15. For the year 1928-29, the net loss of 21 lakhs referred to in paragraph 5 would be converted into a gain of 20 lakhs, and the total net loss would be reduced to 85 lakhs. Thereafter, as conditions gradually adjusted themselves, the loss would be reduced progressively and any attempt to forecast the ultimate effect on the revenues must be largely guess-work. So many factors beside price-variations have affected the course of trade in the past that it is very difficult to isolate the effect of any particular factor, but it may, perhaps, be instructive to compare trade in 1913-14 with trade in 1925-26. Imports have increased in value from 183 to 226 crores and exports from 249 to 385 crores. Assuming a rise in the level of prices of only 50 per cent., it will be seen that whereas the volume of exports has remained at about the same figure, the volume of imports has fallen by about 20 per cent. It may fairly be inferred that the recovery of the import trade from a permanent increase in prices, whether it be a direct pricevariation, or the indirect result of high duties or an alteration in exchange, is a slow process. In any case, the effect on specific duties will always operate to set off a part at least of what may be gained by the levy of ad valorem duties on higher priced goods.

G. S. HARDY,-25-2-27.

A. R. L. TOTTENHAM,-25-2-27.

APPENDIX II.

Statement showing the Gross Expenditure of the Central Government as in the Budget Estimates for 1926-27 and 1927-28 as presented to the Legislature, divided between voted and non-voted.

APPENDIX III,

Memorandum on the Military Estimates for 1927-28.

The report of the Army Accounts Committee to which allusion was made in last year's Memorandum has since been received and considered by the Government of India. They have now decided. with the approval of the Secretary of State, to revert from 1st April 1927 to a system of estimates and accounts, including appropriation accounts, which will deal solely with the actual cash grants allotted and spent for the maintenance of the Army. With these main accounts will be published three subsidiary accounts; the first will be the store accounts of supplying depôts showing the value of receipts of stores from all sources, issues to the various arms and departments of the service and of the balances, the second will be the maintenance accounts of the various arms and departments of the service and the third will be accounts on commercial lines for factories and other manufacturing concerns. The Military Engineer Services will not take credit nor will Army be charged in the main cash accounts for free supplies of electricity, water and ice to Army units and formations. Travelling allowances, rail and other transportation charges, expenditure on conservancy, antimalarial measures and hot weather establishments will, in future, be taken to single heads in which their distribution under the several arms and services will be made. The Royal Air Force will still have a Block vote. The volume of the detailed estimates placed before the House takes into account all the alterations necessitated by these changes. The form also provides, as in the case of Demands for Grants, in their order, for the actuals of the previous year, the Original and Revised Budgets of the current year and the Budget for the ensuing year. The details of the considerable revision in the heads of classification have only recently been settled and the reduction of the form to Octavo size has, therefore, to be postponed to next year; nor can the actuals for 1925-26, and the Budget and Revised Estimates for 1926-27 be exhibited in the volume under the new minor heads. Explanations have been given in the detailed estimates against the various heads which show the nature of the services performed by the units and formations.

2. Since 1921-22 substantial reductions have been effected in the expenditure on the Military services. The actual net expenditure as shewn in the final accounts or as estimated, where the accounts are not yet closed, is indicated in the following statement :-