GyanGramQuestion
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 ?
PRELIMS 2026 · MODERN HISTORY
The artificially fixed rupee-sterling exchange rate prescribed by the Hilton-Young Commis…
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Approach: *Analyze the colonial economic policy behind the Hilton-Young Commission's exchange rate to understand how it favored British treasury requirements over Indian commercial interests.*
- **Correct Answer:** (a) Aiding the flow of remittances from India and maintaining India's creditworthiness
- The **Hilton-Young Commission (1926)** recommended fixing the rupee value at a higher rate of *1 shilling 6 pence (1s 6d)* instead of the traditional *1s 4d*.
- This artificially high rate overvalued the rupee, allowing the British Government of India to pay its **"Home Charges"** (sterling obligations and remittances to the UK) using fewer rupees, thereby balancing its budget and maintaining creditworthiness.
- This policy was heavily criticized by Indian nationalists and industrialists because an overvalued rupee made Indian exports (like cotton) expensive and uncompetitive globally, while making British imports into India cheaper.
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