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involve a loss of the order of rupees ten millions; but it is expected that this will be largely offset by the sales tax recently introduced in Travancore, by increased food subsidies and Grow-More-Food grants and loans from the Centre, and by the special guarantee arrangement devised for this State for the first three years.

201. After the first five years, however, it will be necessary in the case of Mysore, Travancore-Cochin, and Saurashtra, to replace a diminishing Central guarantee by revenue from alternative sources. But there is no cause for undue anxiety on this account, especially as the matter will be the subject of careful review by the Finance Commission to be appointed under Article 280 of the New Constitution. In the meanwhile, however, the finances of these, and indeed of all, States will require careful nursing. In the words of the Committee—

"………We find it necessary, however, to sound a note of warning. Representatives of the Governments of States who met us referred to plans prepared in their States for prohibition, abolition of Jagirs, etc., for implementation in the near future. We hold the view that the Governments concerned should proceed in these matters with caution. We are convinced that for a number of years their finances cannot bear the losses of revenue involved and, as has been pointed out by the Government of India to Provinces, the execution of such policies will defeat the efforts now being made to check inflation".^[1]

Advantages of Integrated System of Federal Finance

202. The difficulties of a transitional period are unavoidable and must be squarely faced. But they should not be allowed to obscure the far-reaching and fundamentally beneficial character of the transformation that is implicit in federal financial integration. Under the new Constitution, the Central Government will conform to the pattern of other Federations and will function with the same rights and obligations throughout the country. In this way it will gain in strength and its policies in effectiveness. "Only so can the Union of India make an effective contribution to the solution of the difficult economic problems that face India, meet the strains and stresses of the post-war world and maintain national unity. The States themselves will also derive substantial advantages among which the following may be mentioned:—Firstly, their people end Governments will take their place in the polity of India alongside of the people and Governments in the rest of India and share in its wider life

1. Paragraph 35 of Part I of the Committee's Report.