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In 1896, the British Government decided to increase the duty on salt to meet the deficit of 1.5 million pounds which arose as a result of the annexation of Burma.
Gokhale pointed out that in England and other countries, public expenditure was controlled by tax payers.
But in India, there was no popular control over the public expenditure. As far as the apportionment of charges between the United Kingdom and India was concerned, Gokhale suggested that the India office charges should be shared on basis, the army charges should be paid by the crown, the public debt of India should be charged to the crown and the crown should pay a reasonable share of the cost of maintaining the British army stationed in India.
With regard to Indian Budget, Gokhale held the view that, it should be passed item by item.
The finances of the local bodies and provinces were poor.
Gokhale was highly critical of large increase in public expenditure.
He pointed out that India’s monetary resources were mis-spent in extending northern and north eastern frontiers and in using troops for imperial purposes.
Suggestions made by non-official members should be referred to a committee of control. He held that a policy of surplus budget was unsound.
In such a case, people having sound knowledge of Indian conditions would get an opportunity to express their opinion on various items of expenditure.
He charged that the British government was looking after the interests of British traders and it did not bother about the Indian tax payer.
So he emphasised the need for controlling public expenditure in India.