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BY DR. PRAMATHANATH BANERJEA, M.A., D.Sc.

N the earliest period of Indian history the State perhaps depended for its own support on the voluntary contributions of the people. But some method of compulsory contribution must have been found necessary in India as soon as a more improved form of government had come into existence. The early tax-system, however, was a very simple one, and the evolution of a complex system of Public Finance was doubtless a slow and gradual process. By the fourth century B. C., the system of Public Finance had reached a fairly advanced stage of development, as is evidenced by Chanakya's Arthasastra and the Brahmanical and Buddhistic religious works.

The income of the State was derived from

various sources. In very early times, the burden of taxation was extremely light. But as the duties of the State increased, the burden became progressively heavier. Gautama, one of the early law-givers, says:

Cultivators must pay to the king a tax amounting to one-tenth, one-eighth, or one-sixth of the produce. Some declare that there is a tax also on cattle and gold, viz., one-fiftieth. In the case of merchandise one-twentieth was the duty, and of roots, fruits, flowers, medicinal herbs, honey, meat, grass, and firewood, one-sixtieth.

In the time of Vishnu, who perhaps wrote about two centuries later, the rates of taxation were appreciably higher, namely, a sixth part of every kind of crops and of meat, fruits, and flowers; a duty of 2 per cent. levied on cattle gold, and cloths; of 10 per cent. on goods locally manufactured, and of 5 per cent. on articles imported from abroad. Manu mentions even higher rates, except as regards the land, and also gives a longer list of articles on which taxes were to be levied. He says:

A fiftieth part of the increments on cattle and gold may be taken by the king, and the eighth, sixth, or twelfth part of the crops. He may also take the sixth part of trees, meat, honey, clarified butter, perfumes, medicinal herbs, substances used for flavouring food, flowers, roots, and fruits; of leaves, pot-herbs, grass,

objects made of cane, skins, of earthen vessels, and all articles made of stone.

The Mahabharata describes the tax-system in very general terms. It says:

With a sixth part, upon a fair calculation, of the yield of the soil, with fines and forfeitures from offenders, with the imposts levied according to the Shastras upon merchants and trades in return for the protection granted to them, a king should fill his treasury.

We are indebted to Chanakya for a detailed description of the financial system as it existed in Chandragupta's time. He gives two distinct classifications of the revenues of the State. According to the first, the income is classified under seven heads, in view of the sources from which they are derived, namely, (1) the capital, (2) the country parts, (3) mines, (4) public works, (5) forests, (6) pasture-lands, and (7) trade

routes.

The various kinds of income from the capital were excise duties levied on certain articles locally produced, such as cotton goods, oils, salt, liquors, and metallic manufactures; taxes on warehouses, guilds of artisans, and temples; duties collected at the city gates; and fines on gambling and betting. The rates of duties were fixed in view of the nature of a particular commodity and also of its place of origin.

The duties varied from one-tenth to onetwentieth. If it was a harmful commodity, a fine was imposed in addition to the usual duty. But goods which were calculated to be of special benefit to the community, such as valuable seeds, were allowed to enter toll-free, as also were articles required for marriage ceremonies and the worship of gods. In order that the duties might not be evaded, the sale of goods at the place of production was prohibited.

The income from country places consisted of the produce of the State lands, a share of the produce of each plot of land cultivated by private

individuals, minor taxes assessed on lands, tolls paid at the ferries, and road cesses.

The mines formed a very important source of revenue to the State. The receipts from mines consisted of the yield of the State mines and also a share of the produce of mines privately owned, whether the produce consisted of precious metals or of ordinary minerals. The nine kinds of income derived from mines were: (i) output of minerals, (ii) a share of the output, (iii) a duty of 5 per cent., (iv) assaying charges, (v) fines, (vi) tolls, (vii) compensations for the loss of the king's revenues, (viii) coining charges, and (ix) a premium of 8 per cent.

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The receipts from public works were the fruits of trees, vegetables grown in the public gardens, the yield of fisheries, and so forth. The forest was derived from the lease of forest lands for hunting, and for the sale of elephants and other animals. The income from pastures consisted in dues paid to the State for grazing cattle on public lands. The tolls payable on land-routes and water-ways formed another important source of State income.

The other classification of the revenues given by Chanakya is also important. This we may slightly modify and put in modern form. The income of the State, according to this classification, would fall into two parts, namely, (1) tax revenue and (2) non-tax revenue. The first head would comprise (i) fixed taxes (pinda-kara), (ii) one-sixth share of the produce (shadbhaga), (iii) supply of provisions for the army (sena-bhakta), (iv) religious taxes (bali), (v) tributes from subordinate rulers (kara), (vi) forced benevolences (utsanga), (vii) royalties (parsva), (viii) compensations (parihanika), (ix) presents (aupanayika), and rents of public buildings (kaustheyala). Under the second head fall (i) the agricultural produce of crown lands, (ii) sale proceeds of grains, (iii) grains obtained by special request, (iv) incidental gains from trade and commerce,

(v) interest on capital, and (vi) profits of manufactures undertaken by the State. Besides these, there were certain minor sources of income, such as escheats, fines, confiscations, and forfeitures of the property of rebels.

Taxes were paid either in cash or in kind, or partly in cash and partly in kind. Chanakya expresses himself strongly in favour of the collection of taxes in cash. Industrialists, Sudras, and all other persons who lived by their labour (karma-jivanah) gave their labour free to the State for one day in every month in lieu of taxes. But no forced labour was exacted.

Brahmanas were exempt from the payment of taxes on the ground that they paid taxes to the State in the shape of their religious services. The other classes of persons who were exempt were women, minors, students, blind, deaf, dumb, and diseased persons, and those to whom the acquisition of property was forbidden.

In times of financial stress, a ruler was held justified in raising money by means other than those laid down in the Sastras. For instance, he might demand one-fourth or even one-third of the share of the produce of the soil as well as a higher percentage of the other kinds of produce. The king's officers might also compel the people to grow additional crops in the interests of the public treasury. In case such measures failed to bring in enough money, the collector-general asked the people for benevolences in view of the needs of the State, and those who offered handsome amounts received precedence in rank, robes of honour, and decorations. Religious institutions were also compelled to contribute to the funds of the State. On occasions of grave financial difficulty, various other devices were adopted, but in order that these might not lead to trouble, Chanakya utters the voice of warning in these words:

Such expedients should be resorted to only once, and never more than once.

It should be noted that the land-tax was the most important of all the sources of the State revenue. The king, however, was never regarded as the owner of the land, and he never claimed a right to the unearned increment of the land. His claim was limited to a fixed share of the produce. In later times, kings came to possess private landed properties of their own, and the income derived from such crown lands, as Hiuen Tsiang observed, helped considerably to lighten the incidence of taxation on the people.

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The principles on which the tax-system was based were sound and reasonable. To use the language of modern Economics, ability and least sacrifice were the guiding principles of the framers of the financial regulations of ancient times. "The king," says the Mahabharata, "should act in such a way in collecting his revenues that his subjects should not feel the pressure of want." Arbitrary exactions were strongly condemned by law-givers as well as by political teachers. Vasishtha, one of the early law-givers, for instance, says:

"Let him not take property for his own use from the inhabitants of his realm." "Never desire to fill thy treasury by acting unrighteously or from covetousness" is the advice given in the Mahabharata to the king. And, again, the king is thus admonished in the Great Epic against indulging in exactions:

That avaricious king who through folly oppressen his subjects by levying taxes not mentioned in the Sastras brings ruin upon himself.

Chanakya condemns the conduct of overzealous revenue officials in these words:

When an officer realises double the usual amount of revenue, he drinks the life-blood of the people. The king should prevent such exactions.

These were the principles. In practice, while there were many rulers who followed a righteous and wise policy in their collection of taxes, there were others whose love of luxury and ostentation prompted them to fill their empty treasuries by despoiling their subjects. Under weak Governments, royal officials often enriched themselves at the expense of both the State and the people.

Public welfare was in theory at least-the guiding principle in the expenditure of the public revenues. Kalidasa, the greatest of Indian poets, says:

Just as the sun takes moisture from the earth to give it back a thousandfold, so the king gathers taxes from the people only to provide for their welfare.

The main heads of expenditure, according to Chanakya, were, sacrifices, worship of ancestors, charity, expenses of the royal household, charges of the civil departments, expenses in connection with the maintenance of foreign missions, the expenses of the army and the army supply services, public works expenditure, and the expenses for the preservation of forests.

The allocation of funds to the various items of expenditure depended upon the respective needs of the departments. In order to provide against contingencies, wise financiers of old always considered it prudent to budget for a surplus after meeting all expenditure. Some perhaps were over-cautious in this respect. The views of such financiers are expounded in the Sukraniti, according to which only one-half of the State revenue was to be spent for the six purposes of administration in the following proportions: (1) the salaries of head men-one-twelfth; (2) the army -three-twelfths; (3) charities-one-twentyfourth; (4) expenses incurred for works of public utility-one twenty-fourth; (5) salaries of officials-one-twenty-fourth; (6) personal expenses of the king and of the royal householdone-twenty-fourth. According to the Sukraniti, there was to be enough money in the treasury to cover public expenses for twenty years...

The prosperity of the State finances was regarded as a matter of the greatest importance, and Chanakya's views in this regard seem to have been very sound. Circumstances which, in his opinion, tended to keep the treasury full were, prosperity of the people, rewarding of officers for meritorious work, punishment of thieves, prevention of corruption among Govern

ment officers, abundance of crops, prosperity of commerce and trade, freedom from troubles and calamities, non-remission of taxes, and receipt of revenue in gold. Matters which led to the depletion of the treasury were the following: Obstruction to the realisation of revenue, giving of loans, litigation, falsification of accounts, loss of revenue, gains made by officials, adverse exchange, and defalcation.

The control of the department of Public Finance was vested in two officials, namely, the collector-general (Samaharta) and the treasurergeneral (Sannidhata). The former was in charge of the collection of the revenues, while the latter was the custodian of the finances and was responsible for their proper disbursement. It was the duty of the collector-general to divide the country into several districts for revenue purposes, and to classify the villages according as they (i) were exempt from the payment of taxes, (ii) supplied soldiers for the defence of the country in lieu of taxes, (iii) paid their taxes in gold, (iv) paid taxes in kind, that is to say, in grains, cattle, raw products, or dairy produce, or (v) supplied free labour. The treasurer-general, as the custodian of the funds of the State, was expected to acquaint himself with the income and expenditure of the State over the period of a century, so that he might be able to frame accurate budgets and to show a good balance at the end of each year.

For the proper control and administration of the finances of the realm, it was considered neces

sary to have a good system of keeping accounts, and this important department was placed under the control of one of the chief superintendents. It was the duty of this officer so to arrange the business of his department that everything relating to the finances was entered in the books. He was required not only to show the net revenue that remained at the end of a year, but to cause to be entered in the books all details of expenditure, mentioning whether an item was incurred for a purpose, internal or external, public or private, important or unimportant. The account officers had also to enter in their books the names of departments; the description of the work carried on and the results obtained in the several manufactories; the amounts of profit, loss, expenditure, and interest of each factory; the number of labourers engaged, and their wages; the values of different kinds of gems, and of other commodities; presents made to the king's officers and courtiers; remissions of taxes granted; allowances, pensions, and gifts of lands or money to the king's wife and children; and receipts from or payments to foreign kings. The annual accounts were to be regularly submitted to the accounts department, and after they had been examined by the superintendent, they were audited by competent auditors. They were then submitted to the ministers in charge of the different departments, and considered by them sitting together as a cabinet.-4 chapter from the author's forthcoming book on "Public Administration in Ancient India."

DADABHAI NAOROJI'S SPEECHES AND WRITINGS. This is a new publication. It brings under one cover an exhaustive and comprehensive collection of the speeches and writings of the venerable Indian Patriot, Dadabhai Naoroji. The first Part is a collection of bis speeches and includes the addresses that he delivered before the Indian National Congress on the three occasions that he presided over that assembly; all the speeches that he delivered in the House of Commons and a 'selection of the speeches that he delivered from time to time in England and India. The second Part includes all his statements to the Welby Commission, a number of papers relating to the admission of Indians to the Services and many other vital questions of Indian administration. The Appendix contains, among others, the full text of his evidence before the Welby Commission, his statement to the Indian Currency Committee of 1898, his replies to the questions put to him by the Public Service Committee on East Indian Finance. Price, Rs. 2. To Subscribers of " İ.R.," Re. 1-8. G. A. NATESAN & CO., BOOKSELLERS, 4, SUNKURAMA CHETTY STREET, MADRAS,

AN ILLUSION OF NEW INDIA.

BY MR. PRAMATHA NATH BOSE, BSc..

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Illusions of New India", have met with in the New-Indian Press has suggested to me the question, Is synthesis of Hindu civilization possible? The idea which generally runs through them and which, I believe, dominates the New Indian mind is that we should assimilate all that is good and great in Western civilization, and construct a synthetic ndian civilization. "The history of any idea r movement", says one of my critics," may be divided into three stages, that of thesis, anti-thesis, and synthesis. Our wholesale admiration for Western civilization corresponded to the first stage; the reaction against it, of which Mr. Bose's book is an extreme example, fostered by the nationalist impulse, corresponds to the second stage, and we have already entered on the third stage of reconciliation of the two opposing movements into a higher synthesis, in which all that is great and good in Occidental civilization will be added to and assimilated by Oriental civilization." We should endeavour, observes another critic, "to bring about a blend between the civilizations of the East and the West.'

The idea of a synthesis or blend sounds very well, and along with the great majority of my New-Indian friends, I have myself been long governed by it. In fact, it has a flavour of liberality and broad-mindedness about it, which commends it to all who have any pretension to liberal culture. But the difficulties in the way of executing it are so enormous-I might almost say insuperable-that I began to doubt sometime ago whether it could be carried out at all, except perhaps to a small and superficial extent. My "Illusions of New India" is the result of this sceptical attitude. I have in it tried to show that the attempt of the Neo-Indian to bring about a

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blend between the Indian and Western civilizations has so far met with a signal failure, and the progress he beasts of is altogether an illusion. Seeing, however, how persistent the idea of synthesis is in New India, and how strong the hold it has on the Neo-Indian mind, I deem it necessary to try to further demonstrate its illusory character and show more clearly and pointedly than I have been able to do in my work how marked has been its failure so far, and how sure its failure is bound to be in the future.

Prima facie, synthesis is impossible. It is possible to have a synthetic dye or synthetic form. But is it possible to have a synthetic civilization worth the name, especially in the case of an ancient civilization like that of the Hindus? I have endeavoured to show in my "Epochs of Civilization," that Hindu civilization is a completed structure-whether perfect or not is a different question-and that Western civilization, however imposing and even majestic it may appear to be at present, is not a completed structure, and there is still considerable doubt about its stability. But if, for the sake of argument, it be assumed, that there is a good deal in the Western structure which it is desirable to incorporate with ours, the incorporation cannot be compassed without demolishing the latter and building anew. That, however, would be altogether different from what we understand by synthesis. It is possible to adopt Western methods to some extent in the repairs which the Indian structure needs periodically, but it is impossible to adopt Western design, Western style and Western materials in the main body of the structure without disfiguring and destroying it.

Civilization is an organic growth, and like all other such growths it is impossible to effect any

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