Colonial Exchange Rate Policy (1926)
Question
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?
Options
Aiding the flow of remittances from India and maintaining India's creditworthiness
Providing support to Indian importers
Encouraging export of cotton produce from India
Preventing depreciation of the Rupee in terms of gold
Explanation
The Hilton-Young Commission recommended fixing the exchange rate at a high ratio of 1s 6d per rupee. The British administration prioritized this overvalued rate to lower the domestic cost of home charges and official financial remittances from India to London, protecting imperial accounts and preserving India's external debt solvency. This policy disadvantaged Indian exporters by making local commodities more expensive in international markets.
Question details
Year
2026
Paper
GS Paper 1
Question
Q12
Subject
History
Sub-topic
Modern: Colonial & Constitutional
Type
Factual single
Difficulty
Hard
Nature
Static
Source hint
Bipan Chandra / Advanced Economic History of India
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