Civil Services Prep

Prelims 2026 · Economy · Question 2

The artificially fixed rupee-sterling exchange rate prescribed by the Hilton-Young Commission (1926) was adopted by the British Government for which one of the following reasons ?<br/>

  1. Aiding the flow of remittances from India and maintaining India's creditworthiness
  2. Providing support to Indian importers
  3. Encouraging export of cotton produce from India
  4. Preventing depreciation of the Rupee in terms of gold

Answer

Aiding the flow of remittances from India and maintaining India's creditworthiness

The fixed rupee-sterling rate was meant to suit imperial financial interests: easing sterling remittances from India to Britain and preserving India’s standing in London financial markets. It was criticized precisely because it favored British fiscal-remittance needs rather than Indian economic interests.

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