Page 1 of 6
European Journal of Business &
Social Sciences
Available at https://ejbss.org/
ISSN: 2235-767X
Volume 07 Issue 03
March 2019
Available online: https://ejbss.org/ P a g e | 786
The Major Revenue Reforms in Earlier of 20s centuries in India
Ekta
PG Student Dept. Of History
Govt. P G College for Women Rohtak
ABSTRACT
The decade of 1850 was a great matter for Indian society for all dimensions. Many of new
aspects were introduced in that time period. British Indian army had their own reforms, where
social reforms had their new and changed face. But the major structure was changed in the
Indian revenue system. The council paid their special attention toward Indian revenue and trade
system. Now they need to be more sharp and effective to extract wealth from Indian region. The
present research paper is an attempt in this direction and highlights the picture of Indian
revenue and trade in earlier 20s in India. The financial control remains considerable even when
spending powers were delegated to imperial and provincial government. The control of British
parliament is limited to military expenditure beyond the frontiers and addition to public debt
Key Words- Indian society, Freedom, Regions, financial
INTRODUCTION
The revolution of 1857 changed the both financial and administrative phase of British rules in
India. After 1857 British crown focused on overall sector of India. As Indian trade and financial
sector was the most attractive among all these sectors. The council paid their special attention
toward Indian revenue and trade system. Now they need to be more sharp and effective to extract
wealth from Indian region. The present research paper is an attempt in this direction and
highlights the picture of Indian revenue and trade in earlier 20s in India.
The act of 1858 made the secretary-of-state in council the controller of expenditure of the
revenues of India which shall decide on the basis of majority in the council. The financial control
remains considerable even when spending powers were delegated to imperial and provincial
government. The control of British parliament is limited to military expenditure beyond the
frontiers and addition to public debt. A financial statement is put to vote in House of Commons
ceremonially. Although, Great Britain pays nothing towards the maintenance of Indian Empire.
Page 2 of 6
European Journal of Business &
Social Sciences
Available at https://ejbss.org/
ISSN: 2235-767X
Volume 07 Issue 03
March 2019
Available online: https://ejbss.org/ P a g e | 787
The following points should be focussed in the management of finances:
(a) Economic efficiency and prudence shall be priority in the collection of taxes. In some
countries, the cost of collection leaves very little when proceeds to tax reach exchequer. It
may be the result of weak administration, or exemptions given to people; or again system
of “farming” the taxes is in vogue. System of “farming” of taxes is an uneconomical
system that leads to oppression of the poor.
(b) Nature of taxes should be such that it is sufficient for the needs of administration and
burden should fall on all sections especially on capable sections of the community.
(c) Extravagance should be avoided in expenditure.
Let us assess the performance of Indian finances in these respects; and also assess the impact of
recent changes in improving the system. After the government was transferred to crown, Mr.
James Wilson came as first finance member. It was an improvement over company rule when no
finance department was established. Despite all adversities due to increased debt owing to
mutiny and requirement of new expenditure to restore the order; careful management resulted in
the improved position.
The second stage in the history of Indian finances is reached when expenditure and responsibility
of revenue collection got linked. That was not the case earlier as the government of India kept all
finance control in its own hands without any incentives for provincial governments. Sir John
Strachey in this connection has written these words: “The result was a complete absence of real
financial control, frequent wrangling between the supreme and provincial Governments and
interference by the former, not only in financial but in administrative details, with which the
local authorities alone were competent to deal.
In 1867, Lord Mayo reorganized the need of delegating the financial responsibility to the Local
Governments. A fixed sum was given to each so that increased expenditure could be met either
by prudent expenditure or by local taxation. Lord Lytton, some ten years later replaced fixed sum
by share in the revenues. This was done to foster habit of careful collection of revenues. This
amount of share was subject to revision but in early years of 20th century more permanent
arrangement has been made.
Page 3 of 6
European Journal of Business &
Social Sciences
Available at https://ejbss.org/
ISSN: 2235-767X
Volume 07 Issue 03
March 2019
Available online: https://ejbss.org/ P a g e | 788
Revenue sources were divided into three parts: (1) appropriated by imperial Govt. such as
customs, salt tax, opium etc. (2) divided between Central and Local Governments such as land
revenues, excise, and stamp taxes etc. (3) all registration receipts were taken by the provincial
Governments. In all Local Governments receive more than one-third of the Indian revenues. The
expenditure is divided up along these lines. Home charges, defence expenditure, payment of
interest on debt, departments such as railway, post office etc. are the imperial Government
responsibilities. Education, health, sanitation etc. are the responsibilities of local Government.
Irrigation is divided between both accounts.
However, it must be noted that Local Governments enjoy only the delegated powers i.e. they
work under complete control and supervision of imperial Government. They have to submit their
budget beforehand for sanction and enjoy no borrowing powers. All accounts are audited by the
officers of the accounts and audit departments, who are responsible to the imperial Government.
The revenues of the central Government are derived from various sources out of which some are
collected by the imperial and others are collected by the Local Governments. The different tax
revenues were divided under two headings namely: (1) Revenues derived from taxation and (2)
Revenues Derived from sources other than taxation.
I. Revenues derived from taxation
A. Salt Tax:
Salt tax is the only tax in the history of public finance in India that was even borne by the
poorest class of the country. The salt tax revenue is derived partly from the tax on
imported tax and partly by excise duty on salt manufactured within the country and the
amount of duty was also different in different provinces. As a result of varying duties in
different provinces gave rise to custom duties on salt taken from one province to another.
In 1882 the Indian government has made some arrangements for the equalization of salt
duties among different provinces and also in the direction of reduction in the tax rate. As
this was a wise measure. As a result of reduction in the tax rate the amount raised by the
tax has decreased a little but not as expected because of the cheapness the consumption of
salt has increased.
B. Stamps:
