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less than the percentage for the Deccan States under the award given by Dr. Rajendra Prasad, Shri Shankerrao Deo and Dr. Pattabhi Sitaramayya. It is calculated on the basis of 15 per cent. on the first lakh of average annual revenue of the State concerned, ten per cent. on the next four lakhs, and seven and a half per cent. above five lakhs subject to a maximum of ten lakhs. The maximum figure of ten lakhs has been exceeded only in the case of some of the major States, which had been recognised as viable, and the amounts fixed in such cases are payable only during the life time of the present Rulers. The total annual privy purse commitments so far made amount to about Rs. four and a half crores.[1] When the amounts guaranteed to certain Rulers during their life time are subsequently refixed the total annual expenditure in respect of privy purses will amount to less than Rs. four crores.

Under the terms of the Covenants and the Agreements entered into by the Rulers, privy purses are payable to the Rulers, out of the revenues of the States concerned and payments have so far been made accordingly. During the course of the discussions with the Indian States Finances Enquiry Committee, it was urged by most of the States that the liability for paying privy purses of Rulers should be taken over by the Centre on the ground that:—

(a) privy purses have been fixed by the Centre;

(b) privy purses are political in nature; and

(c) similar payments are not made by the Provinces.

Apart from these considerations, the position has definitely changed since the execution of the Covenants. In the first place, so far as the merged States are concerned, with their total extinction under the new Constitution of India, as separate entities the basis of liability for privy purse payments guaranteed to the Rulers of the States will undergo a change, in that the States, from the revenues of which privy purses are payable, would cease to exist. Secondly, the term "revenues of the States", has now to be viewed in the context of the federal financial integration of States. This integration involves a twofold process; one, of 'functional' partition of the present composite State Governments and the other of
  1. ↑ As a result of subsequent agreements including those with the Rulers of Hyderabad and Mysore, the figure has been increased to about Rs. 58 millions.
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