Explanatory Memorandum by the Financial (All figures in this memorandum are in lakhs of rupees unless expressly stated otherwise.} The following table compares the actual revenue and expenditure of the Government of India in the year 1924-25 with the estimates : 2. The realised surplus of the year is over 1,68 lakhs more than the Revised estimate. As explained in the Finance Member's Budget speech, the two most important factors that have contributed to this variation are the increase in the contribution from Railways amounting to 1,14 lakhs and the saving in military expenditure amounting to 70 lakhs. As regards Railways, the gross traffic receipts during the year were 1,48 lakhs more than estimated, mainly owing to heavy traffic in grain and cotton developing earlier than anticipated, the earnings in February and March being thereby increased and, incidentally, the earnings in the earlier part of the financial year 1925-26 being decreased correspondingly beyond expectations. There were also considerable savings in working expenses due to economies, for example, in the consumption of coal, to a decrease in payments of compensation claims and to the decision to debit the loss on revaluation of stores to Railway reserves instead of to working expenses. 3. The total net military expenditure was 55,63 lakhs and was 70 lakhs less than the revised estimate. This decrease was, as explained in the Finance Member's Budget speech, due to a saving in the expenditure on stores and a decrease in payments to the War Office on account of arrear claims in respect of the War. 4. The net transactions on account of the Posts and Telegraphs Department resulted in a total reduction of revenue to the extent of 11 lakhs, on account of credits on account of issues of stores being less than anticipated. 5. The variations from the revised estimate in Civil expenditure (excluding Posts and Telegraphs) amounted only to 4 lakhs in the aggregate though in individual items there were large variations. The gross Customs receipts were 37 lakhs higher. Owing, however, to the fact that the amount actually expended on refunds to Railway Companies for Customs duty on stores imported by them in the past, according to the Privy Council decision, fell far short of the 2,80 lakhs provided for them on a rough estimate, the net Customs receipts were nearly a crore higher than anticipated. On the other hand, the receipts from Taxes on Income and Salt fell below anticipations to the extent of 46 and 35 lakhs respectively. The interest receipts were about 39 lakhs less than expected, the decrease being mainly under the interest on the investments of the Gold Standard Reserve. On the expenditure side, net payments on account of interest on debt were greater than expected on account of the smaller amount of loans to Provincial Governments and to the rate of interest actually charged to Railways and other Commercial Departments on their capital outlay after 1916-17, which is the average of the rates at which the Government has borrowed during the period being less than the previous year's rate which was taken for purposes of estimating. The variations under other heads were of relatively minor importance. 6. The details of estimates for 1925-26 and 1926-27 are explained in the following paragraphs : : 7. The revised estimate of gross Customs revenue in 1925-26 amounts to 47,83 lakhs or 30 lakhs more than the Budget estimate. The outstanding variations are in the import duties on sugar and cotton piece-goods, protective duties and the cotton excise duty. The heavy fall in the prices of sugar has stimulated imports very largely and the duty being now specific and not ad valorem, the receipts on this account are expected to be 1,30 lakhs more than estimated. There is also a large increase of 80 lakhs under protective duties on iron and steel, etc. (partly counterbalanced by a decrease under the 10 per cent. duty goods). The new protective duty on paper is expected to yield 12 lakhs in the current year. On the other hand the yield from the import duty on cotton piece-goods has been very disappointing. The January figures are more encouraging and show the possibility of larger imports in the near future. For the current year, however, the present estimate is about 1,25 lakhs less than the Budget. The cotton excise duty was suspended from December and the total receipts on that account are expected to be 1,44 lakhs against an estimate of 2,15 lakhs. Variations under the other heads are comparatively less important. There are increases under the import duties on motor-cars, rubber tyres and tobacco, the export duty on rice and the excise duty on motor spirit, counterbalanced by decreases under other heads, e.g., the export duty on jute. There are also expected to be savings to the extent of 20 lakhs under refunds. The net receipts from Customs are therefore expected to be in the aggregate 50 lakhs more than estimated. 1st 8. The Budget estimate for 1926-27 takes gross receipts at 47,40 lakhs which is 43 lakhs lower than the revised estimate of the current year. The estimate is based mainly on the revised estimate and has been framed in the expectation of a normal growth of revenue under most heads. In particular, the yield from the import duty on cotton piece-goods has been put at 7 crores in the hope of a revival of trade. Though this is considerably higher than in the current year, it is lower than the realised revenue in 1924-25 which amounted to 7,74 lakhs. Suitable allowance has been made for the probability of a decrease in the yield from the import duty on sugar which has been extraordinarily high in the current year. Excluding the cotton excise duty in both years, the total gross receipts are about a crore higher than in the revised estimate for 1925-26. |