The revised estimate for 1925-26 falls short of the Budget estimate for that year by Rs.110 lakhs net, due to decreases in Super Tax Rs.30 lakhs, and Income Tax Rs.39 lakhs, and to increase in refunds of Rs.42 lakhs. Of the decreased receipts Rs.24 lakhs and 36 lakhs, respectively, pertained to Bombay, where the cotton mill industry has experienced serious difficulties during the last two years.

The Budget estimate for 1926-27 is based generally on the revised estimate of the previous year, due allowance being made for a possible further decrease in the receipts in Bombay. Slight increases set off by decreases elsewhere, are expected, mainly in Burma and Madras; a decrease in Refunds is also anticipated.

The revised estimate for 1925-26 is less than the Budget figure for that year by Rs.55 lakhs, insufficient allowance having been made for the large accumulation of stocks which followed on the reduction of duty in March, 1924.

The estimate for 1926-27 assumes that accumulated stocks will have been worked off by the end of March, 1926.

Most of the opium exported was supplied during 1925-26 at fixed prices to certain other Governments, principally Malaya, the Netherlands Indies and Siam; the balance for export being sold by auction at Calcutta. An agreement for direct sale has now been concluded with the Government of French Indo-China and the Government of India have consequently been able to discontinue the system of auction sales with effect from 7th April, 1926. In no case are exports permitted without an import certificate by the Government of the country of import as prescribed by the League of Nations.

It has been decided to reduce the total of the opium exported in the calendar year 1926 by 10 per cent. annually in each subsequent year until exports are totally extinguished at the end of 1935.

Excise opium is sold to Provincial Governments for internal consumption in India at a fixed price based on the cost of production. This opium is retailed to licensed vendors at rates fixed by the Provincial Governments and varying from Province to Province.

The increased receipts in 1925-26 as compared with the Budget estimate are due to larger stocks of excise opium being taken over and paid for by the Provincial Governments on 1st April, 1925, increased payments for exported opium due to shipments being delayed in the last quarter of the previous year, improved receipts from auction sales and to certain unforeseen receipts on account of medical opium.

In 1926-27 less receipts from opium taken over by Provincial Governments are estimated and a drastic reduction in cultivation is expected to result in a large decrease in expenditure.

(a) The annual provision for the repayment of capital through the railway annuities and sinking funds, amounting to £1,600,000 approximately, has been excluded from the Railway Revenue Account with effect from the Budget of 1924-25.

(b) See remarks below.

In accordance with the resolution passed by the Legislative Assembly in September, 1924, railway finance was separated from the general finances of the Government of India with effect from 1924-25. The Railways have now to meet all working expenses, including interest charges of commercial lines, and after meeting these charges they have to make a contribution to general revenues equal to 1 per cent. on the capital at charge of the commercial lines in the penultimate year plus one-fifth of surplus profits in such

penultimate year and one-third of the amount remaining available for transfer to Railway reserves in excess of Rs. 3 crores. It had, however, been specially arranged that the calculation of the contribution in 1924-25 of 1 per cent. on the capital at charge and one-fifth of surplus profits, should be based on the actuals for 1923-24.

The net payments due from the Railways to general revenues of the Central Government in 1924-25, 1925-26 and 1926-27, calculated in the manner explained above, are as follows:

It will be seen from the foregoing tables and the Net Revenue table on page 6 that the net revenue of the Central Government from the Railways is as follows, viz. :

1924-25 Accounts, Rs.6,78,41,682; 1925-26 Budget, Rs.5,23,86,000; 1925-26 Revised Estimate, Rs. 5,31,98,000; and for 1926-27 Budget, Rs.6,00,87,000.

The gains from Commercial lines in the same years are: 1924-25 Accounts, Rs.14,75,28,120; 1925-26 Revised Estimate, Rs.10,44,86,000; and 1926-27 Budget, Rs.10,44,62,000.

The Railway Depreciation and Railway Reserve Funds are estimated to have closing balances on 31st March, 1927, of Rs.926 lakhs and Rs. 1215 lakhs, respectively.

The East Indian Railway came under State management on the 31st December, 1924, and the Great Indian Peninsula Railway on the 30th June, 1925. The Delhi-Umballa-Kalka Railway was purchased by the Secretary of State on 1st April, 1926.

Indian Postal and Telegraph Department.-The revised estimate of gross receipts in 1925-26 is about Rs.18 lakhs less than the original Budget figures. On the other hand, later calculations of capital outlay enabled interest charges to be reduced by Rs.17 lakhs, and in addition the working expenses are Rs. 19 lakhs lower. Part of this latter improvement is due to the correction in the current year's accounts of a previous adjustment to the extent of about 8 lakhs under stationery and printing charges.

In the Budget for 1926-27 the increase under working expenses as compared with the revised estimate for 1925-26 is nearly Rs.61 lakhs, while the increase in revenue is only Rs.41 lakhs. Part of the increase is due to the fact that the provision for postal stationery and stamps is Rs.13 lakhs higher, owing to the expenditure in 1925-26 being abnormally low, as the Department was using up stocks previously accumulated. The increased expenditure on travelling allowances owing to the withdrawal of free railway passes is about Rs.10 lakhs. A sum of about Rs.15 lakhs has been inIcluded in the Budget for 1926-27 for the grant of concessions to postal employees.

The greater part of the net revenue receipts shown under Currency ordinarily arises from the interest on the securities in the Paper Currency Reserve, and in respect of loans to the Imperial Bank against inland bills of exchange. Under the Indian Paper Currency Act this interest was earmarked for reduction of created securities in the Paper Currency Reserve. This provision has, however, been temporarily suspended since 1921-22 by legislation and the interest credited to revenue.

The increase in the revised estimate for 1925-26 as compared with the Budget estimate for the year was due mainly to the fact that the holding of sterling securities in the Paper Currency Reserve was larger, and rates of interest higher, than anticipated.

The Budget estimate for 1926-27 does not provide for any receipts on account of interest on emergency currency issued to the Imperial Bank of India against internal bills of exchange. In other respects it assumes more normal conditions than prevailed in 1925-26.

Contributions.—It was provided by the Devolution Rules, made under Section 45A of the Government of India Act, that in the year 1921-22 contributions of specified amount, and in future years similar contributions or such smaller sums as might be determined by the Governor-General in Council, should be paid by the Local Governments to the Government of India. If for any year the total of the contributions were reduced, reductions should be made in respect of those Local Governments only whose last previous annual contribution should have exceeded the specified proportion of the smaller sum so determined as the total contribution, and any reduction so made should be proportionate to such

excess.

The Government of India have, with the concurrence of the Legislature, made the further remissions shown below of contributions totalling Rs.125 lakhs with effect from 1st April, 1926.

For temporary remission of Bengal contribution (Rs. 63 lakhs), see footnote on page 3. In addition to the above contributions the Province of Coorg contributes to the Central Government Rs.12,000 annually towards the pay of the Chief Commissioner and his establishment.

Adjustments. In the Budget for 1926-27, the payments consist of the assignments to the Governments of Bombay, Bihar and Orissa, Central Provinces, and Assam on account of Customs duty on imported stores.