Financial difficulties led the government to further decentralize administration by promoting local government through municipalities and district boards.
The Industrial Revolution gradually transformed European economy and society in the nineteenth century. India’s increasing contact with Europe and new modes of imperialism and economic exploitation made it necessary that some of the European advances in economy, sanitation, and education should be transplanted in India.
Moreover, the rising Indian nationalist movement demanded the introduction of modern improvements in civic life. Thus the need for education of the masses, sanitation, water supply, better roads, and other civic amenities was increasingly felt. The government could no longer afford to ignore it.
But its finances were already in disorder due to heavy expenditure on the army and the railways. It could not increase its income through new taxes as the burden of the existing taxation was already very heavy on the poor and a further addition to it was likely to create discontent against the government.
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On the other hand, the government did not want to tax the upper classes, especially the British civil servants, planters and traders.
But the authorities felt that the people would not mind paying new taxes if they knew that their proceeds would be spent on their own welfare.
It was therefore decided to transfer local services like education, health, sanitation and water supply to local bodies that would finance them through local taxes. Many Englishmen had pressed for the formation of local bodies on another ground as well.
They believed that associating Indians with the administration in some capacity or the other would prevent their becoming politically disaffected.
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This association could take place at the level of local bodies without in any way endangering British monopoly of power in India.
Local bodies were first formed between 1864 and 1868, but almost in every case they consisted of nominated members and were presided over by District Magistrates.
They did not, therefore, represent local self-government at all. Nor did intelligent Indians accept them as such. They looked upon them as instruments for the extraction of additional taxes from the people.
A step forward, though a very hesitant and inadequate one, was taken in 1882 by Lord Ripon’s government. A government resolution laid down the policy of administering local affairs largely through rural and urban local bodies, a majority of whose members would be non-officials.
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These non-official members would be elected by the people wherever and whenever officials felt that it was possible to introduce elections.
The resolution also permitted the election of a non-official as chairperson of a local body. But the elected members were in a minority in all the district boards and in many of the municipalities.
They were, moreover, elected by a small number of voters since the right to vote was severely restricted. District officials continued to act as presidents of district boards though non-officials gradually became chairpersons of municipal committees.
The government also retained the right to exercise strict control over the activities of the local bodies and suspend and supersede them at its own discretion.
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The result was that except in the Presidency cities of Calcutta, Madras and Bombay, the local bodies functioned just like departments of the government and were in no way good examples of local self-government.
All the same, the politically conscious Indians welcomed Ripon’s resolution and worked actively in these local bodies in the hope that in time they could be transformed into effective organs of local self-government.