The country later decided to adopt a socialist pattern of society which in fact meant communist-style and that brought in license permit raj and corruption.īy 1990 the country was facing serious problems in repaying the loans and had to mortgage part of its gold reserves. All this because the country had given up on the market economy and adopted a Fabian socialist economy. The downward trend for the rupee in post-independence India started with reckless borrowings. India from now on had to buy oil in US dollars. However, by 1970 the demise of Indian rupee came in the Middle East. This Gulf rupee was at par with the rupee in India. Reserve Bank of India then issued special Gulf rupee in 1959 to fight the smugglers. Gold smuggled into India from Dubai could be legitimately paid in Indian rupees. Indian Rupee was the common currency between India and these nations, till gold smugglers due to India's license permit raj played havoc with the Indian rupee. How many in India's young of today can say the Indian rupee was the official currency in the countries of the Gulf viz Oman, Qatar, Kuwait, Bahrain and the countries that formed UAE. It was this power of the rupee that I found in my first travel abroad in 1952.
But rupee somehow still maintained its strength. Hardly any country accepted weak sterling.
Our reserves were naturally hit in terms of dollars as most buying by India from abroad was in US dollars. India lost heavily and the dollar became now worth four rupees and thirteen annas (equals Rs. With the deed done by the British in devaluation, the pound was now worth US $ 2.8 from 4.03. All along, instead of delinking itself from sterling, India had been trying to impress upon the British not to devalue the sterling. Then came the shock when the British government devalued Pound sterling on September 21, 1949. Should India have turned its sterling balances into US dollars at the time is a question that haunts many till today? We lost heavily as later events proved. Instead of breaking its link with the sterling, independent India's government tried to impress upon the British Government not to devalue sterling. However, independent India's government was a succeeding government and bound by the obligations of British-ruled India. Rupee was still a strong currency for independent India faced no external borrowings. India inherited over 1300 million Pounds sterling in its reserves at the time of independence. That single act of the colonial power resulted in rupee depreciating as it was now linked to a depreciating currency, the Pound sterling. That government had given a lethal blow to the rupee on Septemwhen it removed the goldlink of the rupee and linked it to the worthless pound sterling. The tragedy was the British government had linked the rupee to sterling at a disadvantageous rate of exchange to the rupee. The dawn of India's independence saw Rupee at par with US Dollar i.e one rupee was equal to one dollar. Arriving in Europe I found in Switzerland that rupee was quoted in top banks as 1 India Rupee = 1 Swiss Franc. I found the same story in Port Said and crossing Suez at Port Suez. The shopkeepers wanted payment in rupees, avoiding sterling and no one mentioned the US dollar. I was carrying Pounds sterling and Indian rupees. The ship first berthed at Aden and the passengers came ashore, so did I, to see the place and do some shopping. New Delhi, May 10 (ANI): My first journey from India to foreign lands began in 1952 when I boarded the Italian passenger ship MV Neptunia.