Provincial Government

The Indian Councils Act, 1861 returned the legislative powers to provinces of Madras and Bombay which had been taken away in 1833. Later, legislative councils were established in other provinces. The three presidencies of Bombay, Madras and Calcutta enjoyed more rights and powers compared to other provinces. The presidencies were administrated by a governor and his executive council of three who were appointed by the Crown, while other provinces were administered by lieutenant governors and chief commissioners appointed by the governor-general.

In the following decades, some steps towards financial decentralisation were taken, but these were more in the nature of administrative reorganisation aimed at increasing revenues and reducing expenditure and these did not in any way indicate progress towards provincial autonomy.

The granting of fixed sums out of central revenues for administration of certain services like police, jails, education, medical services and roads to provincial governments signified the first step in the direction towards bifurcating central and provincial finances in 1870 by Lord Mayo. Now, the provincial governments were asked to administer these services as they liked.

Certain other heads of expenditure like land revenue, excise, general administration and law and justice were transferred to provinces in 1877 by Lord Lytton. Besides this, a provincial government was to receive a fixed share of the income realised within that province from sources like stamps, excise and income tax.

In 1882, all sources of revenue were divided into three groups—general (going entirely to centre), provincial (going entirely to the provinces) and those to be divided between the centre and the provinces.

Nevertheless, the central government remained supreme and retained detailed control over provinces. This was inevi- table since both the central and provincial governments were completely subordinated to the secretary of state and the British Government.