This month marks the 100th year of the publication of the ‘Report on Indian constitutional reforms’, commonly known as the Montagu-Chelmsford Report (MCR). Edwin Montagu, then Secretary of State for India, had advocated for increased participation of Indians in the British Indian administration and had begun consultations nearly a year earlier. After many meetings with Indian representatives, Montagu and the then Governor-General, Lord Chelmsford, published the MCR on July 8, 1918.
The MCR stands out for proposing some of the most radical administrative changes and for giving provincial legislatures the mantle of self-governance. To this extent, the report advocated the need “to emancipate the local governments and legislatures from central control; and to advance, by successive stages, in the direction of conferring responsible government on the provinces.”
The Montagu-Chelmsford Committee visited Madras Presidency to gather the views of political leaders. T. Varadarajulu Naidu’s book, Justice Movement 1917, informs us that senior members of the Justice Party led by Sir Pitti Theagaraya met the Committee and made extensive demands, which included the “creation of municipalities and local body institutions with sufficient autonomy to handle their local issues… bereft of the intrusive control of the Government.” They further demanded that administration of the Presidency be eventually moved to the local legislature. To this end, they suggested that departments in administration be placed under the control of legislatures.
Ultimately, the MCR established the framework for devolution of powers and gave credence to the cry for self-governance. This cannot come as a surprise because the report recommended that “the Provinces are the domain in which the earlier steps towards the progressive realisation of responsible government should be taken”. Another one of the most far-reaching objectives of the report was to elucidate the principle of accountable governance by directing that the “Government of India must remain wholly responsible to Parliament.”
Thus was laid the platform for the development of a responsible government. However, in the 32nd session of the Indian National Congress, led by British theosophist Annie Besant, there was strong opposition to the Montagu declaration as something that “was unworthy of England to offer and India to accept.” However, Besant later accepted the reforms as essential for the progress of British India.
The MCR would go on to become the basis for the Government of India Act, 1935, and, ultimately, the Constitution. The key principles of responsible government, self-governance and federal structure grew out of these reforms. The MCR on Indian constitutional reforms along with the Montagu Declaration are, thus, worthy claimants of the title of the Magna Carta of modern India.
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Petrol in India is cheaper than in countries like Hong Kong, Germany and the UK but costlier than in China, Brazil, Japan, the US, Russia, Pakistan and Sri Lanka, a Bank of Baroda Economics Research report showed.
Rising fuel prices in India have led to considerable debate on which government, state or central, should be lowering their taxes to keep prices under control.
The rise in fuel prices is mainly due to the global price of crude oil (raw material for making petrol and diesel) going up. Further, a stronger dollar has added to the cost of crude oil.
Amongst comparable countries (per capita wise), prices in India are higher than those in Vietnam, Kenya, Ukraine, Bangladesh, Nepal, Pakistan, Sri Lanka, and Venezuela. Countries that are major oil producers have much lower prices.
In the report, the Philippines has a comparable petrol price but has a per capita income higher than India by over 50 per cent.
Countries which have a lower per capita income like Kenya, Bangladesh, Nepal, Pakistan, and Venezuela have much lower prices of petrol and hence are impacted less than India.
“Therefore there is still a strong case for the government to consider lowering the taxes on fuel to protect the interest of the people,” the report argued.
India is the world’s third-biggest oil consuming and importing nation. It imports 85 per cent of its oil needs and so prices retail fuel at import parity rates.
With the global surge in energy prices, the cost of producing petrol, diesel and other petroleum products also went up for oil companies in India.
They raised petrol and diesel prices by Rs 10 a litre in just over a fortnight beginning March 22 but hit a pause button soon after as the move faced criticism and the opposition parties asked the government to cut taxes instead.
India imports most of its oil from a group of countries called the ‘OPEC +’ (i.e, Iran, Iraq, Saudi Arabia, Venezuela, Kuwait, United Arab Emirates, Russia, etc), which produces 40% of the world’s crude oil.
As they have the power to dictate fuel supply and prices, their decision of limiting the global supply reduces supply in India, thus raising prices
The government charges about 167% tax (excise) on petrol and 129% on diesel as compared to US (20%), UK (62%), Italy and Germany (65%).
The abominable excise duty is 2/3rd of the cost, and the base price, dealer commission and freight form the rest.
Here is an approximate break-up (in Rs):
a)Base Price | 39 |
b)Freight | 0.34 |
c) Price Charged to Dealers = (a+b) | 39.34 |
d) Excise Duty | 40.17 |
e) Dealer Commission | 4.68 |
f) VAT | 25.35 |
g) Retail Selling Price | 109.54 |
Looked closely, much of the cost of petrol and diesel is due to higher tax rate by govt, specifically excise duty.
So the question is why government is not reducing the prices ?
India, being a developing country, it does require gigantic amount of funding for its infrastructure projects as well as welfare schemes.
However, we as a society is yet to be tax-compliant. Many people evade the direct tax and that’s the reason why govt’s hands are tied. Govt. needs the money to fund various programs and at the same time it is not generating enough revenue from direct taxes.
That’s the reason why, govt is bumping up its revenue through higher indirect taxes such as GST or excise duty as in the case of petrol and diesel.
Direct taxes are progressive as it taxes according to an individuals’ income however indirect tax such as excise duty or GST are regressive in the sense that the poorest of the poor and richest of the rich have to pay the same amount.
Does not matter, if you are an auto-driver or owner of a Mercedes, end of the day both pay the same price for petrol/diesel-that’s why it is regressive in nature.
But unlike direct tax where tax evasion is rampant, indirect tax can not be evaded due to their very nature and as long as huge no of Indians keep evading direct taxes, indirect tax such as excise duty will be difficult for the govt to reduce, because it may reduce the revenue and hamper may programs of the govt.