Government's financial position

THE announcement by the Government of India of its decision not to have any cash subscription to the rupee loan this year on the ground that the position of its cash balances, both in India and London, had been found to be very strong, is a curious commentary upon the financial methods of the government. It was only the other day that speaking during the presentation of the Budget in the Legislative Assembly, the Finance Member said: “I anticipate that the maximum amount of new money that we shall require to raise by a rupee loan in the open market will be Rs 12 crore, a figure which is well within the amount of the annual savings of India available for investment in government securities.” This was the picture drawn on February 28, 1925. Within two months, the position was so completely transformed that the government found itself able to dispense with cash subscriptions to the rupee loan altogether. The obvious comment upon this transformation is that made by Sir Purshottamdas Thakurdas in the course of a recent Press interview. “A Budget that could go wrong by Rs 12 crore in two months,” he said, “or to put it the other way, by Rs 20 lakh per day, must be a Budget based on very loose figures”. There is nothing on which our bureaucracy prides itself more than on its vaunted efficiency. If this is proof of that efficiency, we should perhaps be a great deal better if we had a little less of it in the governing body in India than we actually have. But the matter has another and even more important aspect. The obvious underestimating of the Government of India’s financial position was not without a purpose.