The army estimates themselves would have been enough to cause dismay even if the estimates of other departments, upon which the Indian public looks with more favour, had not clearly been pruned down with more than usual parsimony to meet the large increase in military expenditure.  But Lord Rawlinson, who had done his utmost to reduce them to the extreme limit of safety as he conceived it in existing circumstances, wisely decided to take the Assembly as far as possible into his confidence, and to explain the requirements of the military situation not only from his seat on the Government bench but in private conferences, at which members were freely invited to meet him and his advisers.  If he did not altogether convince them, he gave them food for reflection at a time when not only our own North-West Frontier but the whole of Central Asia is still in a state of turmoil, Persia a very doubtful quantity, and the Ameer of Afghanistan far more eager to sign a treaty of alliance with Soviet Russia than to bring to a friendly conclusion the long-drawn negotiations which the Government of India has sent the head of its foreign department to conduct at Kabul.  The appointment of a Committee to visit the North-West Frontier and to study the situation on the spot was admirably calculated to carry the practical education of Indian legislators a long step farther.  In regard to other matters, too, Government gave and gained time for reflection by referring them, before committing itself to any definite pronouncement of policy, to special committees in which points at issue could be thrashed out much more effectively and with less heat than if only discussed in full house.

Nothing, however, could alter the awkward fact that Government had been compelled to confront the Legislative Assembly at its first session with a Budget showing a deficit and making calls upon the Indian tax-payer absolutely unprecedented in the annals of British-Indian State finance.  The deficit amounted to nearly 19 crores of rupees on a Budget of 130 crores,[3] and the Financial Member, Mr. Hailey, who had only recently succeeded to the financial department, had to admit that the deficit could only be met by increased taxation.  That the estimates of the previous year had been so largely exceeded was due beyond dispute to the growth of military expenditure, which, for the current financial year, has been put down at 62 crores, or very nearly half the total expenditure for which provision has to be made.  This Budget, moreover, not only came at a time of general economic depression, but coincided with the operation of the new financial arrangements between the Provinces and the Government of India, which have deprived the latter of the facilities it had formerly for mitigating its own financial necessities by adjusting to them the doles paid out of the Central Exchequer to the several Provincial Exchequers.  Under the new system various revenues have been definitely allocated to the Provincial