Unless the economic situation improves again with a rapidity beyond even sanguine expectations, Government will have to lay before the Indian Legislature next winter a budget scarcely less unpleasant than the last one. Even if expenditure does not outrun the estimates, revenue can hardly fail to fall short of them. Mr. Hailey, with perhaps forced optimism, seems to have reckoned upon taxation old and new continuing to yield at much the same rate during a year which began and is likely to end in great depression as during the preceding year, a great part of which had been a "boom" year. In the same way he budgeted on a 1s. 8d. rupee, though the rate of exchange for the rupee was then under, and has only quite recently[4] risen above, 1s. 4d. This means an inevitable and considerable loss to the Government of India on all the home charges which it has to remit to London. Another deficit to be met by another increase of taxation would be a strain upon the Assembly far more trying than that to which this year's Budget subjected it. Indian opinion will press for further steps towards complete fiscal autonomy. Scarcely a single Indian is a convinced free trader. In the old Indian National Congress the desire not to estrange the sympathies of the Liberal party in England, and the lack of interest then taken by Indian politicians in economic questions, kept the issue somewhat in the background until the Extremists raised it in the form of _Swadeshi_ and in an attempt to organise a boycott of British imported goods. The immense development of Indian industries during the war has made protection once more a very live issue, for if that development is arrested or languishes as the result of the general economic situation, the louder will be the demand for protection. Even the outcry at first raised last winter in Lancashire against the increase of the Indian import duties as an intolerable blow to British textile industries, though at once firmly checked by the Secretary of State, provoked enough irritation in India to show how deeply engrained is the suspicion that, from the days of the East India Company onward, the industrial and commercial interests of India have always been deliberately or instinctively sacrificed to those of Great Britain. Indians regard complete fiscal autonomy as one of the first steps towards the fulfilment of the pledge of self-government, and indeed as the logical consequence of the recommendation already made by the Joint Select Committee of both Houses of Parliament. To believe that in such matters the Government of India would now place itself in opposition to the views of the Indian Legislature is to ignore the whole spirit of the constitutional changes.