Page:Indian Journal of Economics Volume 2.djvu/250

 288 H. STANLEY JEI/ONS tive or nndeveloped condition. In people produce by their agriculture is necessary to provide them with sisfence. margin of either by Consequently such a state the little more than the means 'hi sub- there is but a the annual produce available the state or by the landlords. very small to be taken As a mater of fact the state always assumes a prior right tb the surplus income of its people over the bare minimum of subsistence, as being necessary to maintain it/ existence by providing for the exercise of the func- tions of government. The economic history of India provides abundant evidence that during the latter priod of the Moghal Empire and the firs few decades of the British rule the taxable capacity  of the people was very low, and the revenue which reached the Treasury was barely sufficient to maintain the Government. Certainly it was revenne which was incapable of expansion at the will of t. he Government. Hence the system of finance forced upon the Government of India in its early history was that of predetermined income. Owing to the fact that the nncertainty of varying assess- ments of land revenue leads to paralysis of improve- ments in agricultire, prmanent or long period settlements have been adopted; and since the state income has so largely been taken in the form of land revenue, the system of predetermined income has remained in vogue in almost all British and Native State finance in India. l.edetermid expeadittre is the name here given to the second system of finance. The idea underlying this name is that it is the expenditure rather than the income which is determined upon beforehand, and the income which is adjusted to the expenditure rather than the expenditure to the income available, as in the first system. I may give a fanciful example by supposing the case of a man whose wants are few I The term to,.r.ble capcity is defined in the nex section, p. 240.