UPSC Prelims 2026 · Question 12 of 96
UPSC Prelims 2026 question on Hilton Young Commission
- ExamUPSC CSE
- Year2026
- PaperGeneral Studies Paper I
- SubjectModern History
- TopicEconomic Policies of British
- DifficultyMedium
- TypeDirect
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?
Show answer
Answer: A. Aiding the flow of remittances from India and maintaining India's creditworthiness
The Hilton-Young Commission recommended fixing the rupee-sterling exchange rate at 1 shilling and 6 pence, a policy subsequently adopted by the British government to serve imperial financial interests. The primary objective was to facilitate the uninterrupted transfer of Home Charges - including pensions, administrative expenditures, interest payments and other obligations - from India to Britain, while preserving India's standing and creditworthiness in London's financial markets.
By maintaining a stable and relatively high exchange rate, the colonial administration ensured that remittances to Britain could be made smoothly and predictably. The policy also reassured British investors and creditors by strengthening confidence in India's ability to meet its financial commitments, thereby integrating the Indian economy more closely into the broader framework of imperial finance.
Hence option (a) is the correct answer.