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These estimates contemplate an increase in revenue from sugar traffic based on the larger crop and on arrangements which have been concluded by the General Manager with one or two sugar factories, to transport by rail sugar which had been previously carried by road. The increased traffic is expected to yield Rs.850,000 as against Rs.608,000 in the current year's estimate. A further drop in passenger traffic to Rs.375,000 is contemplated. These estimates are conditional upon retrenchment of staff involving the discharge of 188 employees, whose annual salaries and wages amount to Rs.135,218. Whether the sugar crop will reach 230,000 tons in view of the damage caused by the cyclone on the 10th April may be considered doubtful. Estimates are now being prepared by the Agricultural Department but very much depends on the weather experienced in the next few weeks.
16. The above estimates have been prepared on the present accounting basis. The Commissioners on page 142 of their Report recommend that the Railway budget be included in the estimates of the Colony as ordinary heads of Revenue and Expenditure respectively. No decision has yet been communicated to me ou this point and I take the opportunity of submitting my grave doubts as to whether it is in fact the wisest procedure. It is to my mind very important that the commercial results of the Railway should be presented in a clear form, and I cannot but feel that these results tend to be obscured by the procedure suggested by the Commis- sioners' Report. In my opinion the inclusion of the Railway estimates as an appendix to the estimates of the Colony, and the inclusion in the Colonial estimates of a Head covering the deficit on the Railway as at present or, if there is a surplus after providing for renewals and depreciations, the surplus is a clearer way of presenting the position to the Legislature. The Commissioners suggest that closer control of Railway finance is required but that the commercial accounting of Railway receipts and expenditure should not be abandoned but the results recorded in the annual report (page 142, last sub-paragraph). I am not clear what is contemplated by these recommendations, If the commercial system of accounting is to be maintained, the staff required for this purpose will also be necessary. It cannot be intended that two systems of account should be concurrently operated, one for financial and the other for statistical purposes, and, so long as the commercial system is maintained, it must surely form the basis of financial control. If the proposal merely ineans that the Treasury should exercise a closer supervision over Railway expenditure than has been the recent practice, it seems to me that this could be arranged without any change in the system of account, but if this control is to involve the re-corporation of the Railway accounts with those of the Treasury, it would involve a further radical reorganization of staff, which is not practicable before the next financial year. For the 1932-33 Budget, therefore, I suggest that
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the Railway estimates on the present basis of account should be included as an appendix to the Colonial estimates, the deficit being shown under a new Head of Colonial Expenditure.
17. It may be convenient to summarize briefly the results of the foregoing proposals. The alternatives put forward are:-
A. In the case that the next few weeks show no improve- ment in trade conditions, and
B. in the event of there being sufficient improvement in the outlook to make it probable that a trade balance between im- ports and exports can be anticipated. The expenditure in either case is taken at the same figure, viz., Rs.4,900,000 [? Rs. 14,900,000] though I trust it may be found possible to make a slight reduction in this. In case A, the revenue ex- pected from present sources including all increases in Customs duties and Excise duties in force, would not exceed Rs.12,000,000. The further taxation proposed is estimated to yield Rs.550,000 to which may be added the proceeds of the The proposed excise duty on local wines, making Rs. 650,000. levy on salaries, at present Rs.400,000, might be extended to produce Rs.685,000, and in this case, a levy on pensions also should be instituted to produce say Rs.60,000. Rs.250,000 may be expected from the interest on Hurricane Loan mortgages, 'There making a total of Rs.1,645,000 or say Rs.1,650,000. would still remain a difference of some Rs.1,200,000 to be made up.
In case B, the present revenue sources might be expected to yield Rs.13,700,000, leaving Rs.1,200,000 to be made good. The above sources of taxation (Rs.650,000) with the addition of the present levy on salaries (Rs.400,000) and the receipts from Hurricane Loan mortgages, would make up Rs.1,300,000 : the margin might be increased by some addition to stamp duties and by extension of the salary levy to a flat rate of 10 per cent. with a concession to salaries below Rs.780 per annum. These would together add perhaps Rs.175,000.
18. If these proposals seem inadequate, it may be permissible to point out that they will represent a very appreciable retrenchment. The average annual expenditure for the four years terminating with 1928-29 was Rs.16,558,686. For 1929-30 it was Rs.15,575,001 and for 1930-31 (exclusive of a sum of Rs.971,630 applied to writing down securities) it was Rs.15,120,443. The anticipated expendi- ture for 1931-32 is about Rs.14,400,000 and for 1932-33, Rs.14,900,000. If, however, new charges, not hitherto included in the Budget, are excluded there will remain an expenditure of about Rs. 14,000,000 or if allowance is made for the lavy on salaries, which is credited to revenue but in fact goes to reduce expenditure, Rs.13,600,000 or Rs.13,400,000 according to the rate at which the levy is made. This represents a reduction of some Rs.3,000,000
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