Page:Indian Journal of Economics Volume 2.djvu/606

of living; (l) so f? as spent on non-productive or constructing elaborate ?he national objects such city halls deb? has been and parks, the prr caF/t? deb? is sn index of ?he ?he people and ?hus of ?he stage nissfion and wesRh-pr?ueing have already s?tained. In nearly every Western country, lending power d of economic orgs- power which they before the ws?, the total of 1oe&l (including state and provincial) loans considerably exceeded the total of the national del? In India however the total of local debt (to the public) is quite insignificant compared with the total of the national (i. e., Government of India) debt. In India the public indebtedness, as a system, is top-heavy; and the time has arrived when a firm foundation of extensive local loans might with great advantage be es-tsbl/shed. Fifty years ago this system of having almos? all the public debt concentrated in the Government of India was' a necessary one, even for borrowing in India; but now the position has entirely changed. There has been a great growth of a wealthy middle- class in many parts of India; and other forms of debt of a local character could be grsd u. ally estsl? lished and extended if the requisite steps were taken to foster and develope local money-markets, and ?0 arouse local interest in local loans. The first step in this direction should undoubtedly be the granting of permission to Provincial Governments to borrow in India up to s maximum limit bearing some fixed proportion to their total revenue, but silowing. free -competition as regards. rate of interest. As this wonld involve a complete hang.e of the policy which the Government of India has hitherto pursued, my assertion needs justification; and for' this purpose it. is necessary first to secure ? clear conception of the conditions which govern the lending o! money--in