Page:White Paper on Indian States (1950).pdf/104

 of the broken period upto 1st April 1950 when federal financial integration would become effective. A slightly different modification had to be made in the case of Saurashtra where, though the financial year ends on 31st March, income-tax was first introduced only in 1949-50.  

194. As regards Defence Forces, it was agreed as recommended by the Committee that only the "sanctioned" Indian State Forces would become a "federal" charge; the rest, commonly described as "irregulars" would continue to be the responsibility of the States subject to the general control of the Central Government and could be gradually liquidated by retrenchment or by absorption of suitable individuals into the "sanctioned" forces or into the police forces. The special administrative arrangements concerning the "sanctioned" forces which were recently concluded would, however, continue until other arrangements were made in due course for evolving a balanced Army in India as a whole including the States.

As regards the other "federal" departments, the following would be taken over on 1st April, 1950 (13th April 1950 in the case PEPSU) for direct administration by the Centre:

The question whether, in view of various administrative and other difficulties the remaining "federal" departments should not continue to be administered for some time through the States themselves as "Agents" of the Centre is under active consideration.  

195. Subject to certain necessary modifications as to details, the Committee's recommendations about the apportionment and allocation of assets and liabilities have been accepted by all States.

In Madhya Bharat, Rajasthan, PEPSU and Saurashtra, the Committee expected that there would be a surplus of liquid assets over liabilities; it recommended that a portion of this surplus (5 per cent. in the case of PEPSU and 10 per cent. in other cases) should be allocated to the Centre for expenditure on federal objectives in those areas. It was, however, subsequently agreed to waive this in all cases except Saurashtra, where certain concessions were made in other directions. 