SOAS Research Online

Abstract

This study examines tree development of monetary management in India from 1873 to date, with special reference to the objectives or standards to which such management has tried to conform. During this period, economic opinion about monetary objectives has undergone revolutionary changes. During the first fifty years, the maintenance of a stable exchange rate through gold standard mechanism was the objective. During the nineteen, thirties, internal stability at a high level of economic activity and employment became the aim of currency management. In the present decade, the maintenance of a stable international currency relation and internal full employment are both retarded as objectives. The introductory chapter of this study reviews the development of this evolution. Monetary manages.ent is fundamentally an international activity, though different countries play unequal parts in it. The general course of management has been regulated, for all, by the major economies of the world, or, more correctly, by England before world War 1, and after it by England, U.S.A., Germany and France. The function of smaller countries has been one of adaptation. Monetary management in the major economies has thus automatically constituted the main part of the Monetary management in a minor economy like India. The indigenous aspect of indian currency management has seen the secondary function of adaptation to the international framework devised abroad. Consequently, an analysis of the international gold standard of the fifty years, and of the attempts of the Indian management to adjust its system to the international standard, constitutes the subject-matter of Chapters II and III. Chapter IV analyses the currency warfare of the thirties resulting from the efforts of the major economies to assume domestic currency autonomy, and its repercussions on Indian currency management. The last two chapters (V and VI) examine the problems of Indian currency management in the present decade, when the maintenance of an equilibrium exchange rate fixed by the international agreement embodied in the Bretton Woods system, and of internal full employment, should form the monetary objectives of India. The speciality of this study lies in as. international perspective of Indian currency management, in its attempts to locate India's real position in the international monetary set-up during the period under review and in its prescribing the external currency relation which India should maintain in the immediate future. The examination of the extent to which the internal monetary objective of full employment investment may be pursued in India, in this international set-up is another contribution of this enquiry.