- Browse by author
- Browse by year
- Departments
- History of Thought
- Advanced search
- Climate Change
100 Years of the Problem of Rupee: Dr. B.R. Ambedkar's Historic Thesis Shapes India's Economic Future
Lucknow - What was the title of the thesis that Dr. B. R. Ambedkar submitted to the London School of Economics, for which he was awarded his doctorate in 1923? This might appear to be quite an easy question for most Ambedkarites, but Himani Bundela, a native of Jhansi, who breezed through the 15 questions of Kaun Banega Crorepati to win Rs 1 crore, couldn’t answer this question and deprived herself of the chance to win Rs 7 crore, the prize money for this question. The answer to this question – "The Problem of Rupee-its Origin and Solution" – is not an esoteric knowledge among Ambedkarites today. As the thesis completed 100 years in 2023, we take a look at the thesis that surpassed the boundaries of a research paper.
On this day, 15th December 1926, Dr. Ambedkar presented evidence before the Royal Commission on Indian Currency and Finance on his thesis - "The Problem of Rupee." It is said that each member of this commission held a copy of Dr. Ambedkar’s 257-page paper. It is noteworthy that the paper completed 100 years this year, as it was presented and published in 1923 as the thesis for his doctoral research at the prestigious London School of Economics (LSE).
The Doctoral Thesis that Laid the Foundation of the Indian Banking System
Dr. Ambedkar postulated the need, working style, and outlook of the Royal Commission, also known as the Hilton Young Commission. The Commission duly incorporated the guidelines presented by Ambedkar in 1926, and later the legislative assembly passed the recommendations in the name of the RBI Act 1934. Consequently, the Reserve Bank of India was established on 1st April 1935.
During British rule, the Indian currency was pegged to the British pound, and the exchange rate was fixed at a rate that favored British interests. The British Indian government had absolute control over the issuance of currency, and they used this power to manipulate the value of the rupee to their advantage.
In his thesis, he exposed the strategy of the British to keep the exchange rate inordinately high, which tipped the balance in favor of their factory products.
One of the major issues was the constant devaluation of the Indian rupee by the British government. The value of the rupee was artificially lowered to benefit British exporters and to finance the expenses of the colonial administration. This devaluation had severe economic consequences for the Indian population, leading to inflation and a decline in the standard of living.
Gold Exchange Standard
He argued that the gold exchange standard does not have stability, and developing countries like India cannot afford gold exchange standards as they are prone to inflationary pressures. He buttressed his claims with statistical figures. The thesis also advocated the regulation of government deficits and the circular flow of money. The book comprises seven chapters.
In the first three chapters of the book, he touches upon the deficiencies associated with silver currency. In the first chapter of the book known as “From a Double Standard to the Silver Standard,” he has touched upon the economic contours of the Mughal Empire and mentioned that the economic condition during the Mughal era was much better than that in the English Empire. Dr. Ambedkar explained how silver standards had been established through the waning of gold currency and how it had been supplemented by paper currency. He pointed out that Act XXIII of 1870 did nothing new - neither the number of the coins authorized by the mints nor its tender-powers. Rather, it helped make some improvements in monetary laws. Since the invention of coinage, people always thought that the actual value of the coin can be exact with the price of the coin legalized by the mint. So according to him, the exact value of the coin can’t, however, always be the same as the certified value.
In the second half of the chapters, Ambedkar draws a comparison between the rupee and coins. The second chapter is "The Silver Standard and the Dislocation of its Parity." In the introduction to the third chapter, “The Silver Standard and the Evils of its Instability,” Ambedkar was concerned about the economic results of the disruption of the ‘par’ of exchange, and he describes it as the most “far-reaching character.”
In the fourth chapter of the book, titled “Towards the Gold Standard,” Ambedkar focuses on how the establishment of a stable economic system was contingent upon the re-establishment of a common standard of value. In the seventh as well as the last chapter of the book titled “A Return to the Gold Standard,” Ambedkar examined the system of the economy that was moving towards the changes made in the exchange standards.
The Thesis that Left its Imprint on Economy and History
Only a few research papers and theses have left their imprint on the economic structure of an economy as "The Problem of Rupee-its Origin and its Solutions" has. The fact that the Reserve Bank of India, the central bank of the country, was formed based on the guidelines made in the research paper proves the acumen of Dr. Ambedkar as an economist.
The research paper was published in 1923 by P. S. King and Sons and had the foreword by Edward Kennan, who grossly disagreed with the assertion of Ambedkar in his thesis. The Thesis is also published by the Dr. Ambedkar Foundation as a part of Dr. Babasaheb Ambedkar's writings and speeches.
You can also join our WhatsApp group to get premium and selected news of The Mooknayak on WhatsApp. Click here to join the WhatsApp group.
- India Today
- Business Today
- Harper's Bazaar
- Brides Today
- Cosmopolitan
- India Today Hindi
- Reader’s Digest
- Aaj Tak Campus
Download App
Get 37% off on an annual Print +Digital subscription of India Today Magazine
Why publication of b.r. ambedkar's thesis a century later will be significant, a contemporary relevance of the thesis, written as part of ambedkar's msc degree at the london school of economics, is that it argues for massive expenditure on heads like defence to be diverted to the social sector.
Listen to Story
Now, over a century after it was written, Ambedkar’s hitherto unpublished thesis on the provincial decentralisation of imperial finance in colonial times will finally see the light of the day. The Dr Babasaheb Ambedkar Source Material Publication Committee of the Maharashtra government plans to publish the thesis that was written by Ambedkar as part of his MSc degree from the London School of Economics (LSE). The thesis, ‘Provincial Decentralisation of Imperial Finance in British India’, will be part of the 23rd volume of Ambedkar’s works to be published by the committee and will give a glimpse into the works of Ambedkar, the economist. Notably, the dissertation argues for expenditure on heads like defence to be diverted for social goods like education and public health.
The source material committee, which was set up in 1978, has published 22 volumes on Ambedkar’s writings since April 1979. “This volume will have two parts. One will contain the MSc thesis and the other will have communication and documents related to his MA, MSc, PhD and bar-at-law degrees,” confirmed Pradeep Aglave, member secretary of the committee. He added that the MSc thesis had been submitted to the LSE in 1921. Veteran Ambedkarite and founder of the Dalit Panthers, J.V. Pawar, who is a member of the committee, said it was significant that the thesis was being published over a century after it was written. Pawar played a pivotal role in ensuring that the committee was set up.
“This work deals with taxation and expenditure. The contemporary relevance of this thesis is that it seeks a progressive taxation based on income levels. Ambedkar argued that expenditure on heads like defence was huge and this needed to be diverted to social needs like education, public health, and water supply,” said Sukhadeo Thorat, economist and former chairman of the University Grants Commission (UGC). Thorat was among those instrumental in the source material committee getting a copy of the thesis from London.
“The sixth volume (1989), published by the source material committee, contains Ambedkar’s writings on economics. This includes his works like ‘Administration and Finance of the East India Company’ (1915) and the ‘Problem of the Rupee: Its Origin and Its Solution’ (1923). However, this MSc thesis on provincial finance could not be included in it because it was not available then,” said Thorat.
J. Krishnamurty, a Geneva-based labour economist located the MSc thesis in the Senate House Library in London and approached Thorat who, in turn, communicated with Gautam Chakravarti of the Ambedkar International Mission in London. Santosh Das, another Ambedkarite from London, paid the fees for permission to reproduce the work in copyright. The soft copy of the thesis was sent to the source material committee on November 18, 2021.
In addition to the MSc thesis, the communication and letters related to his academics, such as the MA, PhD, MSc and DSc and bar-at-law including LLD (an honorary degree that was awarded to Ambedkar by the Columbia University in 1952after he finished drafting the Constitution of India, which remains one of his most significant contributions to modern India), were also arranged and compiled by Krishnamurty, Thorat and Aglave. This also includes the courses done by Ambedkar for his MA and pre-PHD at the Columbia University. These details are being published for the first time.
Ambedkar’s biographer Changdev Bhavanrao Khairmode, writes how Ambedkar worked untiringly in London for his MSc. Ambedkar secured admission for his MSc in the LSE on September 30, 1920 by paying a fee of 11 pounds and 11 shillings. He was given a student pass with the number 11038.
Ambedkar had prepared for his MSc in Mumbai, yet he began studying books and reports from four libraries in London, namely the London University’s general library, Goldsmiths' Library of Economic Literature and the libraries in the British Museum and India Office. In London, Ambedkar would wake up at 6 am, have the breakfast served by his landlady and rush to the library for his studies. Around 1 pm, he would take a short break for a meagre lunch or have just a cup of tea and then return to the library to study till it closed for the day.
“He would sleep for a few hours. He would stand at the doors of the library before it opened and before others came there,” says Khairmode in the first volume of his magisterial work on Ambedkar (Dr Bhimrao Ramji Ambedkar, Volume I) that was first published in 1952. The library staff in the British Museum would tell Ambedkar that they had not seen a student like him who was immersed in his books and they also doubted if they would get to see one like him in the future!
The volume also contains a letter written by Ambedkar in German on February 25, 1921 to the University of Bonn seeking admission. Ambedkar wanted to study Sanskrit language and German philosophy in the varsity’s department of Indology. In school, Ambedkar was discriminated against on grounds of caste and not allowed to learn Sanskrit. He had to learn Persian instead. Ambedkar secured admission to Bonn University but had to return to London three months later to revise and complete his DSc thesis.
Ambedkar completed his DSc in 1923 under the guidance of Professor Edwin Cannan of the LSE on the problem of the rupee, which is described as a “remarkable piece of research on Indian currency, and probably the first detailed empirical account of the currency and monetary policy during the period”.
Ambedkar was among the first from India to pursue doctoral studies in economics abroad. He specialised in finance and currency. His ‘The Evolution of Provincial Finance in British India: A Study in the Provincial Decentralisation of Imperial Finance (1925)’, carried a foreword by Edwin R.A. Seligman, Professor of Economics, Columbia University, New York. Ambedkar also played a pivotal role in the conceptualisation and establishment of the Reserve Bank of India (RBI) in 1935.
Subscribe to India Today Magazine
IMAGES