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 ?

Option (A) — Aiding the flow of remittances from India and maintaining India's creditworthiness

• The Hilton-Young Commission (Royal Commission on Indian Currency and Finance, 1926) recommended fixing the rupee-sterling exchange rate at 1s 6d (1 Rupee = 1 shilling 6 pence).
• The primary purpose of this fixed exchange rate was to facilitate the smooth flow of Home Charges and remittances from India to Britain, and to maintain India's creditworthiness in international markets.
• Indian nationalists criticized this rate as being set too high, which made Indian exports costlier and imports cheaper, thereby draining India's wealth to Britain.
• The overvaluation of the rupee hurt Indian exporters and benefited British manufacturers who exported goods to India.

• a. Aiding the flow of remittances from India and maintaining India's creditworthiness: Correct. The fixed rate ensured stable remittances (Home Charges) to Britain and maintained confidence in India's currency.
• b. Providing support to Indian importers: Incorrect. While a high rupee value indirectly helped importers, this was not the stated reason for the policy.
• c. Encouraging export of cotton produce from India: Incorrect. The overvalued rupee actually made Indian exports more expensive and less competitive.
• d. Preventing depreciation of the Rupee in terms of gold: Incorrect. This was not the primary reason; the policy was about sterling-rupee parity for facilitating British financial interests.