112
82
to be the case, but in view of the approaching examination of the situation by the Financial Commission it was agreed that the esti- mates of the current year should be drawn up on the basis of existing commitments. Apart from reorganization the Commission
"cut
in salaries at au suggest a reduction in expenditure by a average rate of ten per cent. and of pensions at the rate of live per cent. They also suggest an immediate reorganization saving in the current year together with the salary cut a total of Rs.485,000. Of this amount approximately Rs.174,000 is achieved by the "cut ** in salaries. I do not think that the full programme of reorganiza- tion drawn up by the Commission can be carried out in the current year, though this point will be further discussed at a later stage in this despatch. There are, however, certain retrenchments pro- posed which should be immediately possible: these are the reduc- tions relative to
Schools
Farm School Forests
Total
Rs. 12,430
1,000 40,772
Rs.54,202
This with Rs.174,000 saved in salaries and Rs.30,375 on pensions for the half year January-July, 1932, make a total of Rs.258,577 as compared with the saving estimated by the Commissioners at Rs.481,000. The latter figure, however, is reduced by expenditure on pensions and gratuities of Rs.250,000 to a net saving of Rs.235,000 on personal emoluments. The additional liability for pensions involved in the reduced programme outlined above would be very small in amount, so that for the current year the net effect of the two proposals would be about the same. There are, of course, other considerations to be taken into account in favour of the Commissioners' plan which will be further discussed below.
4. Apart from the above proposal there is the possibility of saving by a change in the method of accounting for widows' and orphans' pensions which was approved in principle in your telegram No. 125 of the 14th October. The Commissioners were unable to deal with this before leaving though they will doubtless comment on it in their report it is in any case a less urgent point than many others as it is in fact chiefly a change in book-keeping and does not actually reduce the drain on Treasury cash balances. It must be taken into account, however, in connexion with the estimates, and if adopted, would involve a net saving on paper of about Rs.320,000, making with the saving of Rs.235,000 referred to in paragraph 3 of about Rs.555,000 in all or say Rs.550,000. Although reductions in salaries, pensions, &c., could only take effect for half a year
* C. 80291/31 [No. 18]: not printed.
83
there is no reason why the change in accounting for the Widows and Orphans' Fund should not be made effective over the full year. This would reduce the total expenditure figure to Rs.14,084,000. It might, I think, reasonably be hoped that with care and taking savings "which usually accrue the total into account the normal might be brought to within Rs.14,000,000.
"
5. If this figure were realized and the revenue fell short of the estimate by Rs.1,500,000 as contemplated in paragraph 2 the deficit on the year would be approximately the same whether the full programme of retrenchment suggested by the Commissioners were adopted or the much modified programme tentatively dis- cussed above in paragraphs 3 and 4. The question of additional revenue will be further dealt with below. Setting aside this possibility for the moment it appears that if the above anticipations were realised, and the railway deficit maintained at the figure adopted by the Commissioners, nearly the whole of the available remaining resources which are given in paragraph 10 of the Com- missioners' letter as totalling about Rs.3,500,000 would be required to cover the deficit on the current year's transactions. The Com- missioners' own estimate of the position given in paragraph 7 of their letter is at first sight very much more sanguine than this, as they place the total deficit, including railway losses, remission of sugar duty and other revenue, and new loan charges amounting to Rs.200,000 at a total of Rs.1,435,000. It appears, however, from paragraph 10 of their letter that they contemplate that practically the whole of the remaining cash resources may be needed to cover the possible deficit on the current year's revenue, the difference being that in their scheme they anticipate that out of these balances the outstanding advances to the works on La Nicolière scheme may be refunded which would have the effect of increasing the cash balances of the Treasury to this extent and allowing the new year to open with a cash reserve of some Rs.1,600,000, even if there is a deficit on this year's revenue of something approaching this amount. I doubt whether in practice this expectation will be realized and I do not feel that it would be safe to reckon on it.
6. The Commissioners' proposal contemplates, however, the raising, during the current year, of additional revenue totalling Rs.955,000 as summarized in paragraph 8 of their letter. The actual savings in expenditure achieved by the two alternatives are approximately the same and the revenue proposals therefore constitute the chief point at issue, particularly as these also form an important part of the scheme for balancing the budget of the ensuing year. I see no special difficulty in the suggestions for additional duties on tobacco, silk, perfumery, &c., and will confine myself to those relating to the occupiers tax and additional licence fees. To consider these it is necessary to take into consideration the general review of the position in regard to taxation given in the section of the report dealing with this subject.
10480
F 2
PUBLIC
PECORD OFFICE
Reference -
TLTTIT
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C.O.882/12
PUBLIC RECORD OFFICE, LONDON
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