that Government interferes at the point where the ganja passes from the wholesale
to the retail vendor to fix the price at Rs. 3 per sér, and that the monopoly of
wholesale vend is given to a small and selected number of persons who tender for
payment of duty at Rs. 2 per sér plus as much of the margin between Rs. 3 and
Rs. 2 as can be got from them. There can be little doubt that, apart from the
difficulties above referred to, the system itself may have operated against a rise in
fixed duty. The interference in the natural operation of the laws of supply and
demand has rendered it more difficult for the Government to gauge for itself the
necessity for increasing the direct duty. And it may be remarked that, in
spite of the fact that the direct duty has not been raised, the receipts
from licensed fees have not very materially increased, and therefore, while Bengal
has doubled its taxation on the ganja consumed, the Central Provinces taxation has
remained stationary. The cause of this may partly be found in the different cir-
cumstances of the two provinces. Except in Orissa, the question of smuggling has
been set at rest in Bengal. In the Central Provinces the arrangements with the
Tributary States which were undertaken with this object have only just been
completed, and it may have been considered advisable to postpone any increase
in the duty until this should have been done. But even allowing for this, the
Commission think there is reason for attributing to the different systems, at all
events in part, the widely different results obtained.

Advantages claimed for the sys-

652. The advantages claimed for the system are—

(a) that it enables the retail vendor to know what he is about, and
makes him independent of combinations and caprice among the
wholesale vendors. This would tend to induce him to bid more
for his license:

(b) that it enables Government to secure part of the wholesale dealer's

(c) that it tends to equalize the price to the consumer all over the

The first two of these are not in themselves of any great importance. The
main object is to secure that the drug is adequately taxed; and if, as appears pos-
sible, the license fees instead of being raised are kept down by the present system,
while obstacles are placed in the way of raising the fixed duty, the advantage is
more than counterbalanced. And as regards the third, it may be observed that
the check imposed upon the price of the drug by fixing the price to be paid for it
by the retail dealer may very possibly keep the price to the consumer unduly low
in some districts, while in others, where the opportunities for smuggling are
greater, there is no adequate test of its suitability.

Disadvantages of the system.

653. The principal disadvantage of the system appears to be that it imposes
upon the Government the responsibility of taking
into consideration several factors the precise value
of which it is difficult to estimate; and the effects of which are better gauged by the
unimpeded competition arising from the auction of the privilege of retail sale. And
it seems possible that the present system may operate to a certain extent in check-
ing the cost of production and the profits of the cultivator. If these had free scope,
they would probably tend to raise the price of the article. Moreover, the profits of
the wholesale vendor as such are kept down to such a low figure that it is almost