanction additional taxation unless they were compelled to do so by urgent necessity.' Nothing, therefore, can more conclusively show that the ordinary revenue of India is only just sufficient to meet its ordinary expenditure, no margin being left to provide for those many contingencies which it is officially stated are certain to recur, than the fact that a careful financier like Sir John Strachey admitted that, in order to create the Famine Fund which he says is essential to place the finances of India on a sound basis, no other course was open to him than to provide this fund from new taxation. I shall subsequently have occasion to describe the particular taxes which have been imposed with the object of creating this. fund; and fully admitting that the Indian Government would not wantonly or unnecessarily impose taxation which is exceptionally unjust and burdensome, nothing can more forcibly illustrate the gravity of the financial position of India at the present time than the circumstance that, amongst the new taxes which have recently been imposed, it has been thought requisite to levy what is virtually an income-tax of fivepence in the pound on incomes of no more than four shillings a week.

But, before considering the nature of the new taxation that has lately been imposed in India, and before showing to what straits the Indian Government will be reduced if in future years they should have to obtain additional revenue to meet recurring deficits, it will be desirable to make as careful an estimate as possible of the future prospects of the revenue and expenditure of that country.

1 See speech of Sir John Strachey in bringing forward his proposals for the creation of a Famine Fund. Calcutta, December 28, 1877. This speech, which contains a most able review of the finances of India, was published in the session of 1878 as a Parliamentary paper.

It must be evident that no question relating to Indian finance can be of more fundamental importance than to examine the chief items of her revenue and expenditure, with the object of ascertaining whether, if expenditure increases, it is likely to be met by a corresponding growth of revenue. If such an examination is made, I am afraid that no other conclusion can be arrived at, than that the outlook for the future is gloomy in the extreme. It will be shown that if India continues to be governed as she now is, and if no change is introduced into the administration of her finances, it is inevitable that any possible growth of her revenue will be altogether inadequate to meet the certain increase in her expenditure, and no other prospect will lie before her Government but augmented indebtedness and additional taxation.

Reverting to the six sources from which the revenue of India is derived - namely, land, opium salt, excise, customs, and stamps - I will, as briefly as possible, consider what is the probability of an increase in each separate head of revenue. With regard to the land revenue, from which nearly one-half of the entire net revenue of India is obtained, it is scarcely necessary to remark that there cannot, from the manner in which the land revenue has been settled, be any material increase in its amount for a considerable number of years. Over a large portion of the most fertile districts of India, the land revenue is permanently settled; the Government having commuted the land revenue for a fixed annual rent-charge to be paid in silver. Of the entire land revenue about one-fifth is derived from the permanently settled districts, and therefore, as far as this portion is concerned, it is incapable of any augmentation. In the North-West Provinces, and in other parts of India, what are known as thirty years' settlements prevail. The amount of the land revenue, in these districts, is fixed for thirty years, and until the expiration of this period it is of course impossible that there can be any increased assessment.

From time to time, as these thirty years' settlements fall in, the land can be reassessed; but many who are most competent to express an opinion confidently assert that the agricultural classes in India, except in the pemanently settled districts, where an increase of the land revenue cannot be obtained, are not in a condition to bear a heavier assessment.

Although there would thus appear to be no immediate probability of the amount derived from the land revenue being materially increased, there is unfortunately no room whatever for doubt that the real value of this revenue has been within the last few years most seriously lessened. The land revenue is really a rent paid to the Indian Government in silver, and the amount of this silver rent is fixed, either permanently or for a defined period. A very considerable part of the expenditure of the Indian Government consists of payments which have to be made in gold. At least 17,000,000l., or about 45 per cent, of the entire net revenue of India, is expended in England in paying the interest on the Indian debt, in the purchase of stores, in salaries, pensions, etc, and this large and increasing outlay, known as the home charges, has to be made in gold. The Indian Government receives its revenue in silver, but has to find gold for the purpose of defraying 45 per cent. of its expenditure. Within the last few years there has been a most serious depreciation in the value of silver when compared with gold. Silver has fallen from 60d. to about 50d. an ounce; a sovereign, which could formerly be purchased with four ounces of silver, can now only be purchased with five ounces.

Consequently about 20 per cent. more silver is now required to pay the home charges than would be needed if there were no depreciation in the value of silver. The net land revenue is about equivalent in amount to the net home charges, and consequently, if this revenue were appropriated to defray these charges, it would virtually be reduced in value at least 3,000,000l. a year, owing to the depreciation in the value of silver. With regard, therefore, to the future prospects of the land revenue, I think it may be concluded, first, that there is little probability of any immediate increase in its amount, and secondly, that the depreciation of silver seriously lessens the real value of this revenue.