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 Governments for their own free disposal, and in return they have to make fixed annual contributions to the Central Exchequer. These contributions are in no case to be subject to increase in the future, but on the contrary to be reduced gradually and to cease at the earliest possible moment compatible with the irreducible requirements of the Government of India. The Act of 1919, it is true, transfers to the Indian Legislature no direct or complete statutory control over revenue and expenditure, and powers are still vested in the Government of India to override the Assembly in cases of emergency and to enact supplies which it refuses if the Governor-General in Council certifies them to be essential to the peace, tranquillity, and interests of India. But the fact that there was a deficit which could only be met by increased taxation offered exceptional opportunities which might easily have been used for embarrassing obstruction by a young and immature chamber naturally concerned for its own popularity. Even a direct conflict between the Government and the Assembly might not have been impossible, and the consequences would have been lamentable. For if the Government of India had been driven to use its statutory powers to impose taxation and secure supplies in opposition to the Legislature during its very first session, all the hopes of friendly co-operation based on the new constitution would have been wrecked far more disastrously and permanently than by any "Non-co-operation" movement. The Legislative Assembly was wise enough to exercise its rights with sufficient insistence to show that it was conscious of them, but never to strain them.