Masses in India do NOT Trade. But SENSEX Economy is BOOSTED Victimising the Masses. SUBSIDY crisis is so much so hyped that Masses do seem convinced.No one is Bothered about Taxation and Fiscal Policy as Monetary EXERCISE is all about STIMULUS to Fre

Masses in India do NOT Trade. But SENSEX Economy is BOOSTED Victimising the Masses. SUBSIDY crisis is so much so hyped that Masses do seem convinced.No one is Bothered about Taxation and Fiscal Policy as Monetary EXERCISE is all about STIMULUS to Free Market Economy. Intense Information Campaign Justifies Reforms for Ethnic Cleansing. Fuel Prices in International market often come down. But Fuel Prices in India have to RISE only, NECVER to come down. No one is botheed about Rocketing Defence Expenditure and Fiscal defeicit due to BORROWING mandatory for FORGONE Taxes for the Ruling Market Dominating Class. Only Excluded Masses bear the BURN all on the name of Develpment and ridiculously, INCLUSION!Foreign investors could invest up to $10 billion in mutual funds: Finance minister!Indian markets ended on a firm note Monday as buying activity picked up in oil&gas stocks following hike in fuel prices. The Empowered Group of Ministers increased diesel prices by Rs 3 per litre, kerosene by Rs 2 per litre and LPG by Rs 50 per cylinder. The decline in international crude oil prices also boosted investor sentiments.  Indian shares performed the best in Asia on Friday after Europe pledged to rescue Greece, China hinted that it may be nearing the end of monetary tightening, and crude prices fell. Stocks rallied across the globe, but the government's late evening decision to raise diesel and cooking gas prices and investors' worry about the wobbly Italian finances may temper gains next week. Economic Times reports.Meanwhile,India, US to begin dialogue to boost trade, investment! Montek backs fuel hike, says inflation will last 3-4 months!


 

Indian Holocaust My Father`s Life and Time - SIX HUNDRED SIXTY NINE

Palash Biswas

http://indianholocaustmyfatherslifeandtime.blogspot.com/



http://basantipurtimes.blogspot.com/

Social Inequality and Exclusion

In every society some people have a greater share of valued resources-money, property, education, health and power than others. These social resources can be divided into three forms of capital-economic capital in the form of material assets and income; cultural capital such as educational qualifications and status; and social capital in the form of networks of contacts and social associations. Often these three forms of capital overlap and one can be converted into the other. For example a person from a well-off family can afford expensive higher education and so can acquire cultural or educational capital. Patterns of unequal access to social resources are commonly called social inequality. Social inequality reflects innate differences between individuals for example their varying abilities and efforts. Someone may be endowed with exceptional intelligence or talent or may have worked very hard to achieve their wealth and status. However by and large social inequality is not the outcome of innate or natural differences between people but is produced by the society in which they live.

Home	*
Unit Index Prejudices Stereotypes Discrimination Social Exclusion State initiatives Backward Classes Inequality & tribal Inequality & disabled Inequality & Gender

http://www.sociologyguide.com/socia_inequality_exclusion/index.php

Foreign investors could invest up to $10 billion in mutual funds: Finance minister
Montek backs fuel hike, says inflation will last 3-4 months!

India, US to begin dialogue to boost trade, investment!

The government on Monday said that foreign investors, other than FIIs, would be allowed to invest up to $10 billion in domestic mutual funds, a move that will help in moderating volatility in the capital marke!his class of investors called Qualified Foreign Investors (QFIs), but not Foreign Institutional Investors (FIIs), can invest money into domestic mutual funds through Unit Confirmation Receipts (DPs) or Depository Participant route, Joint Secretary (capital markets) in the finance ministry, Thomas Mathew , said.

QFIs could be individuals and bodies, including pension funds, and cumulatively they can invest up to $10 billion (about Rs 45,000 crore).

At present, only FIIs, sub-accounts registered with the market regulator SEBI and NRIs are allowed to invest in mutual fund schemes in the country.

Masses in India do NOT Trade. But SENSEX Economy is BOOSTED Victimising the Masses. SUBSIDY crisis is so much so hyped that Masses do seem convinced.No one is Bothered about Taxation and Fiscal Policy as Monetary EXERCISE is all about STIMULUS to Free Market Economy. Intense Information Campaign Justifies Reforms for Ethnic Cleansing. Fuel Prices in International market often come down. But Fuel Prices in India have to RISE only, NECVER to come down. No one is botheed about Rocketing Defence Expenditure and Fiscal defeicit due to BORROWING mandatory for FORGONE Taxes for the Ruling Market Dominating Class. Only Excluded Masses bear the BURN all on the name of Develpment and ridiculously, INCLUSION!Indian markets ended on a firm note Monday as buying activity picked up in oil&gas stocks following hike in fuel prices. The Empowered Group of Ministers increased diesel prices by Rs 3 per litre, kerosene by Rs 2 per litre and LPG by Rs 50 per cylinder. The decline in international crude oil prices also boosted investor sentiments.  Indian shares performed the best in Asia on Friday after Europe pledged to rescue Greece, China hinted that it may be nearing the end of monetary tightening, and crude prices fell. Stocks rallied across the globe, but the government's late evening decision to raise diesel and cooking gas prices and investors' worry about the wobbly Italian finances may temper gains next week. Economic Times reports.

India and the United States kick off what is billed as their "highest level" economic engagement here Monday with Finance Minister Pranab Mukherjee and US Treasury Secretary Timothy Geithner meeting top US and corporate honchos.

Backing the fuel price hike by the government, Montek Singh Ahluwalia, Deputy Chairman of Planning Commission told CNBC-TV18 that the increase was 'inevitable' as the global crude prices are at elevated levels.

The government on Friday announced a Rs 3 per litre hike in diesel, Rs 50 per cylinder increase in domestic LPG and Rs 2 per litre raise in kerosene rates. Also, it slashed import duty on petrol and diesel by 5%, did away with the import duty on crude oil and reduced the excise duty on diesel to Rs 2 per litre from Rs 4.60 a litre.

Commenting on the hike, Ahluwalia said, "The diesel price hike has been low and government has offset it by cutting the duties."

Amidst ongoing protest over the fuel price hike that is most likely to push inflation higher, Ahluwalia played down the inflation fears saying that the impact would be felt only for the next three to four months.

"If the hike wasn't announced the government's deficit would have been high leading to higher inflation in the longer term," he added.

While Mukherjee will focus on reassuring foreign investors that India continues to be an attractive investment destination, the US will push India to step up the pace of economic reforms to realise the full potential of one of the fastest-growing economies in the world.

India's focus is on business. During the two-day stay, the finance minister will hold meetings with business honchos and top US economic policy makers," as a finance ministry official told IANS in New Delhi.

"It would be good to reinvigorate the reforms process for India's continued growth prospects," US Treasury Under Secretary Lael Brainard told select Indian media, including IANS, in a briefing Friday on the US-India Economic and Financial Partnership meeting.

"Greater market access and retail multi-branding, those are all areas which matter," she said.

"There are a host of benefits for opening up the retail sector," ranging from more variety to cheaper cost to faster delivery of food products, she said suggesting that US companies had pioneered a lot of innovations and would like to participate in India's growth story.

The key focus of the meeting will be infrastructure development, capital markets reforms, cooperation on the Group of 20 efforts to reduce trade imbalances, and efforts to combat money laundering, Brainard said.

The partnership dialogue will have the "broadest representation" with top officials from both sides. Indian officials joining the talks include Mukherjee's chief economic advisor Kaushik Basu, economic affairs secretary R. Gopalan and Reserve Bank of India Governor Duvvuri Subbaro.

From the US side besides Geithner, key US economic policy makers joining the dialogue would be Federal Reserve Chairman Ben S. Bernanke and Securities and Exchange Commission Chairman Mary L. Schapiro.

Mukherjee and Geithner will join a moderated discussion Monday at the CII-Brookings Conference on US-India Economic and Financial Partnership. The event is being organised by the Confederation of Indian Industry (CII) and the US-based think tank.

Indian shares provisionally closed 2.9 percent higher on Friday, taking cues from firm global markets after Greece struck a deal for an austerity plan to avoid a debt default. Financials led the gains.

The 30-share BSE index provisionally ended up 2.86 percent, or 506.53 points, at 18,234.02, with 28 components advancing.

The Reserve Bank today said it will announce the first quarterly review of monetary policy on July 26.

This will be done in a meeting with the chief executives of major banks, RBI said in a statement.

In its mid quarterly review earlier this month, RBI raised key policy rates by 25 basis points in its effort to tame inflation.

The RBI has raised the short-term lending (repo) rate by 25 basis points to 7.50 per cent and the short-term borrowing (reverse repo) rate will move up by a similar margin to 6.5 per cent.

The rate hike was 10 time in the last 15 months as part of inflation containing measure.

Yuvraj Grover comments rightly on ET report! He writes:
Government does all things which are not to be trusted. Internationally oil prices are coming down, custom duties are reduced now, prices of diesel increased now, all looks topsy-turvy, seems no one is bothered about inflation, decisions are so much so delayed the impact is nil. Sqeeze the economy by monetary policies since common man do not understand all this, bothered about vegetable, eatables prices, milk prices and all other essential items prices are already up. Think Govt is making people use to such kind of inflation, once people are used to , no worries for them. Oil prices will come to $ 75,oo even then Govt will not reduce the oil prices, am sure. God knows where we are heading for???????

http://economictimes.indiatimes.com/markets/stocks/market-news/stock-market-wealth-grows-rs-157-lakh-crore/articleshow/8977066.cms


To begin with, $10 billion is the total ceiling on QFI investment in India but it is subject to review depending on response, Thomas Mathew said.

"SEBI will be the regulator for all investments for both routes," he said, adding the SEBI will issue necessary notification and framework by August 1.

Only KYC (know-your-customer) compliant retail foreign investors would be allowed to invest and the DPs will ensure proper KYC of QFIs as per the norms prescribed by SEBI, he said.

Besides, mutual funds would also undertake KYC of QFIs, he added.

He further said that one QFI can open one account in one of the qualified DPs and only QFIs from jurisdictions which are FATF (Financial Action Task Force) compliant would be eligible to invest in the MFs under the scheme.

The move follows the announcement of finance minister Pranab Mukherjee on the issue in the last Budget.

"Currently, only FIIs and the sub-account registered with the SEBI and NRIs are allowed to invest in the mutual fund schemes. To liberalise the portfolio investment route it has been decided to permit SEBI registered mutual funds to accept subscriptions from foreign investors who meet the KYC requirements for equity schemes," Mukherjee had said in the Budget speech.

"This would enable Indian mutual funds to have direct access to foreign investors and widen the class of foreign investors in India equity market," the finance minister had said.

The average assets managed by the MF industry, consisting of 40 players, stood at Rs 7,00,538 crore as of March 31, 2011.

Since it is going to be retail investment, it would be more stable than the FII money, Mathew said.

According to dealers, some short covering was seen in capital goods, banks and auto stocks ahead of June series F&O expiry. The fuel hike is likely to push inflation in double-digits which is above the comfort zone.

"We estimate the direct impact on headline inflation of the June 24 increase to be 0.6 percentage point (ppt), and an overall impact of 0.9 ppt for FY12. We therefore raise our WPI inflation forecast to 8.6%, with most of the increase likely in the near term. We project the July and August headline inflation numbers could be in the double digits, higher than expected, but we continue to expect inflation to peak in September," said Tushar Poddar, Chief India Economist, Goldman Sachs .

There's some concern for the rate-sensitive sectors in near-term as the Reserve Bank of India is expected to continue to hike interest rates.

"We maintain our view of 50bps of cumulative tightening by December-11, although the RBI's anti-inflationary stance could result in a further elongation of the rate tightening cycle," said Rohini Malkani, Economist, Citi India.

National Stock Exchange's Nifty closed at 5526.60, up 55.35 points or 1.01 per cent. The broader index touched a high of 5552.65 and low of 5434.25 in trade today.

Bombay Stock Exchange's Sensex was at 18412.41, up 171.73 points or 0.94 per cent. The 30-share index hit a high of 18494.11 and low of 18132.70 intraday.

BSE Capital Goods Index was up 1.75 per cent, BSE Bankex gained 1.61 per cent, BSE Auto Index moved 1.49 per cent higher and BSE Oil&gas Index advanced 1.40 per cent.

Bank of America Merrill Lynch has raised its target price on state-run oil marketing companies Indian Oil, Hindustan Petroleum and Bharat Petroleum. HPCL target price is increased to Rs 500 from Rs 441 per share, Oil India to Rs 1,756 from Rs 1,583, while BPCL's target price was raised to Rs 739 Rs 650.

Citigroup has said that the price hikes were well ahead of its expectations and upgraded state-run oil marketing companies including Indian Oil Corp , Hindustan Petroleum Corporation , Bharat Petroleum Corporation and Oil India to "buy" citing these companies stand out as clear near-term beneficiaries due to the sharply reduced under-recovery burden.

Power Grid Corporation (5.07%), BPCL (4.71%), ONGC (4.01%), Reliance Capital (3.57%) and Maruti (3.16%) were the major Nifty gainers.

Reliance Infrastructure (-1.13%), Grasim (-1.10%), DLF (-0.99%), Ambuja Cements (-0.75%) and ITC (-0.72%) were the top index losers.

Market breadth was positive on the NSE with 1669 gainers against 1212 losers.

Fuel hike unlikely to address concerns over OMC credit profile

The government decision to hike diesel, domestic cooking gas and kerosene prices and cut customs and excise duty will not be adequate to alleviate concerns over the credit profile of state-owned retailers, credit ratings agency ICRA said on Monday.

Icra senior vice president & co-head, corporate ratings, K Ravichandran said "concerns remain" on the government compensating retailers for losses incurred on selling auto and cooking fuel below cost.

"Uncertainty on diesel price deregulation and indirect control on the pricing of petrol" were also a concern.

Icra said diesel price deregulation looks unlikely in the near term because of soaring inflation.

"Consequently, regulatory risk will continue to weigh heavily on the credit risk profiles of PSU OMCs," it said.

"Because of the significant delay in the release of cash compensation, liquidity position of the public sector oil marketing companies (OMCs) has been negatively affected, resulting in increased reliance on short-term borrowings.

"Moreover, such high level of borrowings results in higher interest expenditure, which are not compensated in the existing under-recovery sharing mechanism," Icra said.

In response to soaring oil prices, the government on Friday announced a Rs 3 per litre hike in diesel, Rs 50 per cylinder increase in domestic LPG and Rs 2 per litre raise in kerosene rates. Also, it slashed import duty on petrol and diesel by 5 per cent, did away with the import duty on crude oil and reduced the excise duty on diesel to Rs 2 per litre from Rs 4.60 a litre.

"As a result of these measures, while the gross under-recoveries (or revenue loss) will fall by a modest amount (Rs 49,000 crore), the absolute level of gross under-recoveries will still remain sizeable (about Rs 120,000 crore) for FY2011-12," Icra said.

It said the "final under-recovery sharing mechanism that the government will be announcing during the course of the year will be critical to determine the profitability of the PSU oil marketing companies."

Because of the sheer size of the revenue loss, the share of government compensation (which till now has been around 50 per cent) and that from upstream companies (that has hovered around 33 per cent) will have to be higher than usual as the absorptive capacity of OMCs is limited by the modest profits.

"On the brighter side, import duty changes will translate to marginally higher import duty differential, leading to higher Gross Refining Margins (GRM)," it said.

Consequently, retailers with a higher product cover for marketing, such as IOC and BPCL, will stand to gain and will be able to partly mitigate the pressure on marketing profits.

27 JUN, 2011, 02.48AM IST, SHRUTI CHOUDHURY,ET BUREAU
Manufacturing set to get tax boost in new policy

NEW DELHI: The government plans to exempt the sale of a house or any other asset from capital gains tax if the proceeds are used to set up a business, hoping that such a concession in the proposed manufacturing policy would encourage people to turn entrepreneurs.

A committee of secretaries will meet Tuesday to give final shape to its planned national manufacturing policy, which proposes sops for small and medium businesses that aim to increase the sector's share in GDP to 25% by 2025 from the existing 16% and create over 100 million jobs.

"All individuals reinvest their capital gains; so, we are proposing to give capital gains exemptions to these SMEs, and hence encourage them to put (such gains) into venture capital funds or businesses instead of locking up funds in unproductive assets like housing," said a senior official of the Department of Industrial Policy (DIPP).

However, the proposal is facing resistance from the revenue department and the Central Board of Direct Taxes .

The incentive is akin to that available under sections 54 and 54E of the Income-Tax Act, 1961. Under section 54, capital gains tax is not levied if the proceeds from the sale of a residential house are used to purchase or construct another house.

"This is a step in the right direction to ease the financing woes of SMEs," said Federation of Indian Small and Medium Enterprises president V K Aggarwal .

National and Small Industries Corporation chairman-cum-managing director H P Kumar told ET: "Apart from enterprises, if investors could avail of the exemptions when they invest in the small enterprises, this would make SMEs an attractive destination for investments and help ease the credit crunch faced by them."

The policy has proposed several other incentives to make more finance available to SMEs, which contribute about 9% to the country's GDP and account for 45%-50% of its exports.

The policy has suggested capital gains tax exemption on investments in equity schemes or units of mutual funds that specifically target manufacturing SMEs, which account for 45% of India's factory output.

SMEs employed 69 million people in 2009-10, up 137% from 29 million in 2005-06, making the sector the second largest employer after agriculture.

DIPP says the tax relief would also help curb black money generation as there won't be any incentive left for sellers to under-report transactions. "This is also a far better way of checking black money as it will be an incentive for people to put money into the system instead of housing," the official told ET.

Much of India's black money is estimated to be parked in real estate. FICCI assistant secretary general Jyoti Vij says: "Obviously, with tax exemptions on capital gains, there will no longer be any incentive to hide your money and one can deploy funds in productive transparent assets, thereby bringing down cash exchanges."

Although the revenue department and CBDT say the policy is not feasible to implement, DIPP claims investments in factories and manufacturing are foolproof unlike housing transactions, which sometimes are not certified and hence lack transparency.
http://economictimes.indiatimes.com/news/economy/policy/manufacturing-set-to-get-tax-boost-in-new-policy/articleshow/9006995.cms


25 JUN, 2011, 06.24PM IST,ET BUREAU
Diesel price hike: Government's decision on fuel prices may temper market gains next week

MUMBAI: Indian shares performed the best in Asia on Friday after Europe pledged to rescue Greece, China hinted that it may be nearing the end of monetary tightening, and crude prices fell. Stocks rallied across the globe, but the government's late evening decision to raise diesel and cooking gas prices and investors' worry about the wobbly Italian finances may temper gains next week.

Twenty-eight of the 30 Sensex constituents rose, with top five stocks such as Infosys Technologies and State Bank of India leading the gains.

"The recent drop in commodity prices, including crude oil, and hope of settlement of the Greece issue have given comfort to investors, resulting in the bounceback of India's underperforming markets," said Aneesh Srivastava, chief investment officer, IDBI Federal Life Insurance.

The BSE's 30-share Sensex rose 513.64 points, or 2.89%, to 18,240.68, its first weekly gains this month. The NSE's 50-share Nifty gained 151.25 points, or 2.84%, to 5,471. Gainers outnumbered gainers 1,984:852 on the BSE.

Stocks advanced across the globe as investors cheered the European Union's commitment to bail out Greece if Prime Minister George Papandreou pushed through austerity measures. Chinese Premier Wen Jiabao wrote in Financial Times that prices are "within a controllable range" and may decline "steadily".

Crude oil eased after the International Energy Agency said members will release 60 million barrels, equivalent to three days of US demand, from strategic reserves. Goldman Sachs and CLSA cut price targets for crude. Stocks in Asia rose and were higher in Europe. The S&P Futures also gained.

The MSCI Emerging Markets Index was 1.1% above its previous close. "If crude prices continue to soften in the next few days, the market may add to its gains," said Sanjeev Zarbade, veep, Kotak Securities. India is among the 10 worst-performing global markets along with Tunisia and Egypt, falling 11%. Global investors, who poured $29 billion into Indian equities last year, have net invested just $52 million this year, lower than Pakistan's $72.8 million.

http://economictimes.indiatimes.com/markets/stocks/market-news/diesel-price-hike-governments-decision-on-fuel-prices-may-temper-market-gains-next-week/articleshow/8983989.cms


24 JUN, 2011, 10.54PM IST,PTI
Stock market wealth grows Rs 1.57 lakh crore

NEW DELHI: A sharp rally in the stock market today made the investors richer by more than Rs 1.57 lakh crore, as the benchmark index Sensex soared by more than 500 points.

The total investor wealth, measured in terms of cumulative market capitalisation of all listed companies, rose to Rs 65,67,848.15 crore -- up by Rs 1,57,357 crore from its yesterday's level.

More than half of this gain was contributed by the 30 Sensex companies alone, whose combined market value rose by Rs 78,051 crore without any contribution from Reliance Industries , the country's most valued firm and one of the biggest wealth creators traditionally.

Reliance shares in fact closed almost flat with a 0.03 per cent decline and the company's market value fell by Rs 85 crore to Rs 2,84,918 crore at BSE.

The only other Sensex stock to close in the red was Anil Ambani group firm Reliance Infra, which fell by 0.84 per cent.

Among the Sensex companies, the biggest gainers in terms of market value were Tata group's TCS and public sector lender SBI , both of which saw their market cap rising by more than Rs 8,000 crore each.

Public sector energy giant ONGC also saw its market value rising by more than Rs 7,000 crore, while Infosys and NTPC added more than Rs 5,000 crore each to their market wealth.

Other major gainers included HDFC (Rs 4,100 crore), ICICI Bank (Rs 3,500 crore), Bharti Airtel (Rs 3,500 crore), Wipro (Rs 3,400 crore), ITC (Rs 2,700 crore), HDFC Bank (Rs 2,300 crore), Tata Steel (Rs 2,100 crore), Hero Honda (Rs 2,100 crore) and Bhel (Rs 2,000 crore).

Tata Motors , HUL, M&M, Jindal Steel, Hindalco, Bajaj Auto and DLF also added more than Rs 1,000 crore to their respective market values, while gains were relatively smaller for companies like Tata Power, Cipla , Maruti Suzuki, Jaiprakash Associates and Reliance Communications .

The Sensex today rose by 513.19 points to close at 18240.68 points. This was the biggest one-day rally for the Sensex since March 1 and the second biggest rally in more than one year.

The Sensex had gained 623 points on March 1, while it had risen by 561.44 points on May 10, 2010.

27 JUN, 2011, 03.31PM IST,ET BUREAU
Nandan and Rohini Nilekani announce a gift of $11 mn to IIHS

BANGALORE: UIDAI Chairman , Nandan Nilekani and his wife Rohini Nilekani have announced a gift of $11 million to the Indian Institute for Human Settlements (IIHS) to fund its School of Environment and Sustainability . The institute is the first in the country that is being developed to look into urban affairs exclusively.

Their joint statement said, "IIHS is at the convergence of both our interests in education, urbanisation and sustainability. We are excited about contributing to an institution which will help people engage with new challenges in an innovative and interdisciplinary manner."

The institute had started a campaign to gather resources of around $67 million to fund five interdisciplinary Schools, one of South Asia's largest reference and digital libraries and other facilities for its Bangalore campus. Another $22 million will be raised for chair professorships.

Nilekani is also part of the team of thought leaders from diverse disciplines including HDFC's Deepak Satwalekar, Jamshyd Godrej and Vijay Kelkar who initiated the establishment of IIHS.

27 JUN, 2011, 03.53PM IST, GOURI AGTEY ATHALE,ET BUREAU
Educational institutes want Special Education Zones

PUNE: With manufacturing industry increasingly giving up on Special Economic Zones , or SEZs on the grounds that they have become unviable, there is another sector of the economy that would like SEZs. In their case, though, SEZs would stand for Special Education Zones .

"Creating a Special Education Zone will allow educational institutes to set up in a large area and then optimise common services such as auditoria, canteens, hostels or student accommodation, sports facilities," said Sanjay Chordia, chairman, Suryadatta Group, which runs a clutch of educational institutes.

Concurred Vidya Yeravadekar, prinicpal director, Symbiosis Society which runs educational institutes, saying, "According to government rules, every educational institute needs to reserve 40% of its plot for sports facilities. If we had an Educational Zone, we could all of us collectively set aside the space as part of the common facilities," adding, "I believe education is an industry and we plough our profits back into the business."

While Chordia went further, suggesting that such a cluster could also get one eminent person visiting all institutes, Tarita Shankar, head of the Indira Group of Institutes said this was not viable. "We cannot share eminent visiting faculty because that is part of our branding: that only our institute can bring a certain person. We will not share that branding and faculty with all the others," she said. She stressed the need to have a critical mass at one location in an Education Zone since it would also help in the eventual placement of students in industry.

"Such a zone has already been created in the Wakad area, where a huge number of educational institutes are already present," Ms Shankar said.

PC Kalkar of the Sinhagad Institutes, which runs schools, engineering and medical colleges, and Capt S Mahadkar, honorary secretary, All India Shri Shivaji Memorial Society, added that they need some government support in the form of quick clearances for infrastructure such as approach roads, water and other critical infrastructure. The rest they can do themselves, they indicated.
http://economictimes.indiatimes.com/news/news-by-industry/services/education/educational-institutes-want-special-education-zones/articleshow/9013164.cms

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	Globalization and Exclusion:The Indian Context By P. Radhkrishnan
	The concept of social exclusion in India dates back more than three millennia, enforced by the Hindu caste system. Modern India, though, now faces a fresh challenge to its efforts to stamp out institutionalized social exclusion. India sociologist P. Radhakrishnan explains how globalization is reinforcing some of the worst of India's social problems. While globalization is a recent phenomenon, social exclusion is both historical and contemporary. Therefore, in order to place globalization in perspective and understand its impact on persistent social exclusions and how it also results in new forms of exclusion, it is important to understand the so-called exclusion debate both in general and in the Indian context.
	SOCIAL EXCLUSION Social exclusion is used here to mean the systematic exclusion of individuals and groups from one or more dimensions of society, such as structures of power and privilege, opportunities and resources. Exclusion discourse in Europe has generally been concerned with social problems in the labor market thrown up by economic restructuring. It is this economic restructuring, and the resultant social transformation, that dismantled social bonds and support systems, undermined democracy and condemned large numbers of people to life in urban slums and collapsing rural communities, according to Noam Chomsky. Social exclusion in India cannot be captured by the Euro-centric approach and its labor market framework. The exclusion discourse in Indian society has to be understood against the backdrop of the caste system. Caste, traditional India's system of social ordering and control, is the most elaborate form of social stratification ever known. It has dominated the Indian sub-continent for about three millennia, and is also the most exhaustive and obnoxious of all exclusionary systems. Caste-exclusions are explicit in traditional society. Membership and status are determined by birth; there is a hierarchy of social precedence among the castes; there are restrictions on social and cultural intercourse between castes; castes are segregated and stratified with regard to civil and religious privileges; occupations are caste determined with relatively little choice allowed; restrictions on marriage outside one's sub-caste help maintain the system. (Ghurye, 1979: Chapter 1). Caste exclusions are writ large in the Manusmriti, or Laws of Manu, the fundamental work of Hindu law. It defines the duties and occupations ordained for the four chief castes, or Varnas. In its "dos" and "don'ts" it describes the treatment of women, mixed-castes and castes of "low origin," of which the most despised are Chandalas, the lowest untouchables. The rules are most glaring in the practice of untouchability, and the treatment of certain castes as "unapproachable" and "unseeable." As the structure of exclusion in India is very old, and still persists in different forms, at least three strands of exclusion discourse can be discerned, all directed against the discriminatory, oppressive, exploitative and exclusionary practices of the caste system (For an overview of this discourse, see Milton Singer and Bernard Cohn, 1968). The first are the protest movements that have been a feature of caste society since the sixth century B.C., when Buddhism and Jainism arose in opposition to Brahminism and the supremacy and socio-cultural hegemony of the Brahmins and related caste prejudices. The Bhakti movements in different parts of the country throughout the Middle Ages, and Veerasaivism in twelfth century Karnataka challenged the established hierarchy of caste in the name of social equality. The Brahmo Samaj founded by Rammohun Roy in Calcutta in 1828 repudiated caste, and established a brotherhood of men irrespective of caste or creed. The Satya Shodak Samaj, or society of truth-seekers, was founded by Jotiba Phule in Poona in 1873 and blamed the Hindu religion for social inequality, and the Brahmins for fabricating "sacred scriptures" to maintain their social dominance; the movement, which is still alive, asserted the worth of man irrespective of caste. The Hindu reform movement Arya Samaj was founded by Dayananda Saraswati in Bombay in 1875 and seeks to remove birth as the basis of hierarchy. It promoted inter-caste marriages, and encouraged admitting untouchables into mainstream society. Sri Narayana Guru, who was active in Kerala as a socio-religious reformer for four decades beginning in the 1890s, attacked the caste system, especially the supremacy of Brahmins, who had denied low caste Hindus the right to participate in Brahminic Hinduism. He exhorted his followers to reject differences based on caste and to work for the abolition of the caste system. B.R. Ambedkar, who described the caste system as a gradation of castes forming an ascending scale of reverence and a descending scale of contempt, advocated its outright annihilation. The political culture built by Ambedkar in articulating the socio-political rights of the untouchables culminated in the Constitutional provisions for formal equality to all and special dispensation (affirmative action) to the historically disadvantaged, in particular the Constitutionally recognized Scheduled Castes (SC), otherwise known as Dalits, and Scheduled Tribes (ST). Second, beginning in the early 19th century, caste came under severe attack by Christian missionaries like William Ward and Abbe Dubois, especially in the context of discrimination against lower castes and women. Ward (1822, Vol.1: 143-44) criticized the caste institution as one of the greatest scourges of Indian society, dooming 90 percent of the people even before birth to a state of mental and physical degradation. Both Ward and Dubois deplored the servitude of women, and their exclusion from learning. In one context Ward observed: "Like all other attempts to cramp the human intellect, and forcibly to restrain men within bounds which nature scorns to keep, this system, however specious in theory, has operated like the Chinese national shoe; it has rendered the whole nation cripples." (Op. Cit. 64) Third, from the second half of the 19th century the British administration also showed concern about various forms of exclusion in Indian society. This was mainly in the context of Brahmin dominance, Muslim alienation and the social isolation and backwardness of the lower castes and tribes. As a result, British educational and employment policies came to be characterized by concessions, communal representation and patronage politics. Since the 1950s, social exclusion in India has assumed a wider connotation, and discourse on it has had greater significance in political rhetoric, and among academics, more recently in writings on women, Dalits and other deprived groups. Exclusion discourse also gained new meaning in the 1990s with Prime Minister V. P. Singh's decision to implement the Mandal Commission report, which sought to increase affirmative action programs for the disadvantaged. The discourse now covers a wide range including emancipation politics, national justice and the empowerment of women and backward classes. The excluded social groups Those historically excluded in Indian society are broadly several social groups subsumed under the Scheduled Caste and Scheduled Tribe categories, the lower strata of caste-Hindus, women, Muslims and some Christians. Until the Constitution came into force in 1950, exclusion was enforced primarily by the traditional caste-based social order. This practice was legally abolished in the 1950s, though it still persists socially. The Constitution is, prima facie, anti-discriminatory, anti-exclusionary, anti-exploitative and anti-oppressive. It strikes at the roots of traditional caste and community-based prejudices, hierarchies and inequalities, and provides for legal remedies to reshape social patterns. Effective implementation of its provisions over the last six decades should have ushered in an inclusive, egalitarian society devoid of privileged high castes, despised low castes, entrenched backwardness and exclusionary practices. This has not happened.
	EXCLUSION AND GLOBALIZATION While social exclusion is an extreme form of vulnerability, it is also both a cause and consequence of it. Even as India struggles to grapple with this problem, the impact of globalization has made it worse. The globalization behemoth has added new dimensions to the vulnerability of India's downtrodden by exacerbating their social exclusion, and making large segments of other social groups also vulnerable and excluded. But before turning to these issues, it is necessary to place globalization in perspective. One way of understanding globalization is from its etymology. As globalization is "going global" and many things over the centuries have "gone global," it is pertinent to ask in the context of the ongoing globalization discourse, (a) what has gone global, (b) how it has gone global, (c) why it has gone global, and (d) why it has been causing so much commotion, concern and consternation. The answer to what has gone global is, as political scientist James Kurth (1999) would have it, that the United States — the sole superpower, "high-technology economy" and "universal nation" — has been leading the drive for globalization. On how it has gone global, more from Kurth: "It [the US] has done so by systematically pressing to remove any national barriers to the free movement of capital, goods and services. It has done so through the great international, now global, financial institutions, especially the International Monetary Fund, the World Bank and the World Trade Organization. And it has done so because it has the political, economic and military power to get its way. The triumphalist United States, which has reached the heights of being the sole superpower at the culmination of the "American Century" and at the end of the modern era, now seeks to lead the world into the globalized economy and the post-modern era." The answer to why it has gone global is partly evident from the above passage, but, as will be shown later, it is not the economy alone that is globalizing. As for why it has been causing so much commotion, concern and consternation — it is because unlike the earlier processes, the present one is a gargantuan juggernaut. On this, more from Kurth: "Globalization is often described as a process: steadily progressing over time, pervasively spreading over space and clearly inevitable in its development. But globalization is also a revolution, one of the most profound revolutions the world has ever known. Indeed, globalization is the first truly world revolution. All revolutions disrupt the traditions and customs of a people. Indeed, they threaten a people's very security, safety and even identity. The world revolution that is globalization in some measure threatens the security of every people on the globe." (Emphasis added.) It is only to be expected that the impact of such disruption and threat exacerbates the conditions of groups that are already excluded, vulnerable and are at the margins of society. This observation is particularly valid in the Indian context.
	FEATURES OF GLOBALIZATION Despite the accelerated pace of knowledge production under globalization, the nature of these changes and the nature of the related transformations in social and economic relations have not been understood adequately in their complexity and diversity, since many facets of globalization have only begun to unfold. However, it is possible to discern some of its features. These include: increasing economic and market capitalism and economic and market integration at a global level; increasing free global movement of capital, goods and services by removing national barriers, with the IMF, World Bank and WTO as its key instruments; the rise of the knowledge-technology revolution; and the need for countries to be knowledge-driven and market-driven to compete and survive in the new global scenario.
	MARKET DISCIPLINE VS. NANNY STATE All said, globalization is not global integration that breaks barriers among nations by turning the world into a "global village." On the contrary, it is an insidious agenda for perpetrating the hegemony of one country over the whole world, by force and fraud. In an interview with the Indian weekly, Outlook (January 3, 2000), Noam Chomsky observed: "The consensus of the rich and powerful is that the weak and defenseless should be subjected to market discipline, while the rich and powerful should continue to shelter under the wings of the nanny state … The global consensus is achieving its aims of enriching small sectors, dismantling social bonds and social support systems, and undermining democracy — one of the chief goals and consequences, of liberalizing capital flow… disposable people are being removed from society, either left in deteriorating urban slums and collapsing rural communities or sent to prison. Though crime rates have been declining, incarceration has sharply increased, targeting the poor and minorities by various devices, primarily, a 'drug war' that's recognized to be utterly fraudulent by serious criminologists, a consequence of a deliberate social policy designed to remove the superfluous population. Other industrial societies are proceeding along similar paths, though in different ways."
	MARKET CAPITALISM No matter how one perceives globalization, it is pervasive and brings under its sweep everything indispensable to individuals and societies. It covers culture, consumerism, economy, education, entertainment, media, natural resources, politics, productive forces, religion, society, state and what have you, with the market, knowledge and technology as driving forces. As globalization necessarily entails the fast-paced development of material and human resources, those developing countries that do not chant the globalization mantra are bound to be left behind by the developed countries. India is one such country.
	THE INDIAN CONTEXT Only a liberalized state can shape and sustain a liberalized economy in keeping with the needs of a growing democracy. The state, by creating and sustaining institutions that strive for equality, social justice and fairness, can cushion the shocks of social dislocation arising from a liberalized economy. But the Indian state has not brought about the required liberalization nor the needed structural transformation. In the absence of the state liberalizing its activities in vital social areas, economic liberalization has wrought havoc on India's economy and society. Having now been overrun by the newfangled capitalism of the liberalized economy, practically every state sector is devastated. If technology, the market and knowledge are seen as the drivers of globalization, India lacks all of them. Indian technology is way behind that of developed countries, and its development is confined to certain regions. The Indian market, whether for labor or commodities, is neither free, fair, nor participatory, as most traditionally excluded groups and many others are not equipped to participate. The state of India's knowledge industry is not any better.
	EXCLUSION IN GLOBALIZING INDIA Exclusion in the Indian context is complex, widespread and multi-layered. It may be the result of a lack of social and economic opportunity, as in the case of the urban poor, denial of legitimate social space thus causing social segregation and ghettoization, as in the case of the lower castes, or social insecurity, as in the case of Muslims. Of these, the plight of the urban poor and the lower castes is well known. The plight of Muslims was elaborated in the 2008 Sachar Committee report. (Government of India, 2006: 14-15). There are a great many manifestations of these new types of exclusion: Displacement: Exclusion may be the result of social uprooting by the state, as has been happening to tribal peoples due to development projects, special economic zones and displacement from traditional occupations caused by economic liberalization (read globalization). While such exclusion is not new, the "development project" as part of the globalization mission has accelerated the processes involved. The Sachar Committee dwelt at length on this in the context of economic liberalization and livelihoods (see Government of India, 2006: 21; also Radhakrishnan 2008). Fragmented labor: Exclusion may also be the result of the disappearance of well-organized industrial structures. Multinational corporations and their compradors in globalization have dismantled and replaced much local industry with business process outsourcing. In the process they have fragmented industrial labor and weakened the organizational ability and bargaining power of the working class. Educational deprivation: Exclusion also results from denial of access to education and employment, as in traditional Indian society, or lack of access to the education system and occupational structures for various reasons, especially the state's failure to provide free or affordable education and generate adequate employment opportunities in contemporary India. Whether in the traditional sense, in the context of globalization, or both, the need for universal higher education is a social imperative. In its Overview, the report of the 1997-99 Task Force on Higher Education in Developing Countries concluded that without more and better higher education, developing countries will find it increasingly difficult to benefit from the global knowledge-based economy. This report, Perils and Promise: Higher Education in Developing Countries, published in 2000, was prepared by the Task Force on Higher Education in Developing Countries, convened by the World Bank and UNESCO. The Task Force brought together experts from 13 countries to explore the future of higher education in the developing world. India's gross enrollment for tertiary education is only 9 percent to 11 percent, which is way behind the 54 percent to 85 percent in developed countries. Going by India's Census 2001, the overall share of graduates in the 20-24 age group is only about 8 percent. Of the six categories into which the Census 2001 classified the Indian population, degree holders in the 20-24 age group account for only 2.3 percent of the total population in this age group among the STs, 3.6 percent among the SCs, 4 percent among the Muslims, 7.4 percent among the Buddhists, 7.6 percent among the Sikhs, 9.8 percent among the caste-Hindus (Hindus excluding SCs and STs), and 11 percent among the Christians. Given this dismal scenario, and the fact that 54 percent of India's population is below age 25, it is only too obvious that the state has failed to grapple with the enormous task of educating India's rising generation in socially equitable and globally competitive ways. The problems of Indian education center on financing, equity and excellence. As these problems have been confounded by rapid globalization that requires only educated manpower, the traditionally excluded social groups, which are way behind the advanced groups in their access to education, are now victims of a double whammy. Their traditional deprivation keeps them away from education, and the demands of a knowledge-driven society under globalization leave them out of the mainstream because of their lack of education. Virtual communities: While lack of access to education in itself is a major exclusion of Indian youth from participating in and benefiting from opportunity structures, there are other forms of exclusion that neither the youth nor the elders seem to be aware of. Such exclusions include the educated as well. This refers to increasing participation in web-based virtual communities such as Facebook, Myspace, Orkut and Geni (for family networking) and the subsequent withdrawal from direct, personal interaction with real society. The result is a remaking and redefining of the social landscape. While this may give participants some immediate satisfaction, its effect is surreal, which, if it becomes widespread and an addiction, may gradually make society both morbid and moribund.
	CASTE-CLASS OVERLAP Though exclusion and related vulnerabilities in the traditional Indian context are seen in terms of groups, in the case of globalization it is necessary to go beyond groups and look at vulnerable populations as a broad class or category. A case in point is the devastation of India's agrarian sector by global companies with the resulting rural impoverishment, indebtedness and rise in farmers' suicides in a number of regions (see Radhakrishnan, 2006). This impact is not only on traditionally excluded social groups but also on many others, as caste and class overlap to a large extent. For instance, while the majority of the scheduled castes are agricultural laborers, the majority of agricultural laborers are not SCs. Here it is necessary to keep in mind the impact of globalization on rural and urban areas alike, with those in rural areas migrating to urban areas and ending up as insecure street vendors, daily wage workers or vagabonds.
	MIGRATION AND MISERY A case in point here are street vendors. In the absence of reliable data it may be difficult to treat them as part of any one traditionally excluded social group, though studies may reveal that they belong to more than one group. Going by one account, the total number of street vendors in India is about 10 million, accounting for 2 percent of the total urban population, with Mumbai and New Delhi having around 250,000 street vendors each, Kolkata around 150,000, Ahmedabad and Patna 80,000 each and the rest spread across the country. Though street vendors form a very important component of the urban informal sector in India, and the street-vendor economy absorbs millions in the job market, sustains industries and delivers basic necessities to the poor (Sharit Bhowmick, 2008), by the very nature of their work they are vulnerable and the wretched of the earth: "Despite their growing number and positive contributions to the urban economy, street vendors are regarded as illegal traders and encroachers. Their illegal status makes them vulnerable to rent seeking by the authorities (police and municipality) and extortion by local mafias. It's estimated that in Mumbai, around Rs 400 crore is collected as bribes annually from street vendors. In Delhi, a study by Manushi showed that the police and municipality collect Rs 50 crore every month from street vendors and cycle rickshaw pullers." (Ibid.) Far from improving their lot, globalization has only added to their misery: "The opposition to legalizing street vendors comes from several quarters. There are the so-called citizens groups and residents welfare organizations who view them as encroachers on public space; department stores and shopping malls that regard them as competition; and, finally, municipal and police officials who find it profitable to keep them as illegal entities. Despite such opposition, street vendors exist, eking out a precarious living on the margins of the economy." (Ibid.)
	LIVING BEHIND WALLS The negative impact of fast emerging "gated communities" for the wealthy in urban areas is obvious. Such communities shrink the traditionally available social space to people in general and the excluded in particular. Traditionally, human habitation has been horizontal — at ground level — though social relations involved hierarchies reflected in the geography of spatial habitations. These horizontal habitations created adequate avenues for social interaction, and, when necessary, social mobilization. Those who were not part of such habitations at least had access to the public space. "Gated communities" exclude by definition those outside the gate but also exclude the denizens inside from the dynamics of society and the social interaction such communities cannot provide. This is in some sense a symptom of a dying society.
	CONCLUSION While the foregoing sections have dealt with some aspects of exclusion and vulnerability in the context of globalization, the discussion is far from complete or comprehensive. There are different ways of doing this. One is by revisiting the exclusion discourse in the Indian context that was mentioned briefly at the beginning of this essay. Keeping that discourse in mind, it is important to point out that in India's development efforts there has been no coherent appreciation of social exclusion, and no integrated approach to combat exclusion, despite the fact that political rhetoric and policy documents take into account women, ethnic groups, backward classes, scheduled castes and scheduled tribes. Issues such as civil rights, poverty, untouchability, inequality and basic needs are all related to exclusion in some way but this fact is not well appreciated. Because exclusion is embedded in the way society functions, any approach to overcome it calls for understanding the role of societal processes and institutional structures in creating deprivation and exclusion. This assumes greater significance with the arrival of globalization. Since the notions of citizenship, and social, civil, and political rights are new to India, markets (whether labor or commodities) are not well developed, and India has hardly anything in the nature of a welfare system or safety net, the exclusion discourse and inclusion approach in India ought to focus on these issues. Exclusion operates at the level of individual, group, institution, locality, region and so on. It is both cultural and material, and is hierarchical in terms of needs and intensity. Therefore, there is a need for a disaggregated approach in understanding the patterns and processes of exclusion and the nature of the excluded, taking into account historical and contemporary disabilities, and problems of lack of integration of particular groups. Inadequate social and economic infrastructure in areas that have insufficient resources for participation in mainstream development also has been at the root of various "sub-national movements" such as the Jharkhand, Uttarkhand and Bodo-land. People respond to social exclusion in various ways, ranging from passivity to group action. Because of a long history of fatalism, which is embedded in the caste system, it is more often than not the case that the excluded themselves are not aware of their exclusion, and even if they are aware, they do not act. There is a need to raise awareness of exclusion, leading to mobilization and group action. Disadvantages arising out of exclusion in India take multiple forms — economic, educational, social, political and cultural — and are all deeply rooted in traditional society. Because combating social exclusion is meant to bring about social integration — a value-loaded term in the context of continuing caste, communal, ideological and political conflicts — one might ask: integration of whom, with whom, how and why? Because the mandate of the Indian Constitution is to usher in a secular, democratic, pluralist and egalitarian society, even though the caste-based social hierarchy still stifles this mandate, the answers to these questions would entail engagement with many related social problems. Central to such engagement is the need to enrich India's legislative and parliamentary practices, processes and discourses, thus separating religion from politics and governance, expanding the space for effective participation by those at the margins of society and strengthening "social justice" in order to enable the full and healthy growth of democracy. Because globalization, per se, is not development and has many socially harmful elements, globalization itself needs to be brought within the ambit of development; in which case the emphasis should be on development discourse, treating development as freedom — as Amartya Sen has done. Such a debate has not yet taken place. With globalization only part of a larger development project, its success or failure depends on how different nations draw up globalization road maps in the context of the larger development process. India's record on this so far has been dismal and disastrous. P. Radhakrishnan is Professor of Sociology at the Madras Institute of Development Studies, Chennai, India. His email address is prk1949@gmail.com and his official home page is http://www.mids.ac.in/prk.htm.
	References Ghurye, G.S. (1979). Caste and Race in India. Bombay. Popular Prakashan. Government of India (2006). "Social, Economic and Educational Status of the Muslim Community of India: A Report." James Kurth. (1999) "The Templeton Lecture on Religion and World Affairs". Foreign Policy Research Institute Wire, Religion and Globalization. Vol. 7, No. 7. May. James Petras and Henry Veltmeyer. (2001) Globalization Unmasked: Imperialism in the 21st Century. Zed Books. London. Radhakrishnan, P. (2008) "Muslim Backwardness and Sachar Report." South Asian Journal, No. 19, January-March. Radhakrishnan, P. (2007) "Academic Freedom in India." South Asian Journal, No. 18, September-December. Radhakrishnan, P. (2006) "Farmers' Suicides in India: Some Sociological Reflections." South Asian Journal. No. 11. January-March. Sharit K Bhowmick. (2008) "Urban Blessing, not Urban Blight." Tehelka. Vol. 5, Issue 8, March 1. William Ward. (1822) A View of the History, Literature, and Mythology of the Hindoos. Vol. 1. London, Kingsbury, Parbury, and Allen.
	*

http://globalasia.org/articles/issue9/iss9_14.html

MAINSTREAM, VOL XLVI, NO 19

Cultural Heterogeneity and Exclusion in India

Vivek Kumar
For some politicians it is difficult to understand India's diversity and appreciate it too. The lesson taught in our school days that there exists 'unity in diversity' in Indian society is taught even today in our schools and colleges. Although the slogan emerged at a particular point in time yet it is as relevant as it used to be in the past. However, very few know the basis of this 'unity of diversity' contained in this slogan, which was coined by British historian Vincent Smith and later on popularised by our first Prime Minister, Jawaharlal Nehru. The basis of unity is unique because it did not emerge out of similarity. Unity in this slogan does not mean uniformity. This unity is organic in nature, because this emerges from differences. Very much like the unity of different organs of the human body. As in an organism, although the organs of the body are different in their shape, size and function yet they contribute to the maintenance of the body; similarly in Indian society, there are so many social groups which are of different shape, size and perform different functions but they all contribute to the main-tenance of the Indian society.
Each group has contributed in its own capacity since time immemorial to running the country's economy, polity and society. For instance, a very small religious group like the Parsis has contributed in a significant way to the development of the country's economy and science and technology. This helped India to maintain its scientific capability. Who can forget the labour of the Sikhs of Punjab for producing tonnes to wheat to feed the country, of course with the help of the migrant Bihar and Uttar Pradeshi labour. The Dalits and tribals have contributed their labour, acting as landless agricultural and industrial labourers, in running the economy and polity of this country. Moreover, what is known as Indian art and culture today comprises Buddhist, Jain, Mughal and British architecture as well as Madhubani and tribal paintings. Can we forget the role of Abdul Rahim Khan-e-Khana and Raskhan in popularising the Hindi language? If Pandit Bhimsen Joshi, Pandit Jasraj have enriched the Indian classical singing the Dagar Brothers popularised the Dhrupad style of singing which starts with Sanskrit shlokas. The jugalbandi of Ustad Bismillha Khan's shehnai and tabla of Ustad Zakir Hussain take Indianmusic to different heights. This list can be unending but I think these examples are enough to make the point that it is the collective effort of Indians which runs the country.
HOWEVER, diversity is the reality of Indian society. But what we have to understand is that no one community has deliberately created this diversity. Rather, it is natural in nature. The Indian diversity has evolved through eight interrelarted and interconnected epochs. If we take the Indus valley civilisation as the starting point, then the first epoch of the Indian society starts with the advent of the Aryans, which created a hierarchical social order and hence the diversity. The second epoch comprises Jain and Buddhist revolutions. The advent of Islam both through Sufism, that is, through peaceful means, and the 'kings' conquests' is the fourth epoch. The coming of the Europeans, the British victory and the establishment of colonial rule mark the beginning of the fifth epoch in making India more diverse culturally and religion-wise. The trauma of partition of the country the transfer of huge populations on both sides of the artificial but political borders is the sixth epoch of Indian history. The commencement of our democratic Constitution along with the process of modernisation, which included the establishment of big industries and dams, can be termed as the seventh epoch in the making of India as we see it today. This epoch is significant because after centuries Indians got the identity of free citizenship. The different identities of region, religion, caste, etc. became subservient to this identity of the citizen, at least in the spheres of constitutional rights and state run programmes and policies. The eighth epoch in the making of contemporary India started with the process globalisation along with its sub-processes of liberalisation, privatisation and information revolution.
In turn these aforementioned epochs have given birth to diversities of different types. That is why people of all major religions of the world—Hinduism, Islam, Christianity, Sikhism, Buddhism, Jainism, Zoroastrianism, Bahai live in India. Along with these religious groups there are a number of sects and cults and other divisions in all the religions found in India. It is interesting to note all the religions are internally differentiated. Further, according to B.S. Guha's classification, people of six racial stocks live in India. However, linguist Grierson reported 179 languages and 544 dialects in India. However, according to the 1971 census there were 1652 languages spoken as mother tongue. Knowing fully well this linguistic diversity the framers of the IndianConstitution gave certain languages a co-national status. The Constitution of India now recognises 22 languages, spoken in different parts the country, namely, Assamese, Bengali, Bodo, Dogri, Gujarati, Hindi, Kannada, Kashmiri, Konkani, Maithili, Malayalam, Meitei, Marathi, Nepali, Oriya, Punjabi, Sanskrit, Santhali, Sindhi, Tamil, Telugu and Urdu. The intellectuals always play down the caste system as if it shows them the mirror of their so-called tolerant society. However, the reality is that Indian diversity becomes more acute because of the presence of approximately 6000 castes in it. The Mandal Commission alone listed 3743 castes plus there are 1000 Scheduled Castes well. If we add to these castes, sub-castes and sub-sub-castes, it is very difficult to comprehend this diversity. Although intellectuals keep on downplaying the existence of caste insociety, stressing on the difference between caste assertion and caste in Indianpolitics, there is 'caste in Indian politics', 'politics of caste' and caste-ism writ large in Indian society.
THE most worrisome aspect of this diversity in Indian society is that it is accompanied by exclusion as well. Although this exclusion because of different diversities is part and parcel of Indian society, it is not discussed among the masses in general and in classrooms in particular. We are told on and off about the unity in diversity but rarely are we told abot the hegemony in diversity. If we analyse the nature of the exclusions in Indian society we will find its different forms with different basis. There is exclusion on the basis of cultural heterogeneity. In this type of exclusion groups are excluded because they differ on the basis cultural diversities even though they belong to same country and religion. The cultural region becomes very important in this type of exclusion. But the positive aspect of this type of exclusions is that it is always temporary in nature. That is, it passes out quickly and is never successful in driving out the people en masse from the host society. The latest outburst of a politically naïve leader against the North Indians in Mumbai is one of the recent examples of such exclusion. We can observe ourselves that although the people from UP and Bihar are Indians and a majority of them belong to the same religious group, they are not welcome in the alien culture. However, it is certain that this politics of hate against North Indians will not last long and will die its own death. Nobody would have taken note of it had the media not aired it continually for several days. One can recall the Shiv Sena's example. It came to power on the plank 'Mumbai for Marathis' but soon its leadership added religious exclusion, which has a different basis. The leadership took a plank of the 'Hindu Hriday Samrat' for mobilisation and consolidation. Similarly, the allergy of the Dravidian parties in South India against Hindi did not last long as well. Both the Dravidian parties aligned with a party which swears in the name of Hindi and Hindutva.
In comparison to exclusion based on cultural heterogeneity the exclusion on the bases of gender, that is, between men and women, hierarchy and externality are more dangerous. Fifty per cent of the Indian population had been excluded because of gender only. Female foeticide is the latest form of eclusion. Further, around a quarter of the Indian population is excluded in Indian society on the basis of hierarchy, that is, on the basis of their caste. Here, especially in the case of ex-untouchables or Dalits, who are considered a part of the Hindu religion and belong to the same country, they are excluded from the main part of the village, certain occupations and day-to-day life interaction. They are now excluded from modern institutions like education, judiciary, bureaucracy, market and media. Another form of exclusion, which occurs in Indian society, is because certain people follow certain religious faiths which have a foreign origin. The exclusion of Muslims and Christians is the most glaring example. Even though they have been living here for generations and contribute with their labour in the process of nation-building, they are often told to got out of this country as they do not belong to this land. These types of exclusions are more permanent and harmful in nature. Their permanence is evident from the fact that in spite of a number of movements and campaigns since time immemorial they continue to survive and persist in society. Therefore, while celebrating diversity we should be more concerned about the exclusions based on gender, religion, caste and tribe. One should not worry too much about theexclusions emerging out of cultural heterogeneity. On the other hand the media should boycott such attempts of power hungry people creating hype to heighten the exclusions. The TV channels should be aware of the fact that, after all, India has survived all these years only celebrating its diversity and whosoever has tried to undermine this diversity for homogenisation has become history in due course of time.
The author is an Assistant Professor of Sociology, School of Social Sciences, Jawaharlal Nehru University, New Delhi.
http://www.mainstreamweekly.net/article661.html

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    Taxation in India

    From Wikipedia, the free encyclopedia

    This article needs additional citations for verification. Please help improve this article by adding reliable references. Unsourced material may be challenged and removed.(September 2007)

    Taxation An aspect of fiscal policy
    Policies[show]
    Economics[show]
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    International and trade[show]
    By Country[show]
    v · d · e

    Taxes in India are levied by the Central Government and the State Governments. Some minor taxes are also levied by the local authorities such the Municipality or the Local Council.

    The authority to levy a tax is derived from the Constitution of India which allocates the power to levy various taxes between the Centre and the State. An important restriction on this power is Article 265 of the Constitution which states that "No tax shall be levied or collected except by the authority of law."^[1]Therefore each tax levied or collected has to be backed by an accompanying law, passed either by theParliament or the State Legislature.

    Contents  [hide] 1 Central Board of Direct Taxes 2 Constitutionally established scheme of Taxation 2.1 Central government 2.2 State governments 3 Income Tax Act of 1961 3.1 Income tax rates 4 Service tax 5 Other Major Taxation Laws 6 See also 7 Reference list

    [edit]Central Board of Direct Taxes

    The Central Board of Direct Taxes (CBDT) is a part of the Department of Revenue in the Ministry of Finance, Government of India. The CBDT provides essential inputs for policy and planning of direct taxes in India and is also responsible for administration of the direct tax laws through Income Tax Department. The CBDT is a statutory authority functioning under the Central Board of Revenue Act, 1963.It is India's official FATF unit.

    [edit]Constitutionally established scheme of Taxation

    Article 246^[2] of the Indian Constitution, distributes legislative powers including taxation, between the Parliament and the State Legislature. Schedule VII^[3] enumerates these subject matters with the use of three lists;

    • List - I entailing the areas on which only the parliament is competent to make laws,
    • List - II entailing the areas on which only the state legislature can make laws, and
    • List - III listing the areas on which both the Parliament and the State Legislature can make laws upon concurrently.

    Separate heads of taxation are provided under lists I and II. There is no head of taxation in the Concurrent List (Union and the States have no concurrent power of taxation).^[4] The list of thirteen Union heads of taxation and the list of nineteen State heads are given below:^[4]

    [edit]Central government

    S. No.	Parliament
    1	Taxes on income other than agricultural income (List I, Entry 82)
    2	Duties of customs including export duties (List I, Entry 83)
    3	Duties of excise on tobacco and other goods manufactured or produced in India except (i) alcoholic liquor for human consumption, and (ii) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance included in (ii). (List I, Entry 84)
    4	Corporation Tax (List I, Entry 85)
    5	Taxes on capital value of assets, exclusive of agricultural land, of individuals and companies, taxes on capital of companies (List I, Entry 86)
    6	Estate duty in respect of property other than agricultural land (List I, Entry 87)
    7	Duties in respect of succession to property other than agricultural land (List I, Entry 88)
    8	Terminal taxes on goods or passengers, carried by railway, sea or air; taxes on railway fares and freight (List I, Entry 89)
    9	Taxes other than stamp duties on transactions in stock exchanges and futures markets (List I, Entry 90)
    10	Taxes on the sale or purchase of newspapers and on advertisements published therein (List I, Entry 92)
    11	Taxes on sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce (List I, Entry 92A)
    12	Taxes on the consignment of goods in the course of inter-State trade or commerce (List I, Entry 93A)
    13	All residuary types of taxes not listed in any of the three lists (List I, Entry 97)

    [edit]State governments

    S. No.	State Legislature
    1	Land revenue, including the assessment and collection of revenue, the maintenance of land records, survey for revenue purposes and records of rights, and alienation of revenues (List II, Entry 45)
    2	Taxes on agricultural income (List II, Entry 46)
    3	Duties in respect of succession to agricultural income (List II, Entry 47)
    4	Estate Duty in respect of agricultural income (List II, Entry 48)
    5	Taxes on lands and buildings (List II, Entry 49)
    6	Taxes on mineral rights (List II, Entry 50)
    7	Duties of excise for following goods manufactured or produced within the State (i) alcoholic liquors for human consumption, and (ii) opium, Indian hemp and other narcotic drugs and narcotics (List II, Entry 51)
    8	Taxes on entry of goods into a local area for consumption, use or sale therein (List II, Entry 52)
    9	Taxes on the consumption or sale of electricity (List II, Entry 53)
    10	Taxes on the sale or purchase of goods other than newspapers (List II, Entry 54)
    11	Taxes on advertisements other than advertisements published in newspapers and advertisements broadcast by radio or television (List II, Entry 55)
    12	Taxes on goods and passengers carried by roads or on inland waterways (List II, Entry 56)
    13	Taxes on vehicles suitable for use on roads (List II, Entry 57)
    14	Taxes on animals and boats (List II, Entry 58)
    15	Tolls (List II, Entry 59)
    16	Taxes on profession, trades, callings and employments (List II, Entry 60)
    17	Capitation taxes (List II, Entry 61)
    18	Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling (List II, Entry 62)
    19	Stamp duty (List II, Entry 63)

    Any tax levied by the government which is not backed by law or is beyond the powers of the legislating authority may be struck down as unconstitutional.

    [edit]Income Tax Act of 1961

    Main article: Income tax in India

    The major tax enactment in India is the Income Tax Act of 1961 passed by the Parliament, which imposes a tax on income of individuals and corporations.^[5] This Act imposes a tax on income under the following five heads:^[6]

    • Income from house and property,
    • Income from business and profession,
    • Income from salaries,
    • Income in the form of Capital gains, and
    • Income from other sources

    However, this Act is about to be repealed and be replaced with a new Act which consolidates the law relating to Income Tax and Wealth Tax, the new proposed legislation is called the Direct Taxes Code (to become the Direct Taxes Code, Act 2010). The new Act is purported to come into effect from 1 April 2012.

    [edit]Income tax rates

    In terms of the Income Tax Act, 1961, a tax on income is levied on individuals, corporations and body of persons. The rate of taxes are prescribed every year by the Parliament in the Finance Act, popularly called the Budget. In terms of the Finance Act, 2009, the rate of tax for individuals, HUF, Association of Persons (AOP) and Body of individuals (BOI) is as under;

    • A surcharge of 2.50% of the total tax liability is applicable in case the Payee is a Non-Resident or a Foreign Company; where the total income exceeds Rs 10,000,000.

    Note : -

    Education cess is applicable @ 3 per cent on income tax, inclusive of surcharge if there is any. A marginal relief may be provided to ensure that the additional IT payable, including surcharge, on excess of income over Rs 1,000,000 is limited to an amount by which the income is more than this mentioned amount.

    [edit]Service tax

    Service tax is a part of Central Excise in India.^[7] It is a tax levied on services provided in India, except the State of Jammu and Kashmir. The responsibility of collecting the tax lies with the Central Board of Excise and Customs(CBEC).

    The Finance Minister of India, Pranab Mukherjee in his Budget speech has indicated the government's intent of merging all taxes like Service Tax, Excise and VAT into a common Goods and Service Tax by the year 2011. To achieve this objective, the rate of Central Excise and Service Tax will be progressively altered and brought to a common rate.^{[citation needed]} In budget presented for 2008-2009 It was announced that all Small service providers whose turnover does not exceed Rs10 lakhs need not pay service tax.

    Circular No. 127/9/2010-ST, dated 16-8-2010 regarding Service tax on commercial training and coaching - Whether 'donation' is 'consideration'. A representation has been received seeking clarification whether donations and grants-in-aid received from different sources by a charitable Foundation imparting free livelihood training to the poor and marginalized youth, will be treated as 'consideration' received for such training and subjected to service tax under 'commercial training or coaching service'. 2. The matter has been examined. The important point here is regarding the presence or absence of a link between 'consideration' and taxable service. It is a settled legal position that unless the link or nexus between the amount and the taxable activity can be established, the amount cannot be subjected to service tax. Donation or grant-in-aid is not specifically meant for a person receiving such training or to the specific activity, but is in general meant for the charitable cause championed by the registered Foundation. Between the provider of donation/grant and the trainee there is no relationship other than universal humanitarian interest. In such a situation, service tax is not leviable, since the donation or grant-in-aid is not linked to specific trainee or training.

    [edit]Other Major Taxation Laws

    Other major taxation laws enacted by the Parliament are;

    1. Wealth Tax Act, which has a regular history of being passed and repealed;
    2. Service Tax, imposed under Finance Act, 1994, which taxes the provision of services provided by service providers within India or services imported by Indian from outside India;
    3. Central Excise Act, 1944, which imposes a duty of excise on goods manufactured or produced in India;
    4. Customs Act, 1962, which imposes duties of customs, counterveiling duties and anti-dumping duties on goods imported in India;
    5. Central Sales Tax, 1956, which imposes sales tax on goods sold in inter-state trade or commerce in India;
    6. Transaction Tax, which taxes transactions of sale of securities and other specified transactions;

    The major taxation enactments passed by the State Legislatures are in the nature of the following;

    1. Excise duties on tobacco, alcohol and narcotics;
    2. Sales tax, on sale of goods within the State;
    3. Stamp duties, on sale of property situated within the State;
    4. Entertainment taxes

    [edit]See also

    • Central Excise (India)
    • Union budget of India
    • Tax law
    • Direct taxes code

    [edit]Reference list

    1. ^ Article 265 of the Indian Constitution, retrieved 2009-04-18
    2. ^ Article 246 of the India Constitution, retrieved 2009-04-18
    3. ^ Seventh Schedule of the Indian Constitution, retrieved 2009-04-18
    4. ^ ^a b Distribution of Powers between Centre, States and Local Governments, retrieved 2009-04-18
    5. ^ Indian Income Tax Act, 1961, retrieved 2009-04-18
    6. ^ Section 14 of Income Tax Act, retrieved 2009-04-18
    7. ^ Service Tax in India

    Categories: Taxation in India

    
    

    
    

    THE PROBLEM OF THE RUPEE:

    ITS ORIGIN AND ITS SOLUTION

    (HISTORY OF INDIAN CURRENCY & BANKING)

    ________________________________________________________________________________________

     

    B. R. AMBEDKAR

    Sometime Professor of Political Economy at the Sydenham

    College of Commerce and Economics, Bombay.

     

    LONDON P. S. KING & SON, LTD. ORCHARD HOUSE, 2 & 4 GREAT SMITH STREET WESTMINSTER 1923

     

    DEDICATED TO THE MEMORY OF

    MY

    FATHER AND MOTHER

    AS A TOKEN OF MY ABIDING GRATITUDE FOR THE

    SACRIFICES THEY MADE AND THE ENLIGHTENMENT

    THEY SHOWED IN THE MATTER OF MY EDUCATION.

     

    Printed in Great Britain by Butler & Tanner Ltd., Frome and London

     

    Contents

     

    Preface To The Second Impression       

    Author's Preface     

    Foreword By Professor Edwin Cannan   

    Chapter I - From A Double Standard To A Sliver Standard     

    Chapter II- The Silver Standard And The Dislocation Of Its Parity 
    Chapter III- The Silver Standard And The Evils Of Its Instability        

    Chapter IV -Towards A Gold Standard    
    Chapter V - From A Gold Standard To A Gold Exchange Standard  

    Chapter VI - Stability Of The Exchange Standard        

    Chapter VII- A Return To The Gold Standard

    BIBLIOGRAPHY

     

    PREFACE TO THE SECOND IMPRESSION

    THE PROBLEM OF THE RUPEE was first published in 1923. Ever since its publication it has had a great demand : so great that within a year or two the book went out of print. The demand for the book has continued, but unfortunately I could not bring out a second edition of the book for the reason that my change-over from economics to law and politics left me no time to undertake such a task. I have, therefore, devised another plan : it is to bring out an up-to-date edition of the History of Indian Currency and Banking in two volumes, of which The Problem of the Rupee forms volume one. Volume two will contain the History of Indian Currency and Banking from 1923 onwards. What is therefore issued to the public now is a mere reprint of The Problem of the Rupee under a different name. I am glad to say that some of my friends who are engaged in the field of teaching economics have assured me that nothing has been said or written since 1923 in the field of Indian Currency which calls for any alteration in the text of The Problem of the Rupee as it stood in 1923. I hope this reprint will satisfy the public partially if not wholly. I can give them an assurance that they will not have to wait long for volume two. I am determined to bring it out with the least possible delay.

    B. R. AMBEDKAR

    Rajagraha, 

    Bombay,

    7-5-1947.

     

    PREFACE TO THE FIRST EDITION

    In the following pages I have attempted an exposition of the events leading to the establishment of the exchange standard and an examination of its theoretical basis.

    In endeavouring to treat the historical side of the matter, I have carefully avoided repeating what has already been said by others. For instance, in treating of the actual working of the exchange standard, I have contented myself with a general treatment just sufficiently detailed to enable the reader to follow the criticism I have offered. If more details are desired they are given in all their amplitude in other treatises. To have reproduced them would have been a work of supererogation; besides it would have only obscured the general trend of my argument. But in other respects, I have been obliged to take a wider historical sweep than has been done by other writers. The existing treatises on Indian currency do not give any idea, at least an adequate idea, of the circumstances which led to the reforms of 1893. I think that a treatment of the early history is quite essential to furnish the reader with a perspective in order to enable him to judge for himself the issues involved in the currency crisis and also of the solutions offered. In view of this, I have gone into that most neglected period of Indian currency extending from 1800 to 1893. Not only have other writers begun abruptly the story of the exchange standard, but they have popularised the notion that the exchange standard is the standard originally contemplated by the Government of India. I find that this is a gross error. Indeed, the most interesting point about Indian currency is the way in which the gold standard came to be transformed into a gold exchange standard. Some old, but by now forgotten, facts had therefore, to be recounted to expose this error.

    On the theoretical side, there is no book but that of Professor Keynes which makes any attempt to examine its scientific basis.

    But the conclusions he has arrived at are in sharp conflict with those of mine. Our differences extended to almost every proposition he has advanced in favour of the exchange standard. This difference proceeds from the fundamental fact, which seems to be quite overlooked by Professor Keynes, that nothing will stabilise the rupee unless we stabilise its general purchasing power. That the exchange standard does not do. That standard concerns itself only with symptoms and does not go to the disease : indeed, on my showing, if anything, it aggravates the disease.

    When I come to the remedy, I again find myself in conflict with the majority of those who like myself are opposed to the exchange standard. It is said that the best way to stabilise the rupee is to provide for effective convertibility into gold. I do not deny that this is one way of doing it. But, I think, a far better way would be to have an inconvertible rupee with a fixed limit of issue. Indeed, if I had any say in the matter, I would propose that the Government of India should melt the rupees, sell them as bullion and use the proceeds for revenue purposes and fill the void by an inconvertible paper. But that may be too radical a proposal, and I do not therefore press for it, although I regard it as essentially sound. in any case, the vita! point is to close the Mints, not merely to the public, as they have been, but to the Government as well. Once that is done, I venture to say that the Indian currency, based on gold as legal tender with a rupee currency fixed in issue, will conform to the principles embodied in the English currency system.

    It will be noticed that I do not propose to go back to the recommendations of the Fowler Committee. All those, who have regretted the transformation of the Indian currency from a gold standard to a gold exchange standard, have held that everything would have been all right if the Government had carried out in toto the recommendations of that Committee. I do not share that view. On the other hand, I find that the Indian currency underwent that transformation because the Government carried out those recommendations. While some people regard that Report as classical for its wisdom, I regard it as classical for its nonsense. For I find that it was this Committee which, while recommending a gold standard, also recommended and thereby perpetuated the folly of the Herschell Committee, that Government should coin rupees on its own account according to that most naive of currency principles, the requirements of the public, without realising that the latter recommendation was destructive of the former. Indeed, as I argue, the principles of the Fowler Committee must be given up, if we are to place the Indian currency on a stable basis.

    I am conscious of the somewhat lengthy discussions on currency principles into which I have entered in treating the subject. My justification of this procedure is two-fold. First of all, as I have differed so widely from other writers on Indian currency, I have deemed it necessary to substantiate my view-point, even at the cost of being charged with over-elaboration. But it is my second justification, which affords me a greater excuse. It consists in the fact that I have written primarily for the benefit of the Indian public, and as their grasp of currency principles does not seem to be as good as one would wish it to be, an over-statement, it will be agreed, is better than an understatement of the argument on which I have based my conclusions.

    Up to 1913, the Gold Exchange Standard was not the avowed goal of the Government of India in the matter of Indian Currency, and although the Chamberlain Commission appointed in that year had reported in favour of its continuance, the Government of India had promised not to carry its recommendations into practice till the war was over and an opportunity had been given to the public to criticize them. When, however, the Exchange Standard was shaken to its foundations during the late war, the Government of India went back on its word and restricted, notwithstanding repeated protests, the terms of reference to the Smith Committee to recommending such measures as were calculated to ensure the stability of the Exchange Standard, as though that standard had been accepted as the last word in the matter of Indian Currency. Now that the measures of the Smith Committee have not ensured the stability of the Exchange Standard, it is given to understand that the Government, as well as the public, desire to place the Indian Currency System on a sounder footing. My object in publishing this study at this juncture is to suggest a basis for the consummation of this purpose.

    I cannot conclude this preface without acknowledging my deep sense of gratitude to my teacher, Prof. Edwin Cannan, of the University of London (School of Economics). His sympathy towards me and his keen interest in my undertaking have placed me under obligations which I can never repay. I feel happy to be able to say that this work has undergone close supervision at his hands, and although he is in no way responsible for the views I have expressed. I can say that his severe examination of my theoretic discussions has saved me from many an error. To Professor Wadia, of Wilson College, I am thankful for   cheerfully undertaking the dry task of correcting the proofs.

     

     

    FOREWORD

    BY PROFESSOR EDWIN CANNAN

    I am glad that Mr. Ambedkar has given me the opportunity of saying a few words about his book.

    As he is aware, I disagree with a good deal of his criticism. In 1893, I was one of the few economists, who believed that the rupee could be kept at a fixed ratio with gold by the method then proposed, and I did not fall away from the faith when some years elapsed without the desired fruit appearing (see Economic Review, July 1898, pp. 400—403). I do not share Mr. Ambedkar's hostility to the system, nor accept most of his arguments against it and its advocates. But he hits some nails very squarely on the head, and even when I have thought him quite wrong, I have found a stimulating freshness in his views and reasons. An old teacher like myself learns to tolerate the vagaries of originality, even when they resist "severe examination " such as that of which Mr. Ambedkar speaks.

    In his practical conclusion, I am inclined to think, he is right. The single advantage, offered to a country by the adoption of the gold-exchange system instead of the simple gold standard, is that it is cheaper, in the sense of requiring a little less value in the shape of metallic currency than the gold standard. But all that can be saved in this way is a trifling amount, almost infinitesimal, beside the advantage of having a currency more difficult for administrators and legislators to tamper with. The recent experience both of belligerents and neutrals certainly shows that the simple gold standard, as we understood it before the war, is not fool-proof, but it is far nearer being fool-proof and knave-proof than the gold-exchange standard. The percentage of administrators and legislators who understand the gold  standard is painfully small, but it is and is likely to remain ten or twenty times as great as the percentage which understands the gold-exchange system. The possibility of a gold-exchange system being perverted to suit some corrupt purpose is very considerably greater than the possibility of the simple gold standard being so perverted.

    The plan for the adoption of which Mr. Ambedkar pleads, namely that all further enlargement of the rupee issue should be permanently prohibited, and that the mints should be open at a fixed price to importers or other sellers of gold, so that in course of time India would have, in addition to the fixed stock of rupees, a currency of meltable and exportable gold coins, follows European precedents. In eighteenth-century England the gold standard introduced itself because the legislature allowed the ratio to remain unfavourable to the coinage of silver: in nineteenth-century France and other countries it came in because the legislatures definitely closed the mints to silver, when the ratio was favourable to the coinage of silver. The continuance of a mass of full legal tender silver coins beside the gold would be nothing novel in principle, as the same thing, though on a somewhat smaller scale, took place in France, Germany, and the United States.

    It is alleged sometimes that India does not want gold coins. I feel considerable difficulty in believing that gold coins of suitable size would not be convenient in a country with the climate and other circumstances of India. The allegation is suspiciously like the old allegation that the "Englishman prefers gold coins to paper," which had no other foundation than the fact that the law prohibited the issue of notes for less than £ 5 in England and Wales, while in Scotland, Ireland, and almost all other English-speaking countries, notes for £ 1 or Less were allowed and circulated freely. It seems much more likely that silver owes its position in India to the decision, which the Company made before the system of standard gold and token silver was accidentally evolved in 1816 in England, and long before it was understood, and that the position has been maintained, not because Indians dislike gold, but because Europeans like it so well that they cannot bear to part with any of it.

    This reluctance to allow gold to go to the East is not only despicable from an ethical point of view. It is also contrary to the economic interest not only of the world at large, but even of the countries, which had a gold standard before the war and have it still or expect soon to restore it. In the immediate future, gold is not a commodity, the use of which it is desirable for these countries either to restrict or to economize. From the closing years of last century it has been produced in quantities much too large to enable it to retain its purchasing power and thus be a stable standard of value, unless it can constantly be finding existing holders willing to hold larger stocks, or fresh holders to hold new stocks of it. Before the war, the accumulation of hoards by various central banks in Europe took off a large part of the new supplies and prevented the actual rise of general prices being anything like what it would otherwise have been, though it was serious enough. Since the war, the Federal Reserve Board, supported by all Americans who do not wish to see a rise of prices, has taken on the new " White Man's Burden " of absorbing the products of the gold mines, but just as the United States failed to keep up the value of silver by purchasing it, so she will eventually fail to keep up the value of gold. in spite of the opinion of some high authorities, it is not at all likely that a renewed demand for gold reserves by the central banks of Europe will come to her assistance. Experience must gradually be teaching even the densest of financiers that the value of paper currencies is not kept up by stories of " cover " or " backing " locked up in cellars, but by due limitation of the supply of the paper. With proper limitation, enforced by absolute convertibility into gold coin which may be freely melted or exported, it has been proved by theory and experience that small holdings of gold are perfectly sufficient to meet all internal and international demands. There is really more chance of a great demand from individuals than from the banks. It is conceivable that the people of some of the countries, which have reduced their paper currency to a laughing stock, may refuse all paper and insist on having gold coins. But it seems more probable that they will be pleased enough to get better paper than they have recently been accustomed to, and will not ask for hard coin with sufficient insistence to get it. On the whole, it seems fairly certain that the demand of Europe and European-colonised lands for gold will be less rather than greater than before the war, and that it will increase very slowly or not at all.

    Thus, on the whole, there is reason to fear a fall in the value of gold and a rise of general prices rather than the contrary.

    One obvious remedy would be to restrict the production of gold by international agreement, thus conserving the world's resources in mineral for future generations. Another is to set up an international commission to issue an international paper currency so regulated in amount as to preserve an approximately stable value. Excellent suggestions for the professor's classroom, but not, at present at any rate nor probably for some considerable period of time, practical politics.

    A much more practical way out of the difficulty is to be found in the introduction of gold currency into the East. If the East will take a large part of the production of gold in the coming years it will tide us over the period which must elapse before the most prolific of the existing sources are worked out. After that we may be able to carry on without change or we may have reached the possibility of some better arrangement.

    This argument will not appeal to those who can think of nothing but the extra profits which can be acquired during a rise of prices, but I hope it will to those who have some feeling for the great majority of the population, who suffer from these extra and wholly unearned profits being extracted from them. Stability is best in the long run for the community.

                                                                EDWIN CANNAN.

                                                                                                                                               

    THE PROBLEM OF THE RUPEE:

    ITS ORIGIN AND ITS SOLUTION

    (HISTORY OF INDIAN CURRENCY & BANKING)

    ________________________________________________________________________________________

     

    CHAPTER I

    FROM A DOUBLE STANDARD TO A SILVER STANDARD

    Trade is an important apparatus in a society, based on private property and pursuit of individual gain ; without it, it would be difficult for its members to distribute the specialised products of their labour. Surely a lottery or an administrative device would be incompatible with its nature. Indeed, if it is to preserve its character, the only mode for the necessary distribution of the products of separate industry is that of private trading. But a trading society is unavoidably a pecuniary society, a society which of necessity carries on its transactions in terms of money. In fact, the distribution is not primarily an exchange of products against products, but products against money. In such a society, money therefore necessarily becomes the pivot on which everything revolves. With money as the focusing-point of all human efforts, interests, desires and ambitions, a trading society is bound to function in a regime of price, where successes and failures are results of nice calculations of price-outlay as against price-product.

    Economists have no doubt insisted that "there cannot... be intrinsically a more significant thing than money," which at best is only " a great wheel by means of which every individual in society has his subsistence, conveniences and amusements regularly distributed to him in their proper proportions." Whether or not money values are the definitive terms of economic endeavour may well be open to discussion.^[f1] But this much is certain, that without the use of money this "distribution of subsistence, conveniences and amusements," far from being a matter of course, will be distressingly hampered, if not altogether suspended. How can this trading of products take place without money ? The difficulties of barter have ever formed an unfailing theme with all economists, including those who have insisted that money is only a cloak. Money is not only necessary to facilitate trade by obviating the difficulties of barter, but is also necessary to sustain production by permitting specialisation. For, who would care to specialise if he could not trade his products for those of others which he wanted ? Trade is thehandmaid of production, and where the former cannot flourish the latter must languish. It is therefore evident that if a trading society is not to be out of gear and is not to forego the measureless advantages of its automatic adjustments in the great give-and-take of specialised industry, it must provide itself with a sound system of money.^[f2]

    At the close of the Moghul Empire, India, judged by the standards of the time, was economically an advanced country. Her trade was large, her banking institutions were well developed, and credit played an appreciable part in her transactions. But a medium of exchange and a common standard of value were among others the most supreme desiderata in the economy of the Indian people when they came, in the middle of the eighteenth century, under the sway of the British. Before the occurrence of this event, the money of India consisted of both gold and silver. Under the Hindu emperors the emphasis was laid on gold, while under the Mussalmans silver formed a large part of the circulatingmedium^.[f3] Since the time of Akbar, the founder of the economic system of the Moghul Empire in India, the units of currency had been the gold mohur and the silver rupee. Both coins, the mohur and the rupee, were identical in weight, i.e., 175 grs. Troy[f4] and were "supposed to have been coined without any alloy, or at least intended to be so."§[f5] But whether they constituted a single standard of value or not is a matter of some doubt. It is believed that the mohur and the rupee, which at the time were the common measure of value, circulated without any fixed ratio of exchange between them. The standard, therefore, was more of the nature of what Jevons called a parallel standard^[f6] than a double standard^[f7] That this want of ratio could not have worked without some detriment in practice is obvious. But it must be noted that there existed an alleviating circumstance in the curious contrivance by which the mohur and the rupee, though unrelated to each other, bore a fixed ratio to the dam, the copper coin of the Empire.^[f8] So that it is permissible to hold that, as a consequence of being fixed to the same thing, the two, the mohur and the rupee, circulated at a fixed ratio.

    In Southern India, to which part the influence of the Moghuls had not extended, silver as a part of the currency system was quite unknown. The pagoda, the gold coin of the ancient Hindu kings, was the standard of value and also the medium of exchange, and continued to be so till the time of the East India Company.

    The right of coinage, which the Moghuls always held as Inter jura Majestatis^[f9] be it said to their credit, was exercised with due sense of responsibility. Never did the Moghul Emperors stoop to debase their coinage. Making allowance for the imperfect technology of coinage, the coins issued from the various Mints, situated even in the most distant parts of their Empire[f10], did not materially deviate from the standard. The table below of the assays of the Moghul rupees shows how the coinage throughout the period of the Empire adhered to the standard weight of 175 grs. pure.*[f11]

    Name of the Rupee	Weight in pure Grs.	Name of the Rupee	Weight in pure Grs.
    Akbari of Lahore	175.0	Delhi Sonat	175.0
    Akbari of Agra	174.0	Delhi Alamgir	175.0
    Jehangiri of Agra	174.6	Old Surat	174.0
    Jehangiri of Allahabad	173.6	Murshedabad	175.9
    Jehangiri of Kandhar	173.9	Persian Rupee of 1745	174.5
    Shehajehani of Agra	175.0	Old Dacca	173.3
    Shehajehani ofAhmedabad	174.2	Muhamadshai	170.0
    Shehajehani of Delhi	174.2	Ahmadshai	172.8
    Shehajehani of Delhi	175.0	Shaha Alam (1772)	175.8
    Shehajehani of Lahore	174.0

     

    So long as the Empire retained unabated sway, there was advantage rather than danger in the plurality of Mints, for they were so many branches of a single department governed by a single authority. But with the disruption of the Moghul Empire into separate kingdoms these branches of the Imperial Mint located at different centres became independent factories for purposes of coinage. In the general scramble for independence which followed the fall of the Empire, the right to coinage, as one of the most unmistakable insignia of sovereignty, became the right most cherished by the political adventurers of the time. It was also the last privilege to which the falling dynasties clung, and was also the first to which the adventurers rising to power aspired. The result was that the right, which was at one time so religiously exercised, came to be most wantonly abused. Everywhere the Mints were kept in full swing, and soon the country was filled with diverse coins which, while they proclaimed the incessant rise and fall of dynasties, also presented bewildering media of exchange. If these money-mongering sovereigns had kept up their issues to the original standard of the Moghul Emperors, the multiplicity of coins of the same denomination would not have been a matter of much concern. But they seemed to have held that as the money used by their subjects was made by them, they could do what they liked with their own, and proceeded to debase their coinage to the extent each chose without altering the denominations. Given the different degrees of debasement, the currency necessarily lost its primary quality of general and ready acceptability.

    The evils consequent upon such a situation may well be imagined. When the contents of the coins belied the value indicated by their denomination they became mere merchandise, and there was no more a currency by tale to act as a ready means of exchange. The bullion value of each coin had to be ascertained before it could be accepted as a final discharge of obligations.^[f12] The opportunity for defrauding the poor and the ignorant thus provided could not have been less^[f13] than that known to have obtained in England before the great re-coinage of 1696. This constant weighing, valuing, and assaying the bullion contents of coins was, however, only one aspect in which the evils of the situation made themselves felt. They also presented another formidable aspect. With the vanishing of the Empire there ceased to be such a thing as an Imperial legal tender current all through India. In its place there grew up local tenders current only within the different principalities into which the Empire was broken up. Under such circumstances exchange was not liquidated by obtaining in return for wares the requisite bullion value from the coins tendered in payment. Traders had to be certain that the coins were also legal tender of their domicile. The Preamble to the Bengal Currency Regulation XXXV, of 1793, is illuminating on this point. It says :—

    "The principal districts in Bengal, Bihar and Orissa, have each a distinct silver currency.................. which are the standard measure of value in all transactions in the districts in which they respectively circulate.

    " In consequence of the Ryots being required to pay their rent in a particular sort of rupee they of course demanded it from manufacturers in payment of their grain, or raw materials, whilst the manufacturers, actuated by similar principles with the Ryots, required the same species of rupee from the traders who came to purchase their cloth or their commodities.

    " The various sorts of old rupees, accordingly, soon became the established currency of particular districts, and as a necessary consequence the value of each rupee was enhanced in the district in which it was current, for being in demand for all transactions. As a further consequence, every sort of rupee brought into the district was rejected from being a different measure of value from that by which the inhabitants had become accustomed to estimate their property, or, if it was received, a discount was exacted upon it, equal to what the receiver would have been obliged to pay upon exchanging it at the house of a shroff for the rupee current in the district, or to allow discount upon passing it in payment to any other individual.

    " From this rejection of the coin current in one district when tendered in payment in another, the merchants and traders and the proprietors and cultivators of land in different parts of the country, are subjected in their commercial dealings with each other to the same losses by exchange, and all other inconveniences that would necessarily result were the several districts under separate and independent governments, each having a different coin."

    Here was a situation where trade was reduced to barter, whether one looks upon barter as characterised by the absence of a common medium of exchange or by the presence of a plurality of the media of exchange ; for in any case, it is obvious that the want of a "double coincidence " must have been felt by people engaged in trade. One is likely to think that such could not have been the case as the medium was composed of metallic counters. But it is to be remembered that the circulating coins on India, by reason of the circumstance attendant upon the diversity in their fineness and legal tender, formed so many different species that an exchange against a particular species did not necessarily close the transaction; the coin must, in certain circumstances, have been only an intermediate to be further bartered against another, and so on till the one of the requisite species was obtained. This is sufficient indication that society had sunk into a state of barter. If this alone was the flaw in the situation, it would have been only as bad as that of international trade under diversity of coinages. But it was further complicated by the fact that although the denomination of the coins was the same, their metallic contents differed considerably. Owing to this, one coin bore a discount or a premium in relation to another of the same name. In the absence of knowledge as to the amount of premium or discount, every one cared to receive a coin of the species known to him and current in his territory. On the whole, the obstacles to commerce arising from such a situation could not have been less than those emanating from the mandate of Lycurgus, who compelled the Lacedaemonians to use iron money in order that its weight might prevent them from overmuch trading. The situation, besides being irritating, was aggravated by the presence of an element of gall in it. Capital invested in providing a currency is a tax upon the productive resources of the community. Nevertheless, wrote James Wilson ^[f14]no one would question "that the time and labour which are saved by the interposition of coin, as compared with a system of barter, form an ample remuneration for the portion of capital withdrawn from productive sources, to act as a single circulator of commodities, by rendering the remainder of the capital of the country so much the more productive." What is, then, to be said of a monetary system which did not obviate the evil consequences of barter, although enormous capital was withdrawn from productive sources, to act as a single circulator of commodities ? Diseased money is worse than want of money. The latter at least saves the cost. But society must have money, and it must be good money, too. The task, therefore, of evolving good money out of bad money fell upon the shoulders, of the English East India Company, who had in the meanwhile succeeded to the Empire of the Moghuls  in India.

    The lines of reform were first laid down by the Directors of the Company in their famous Dispatch, dated April 25, 1806,^[f15] to the authorities administering their territories in India. In this historic document they observed :—

    "17. It is an opinion supported by the best authorities, and proved by experience, that coins of gold and silver cannot circulate as legal tenders of payment at fixed relative values...... without loss; this loss is occasioned by the fluctuating value of the metals of which the coins are formed. A proportion between the gold and silver coin is fixed by law, according to the value of the metals, and it may be on the justestprinciples, but owing to the change of circumstances gold may become of greater value in relation to silver than at the time the proportion was fixed, it therefore becomes profitable to exchange silver or gold, so the coin of that metal is withdrawn from circulation; and if silver should increase in its value in relation to gold, the same circumstances would tend to reduce the quantity of silver coin in circulation. As it is impossible to prevent the fluctuation in the value of the metals, so it is also equally impracticable to prevent the consequences thereof on the coins made from these metals....... To adjust the relative values of gold and silver coin according to the fluctuations in the values of the metals would create continual difficulties, and the establishment of such a principle would of itself tend to perpetuate inconvenience and loss."

    They therefore declared themselves in favour of monometalism as the ideal for the Indian currency of the future, and prescribed:—

    "21. ......... that silver should be the universal money of account (in India), and that all ...... accounts should be kept in the same denominations of rupees, annas and pice.......

    The rupee was not, however, to be the same as that of the Moghul Emperors in weight and fineness The proposal that

    "9. ......the new rupee ...... be of the gross weight of—

    Troy grains                     ...           180

    Deduct one-twelfth alloy         ...               15

    And contain of fine silver troy grs.          165"

    Such were the proposals put forth by the Court of Directors for the reform of Indian currency.

    The choice of a rupee weighing 180 grs. troy and containing 165 grs. pure silver as the unit for the future currency system of India was a well-reasoned choice.

    The primary reason for selecting this particular weight for the rupee seems to have been the desire to make it as little of a departure as possible from the existing practice. In their attempts to reduce to some kind of order the disorderly currencies bequeathed to them by theMoghuls by placing them on a bimetallic basis, the Governments of the three Presidencies had already made a great advance by selecting out of the innumerable coins then circulating in the country a species of gold and silver coin as the exclusive media of exchange for their respective territories. The weights and fineness of the coins selected as the principal units of currency, with other particulars, may be noted from the summary table 1. (Page 344)

    To reduce these principal units of the different Presidencies to a single principal unit, the nearest and the least inconvenient magnitude of weight which would at the same time be an integral number was obviously 180 grs., for in no case did it differ from the weights of any of the prevailing units in any marked degree. Besides, it was believed that 180, or rather 179.5511, grs. was the standard weight of the rupee coin originally issued from the Moghul Mints, so that the adoption of it was really a restoration of the old unit and not the introduction of a new one.^[f16] Another advantage claimed in favour of a unit of 180 grs. was that such a unit of currency would again become what it had ceased to be, the unit of weight also. It was agreed ^[f17]that the unit of weight in India had at all times previously been linked up with that of the principal coin, so that the seer and the manual weights were simply multiples of the rupee, which originally weighed 179.6 grs. troy. Now, if the weight of the principal coin to be established was to be different from 180 grs. troy, it was believed there would be an unhappy deviation from the ancient practice which made the weight of the coin the basis of other weights and measures.

     

     

    			Silver Coins.			Gold Coins.
    Issued by theGovernmentof	Territory in which it circulated.	Date and Authority ofIssue.	Name.	Gross Weight Troy Grs.	Pure ContentsTroy Grs.	Name	Gross Weight Troy Grs.	PureContents Troy Grs.
    Bombay	Presidency		Surat Rupee	179.0	164-740	Mohur	179	164.740
    Madras	,,		Arcot „	176.4	166-477	Star Pagoda	52-40	42.55
    	Bengal, Bihar andOrissa Cuttock	RegulationsXXXV of1793 XII of 1805	Sicca Rupee (19th Sun)	179.66	175-927	Mohur	190-804	189-40
    			Furrukabad
    Bengal	Ceded Provinces Conquered Prov-	XLV of 1803	Rupee(Lucknow	173	166.135
    	inces		Sicca of the
    			45th Sun)
    	Benares Provin-	III of 1806	Benares Rupee	175	168-875	—	—	—
    	ces		(Muchleedar)

     

    Besides, a unit of 180 grs. weight was not only suitable from this point of view, but had also in its favour the added convenience of assimilating the Indian with the English units of weight#.

    #Ibid. para. 28. How the English and the Indian systems of weights were made to correspond to each other may be seen from the following:—

    Indian		English
    8 ruttees	= 1 massas	= 15 troy grs.
    12 massas	= 1 tola (or sicca)	= 180 troy grs.
    80 tolas	= 1 seer	= 2.5 troy ponds
    40 seers	= 1 mound (mun)	= 100 troy pounds.

    While these were the reasons in favour^[f18] of fixing the weight of the principal unit of currency at 180 grs. troy, the project of making it 165 grs. fine was not without its justification. The ruling consideration in selecting 165 grs. as the standard of fineness was, as in the matter of selecting the standard weight, to cause the least possible disturbance in existing arrangements. That this standard of fineness was not very different from those of the silver coins, recognised by the different Governments in India as the principal units of their currency, may be seen from the following comparative statement.

     

    TABLE II

    DEVIATIONS OF THE PROPOSED STANDARD OF FINENESS FROM THAT OF THE PRINCIPAL RECOGNISED RUPEES

    Silver Coins recognised as Principal Units and their Fineness		Standard Fineness of the propose Silver Rupee Troy Grs.	More valuable than the proposed Rupee		Less valuable proposed Rupee
    Name of the Coin	Its Pure Contents Troy Grs.		In Grs.	By p.c.	In Grs.	By p.c.
    Surat Rupee	164.74	165			.26	.157
    Arcot Rupee	166.477	165	1.477	.887
    Sicca Rupee	175.927	165	10.927	6.211
    Farrukabad R.	166.135	165	1.135	.683
    Benares Rupee	169.251	165	4.251	2.511

     

    It will thus be seen that, with the exception of the Sicca and the Benares rupees, the proposed standard of fineness agreed so closely with those of the other rupees that the interest of obtaining a complete uniformity without considerable dislocation overruled all possible objections to its adoption. Another consideration that seemed to have prevailed upon the Court of Directors in selecting 165 grs. as the standard of fineness was that, in conjunction with 180 grs. as the standard weight, the arrangement was calculated to make the rupee eleven-twelfths fine. To determine upon a particular fineness was too technical a matter for the Court of Directors. It was, however, the opinion of the British Committee on Mint and Coinage, appointed in 1803, that^[f19] "one-twelfth alloy and eleven-twelfths fine is by a variety of extensive experiments proved to be the best proportion, or at least as good as any which could have been chosen." This standard, so authoritatively upheld, the Court desired to incorporate in their new scheme of Indian currency. They therefore desired to make the rupee eleven-twelfths fine. But to do so was also to make the rupee 165 grs. pure-a content which they desired, from the point of view stated above, the rupee to possess.

    Reviewing the preference of the Court of Directors for monometallism from the vantage-ground of latter-day events, one might be inclined to look upon it as a little too short-sighted. At the time, however, the preference was well founded. One of the first measures, the three Presidencies, into which the country was divided for purposes of administration, had adopted on their assuming the government of the country, was to change the parallel standard of the Moghuls into a double standard by establishing a legal ratio of exchange between themohur, the pagoda, and the rupee. But in none of the Presidencies was the experiment a complete success.

    In Bengal^[f20] the Government, on June 2, 1766, determined upon the issue of a gold mohur weighing 179.66 grs. troy, and containing 149.92 grs., troy of pure metal, as legal tender at 14 Sicca rupees, to relieve the currency stringency caused largely by its own act of locking up the revenue collections in its treasuries, to the disadvantage of commerce. This was a legal ratio of 16.45 to 1, and as it widely deviated from the market ratio of 14.81 to 1, this attempt to secure a concurrent circulation of the two coins was foredoomed to failure. Owing to the drain of silver on Bengal from China, Madras, and Bombay, the currency stringency grew worse, so much so that another gold mohur was issued by the Government on March 20, 1769, weighing 190.773 grs. troy and containing 190.086 grs. pure gold with a value fixed at 16Sicca rupees. This was a legal ratio of 14.81 to 1. But, as it was higher than the market ratio of the time both in India (14 to 1) and in Europe (14.61 to 1), this second effort to bring about a concurrent circulation fared no better than the first. So perplexing seemed to be the task of accurate rating that the Government reverted to monometallism by stopping the coinage of gold on December 3, 1788, and when the monetary stringency again compelled it to resume in 1790 the coinage of gold, it preferred to let the mohur and the rupee circulate at their market value without making any attempt to link them by a fixed ratio. It was not until 1793 that a third attempt was made to forge a double standard in Bengal. A new mohur was issued in that year, weighing 190.895 grs. troy and containing 189.4037 grs. of pure gold, and made legal tender at 16 Sicca rupees. This was a ratio of 14.86 to 1, but, as it did not conform to the ratio then prevalent in the market this third attempt to establish bimetallism in Bengal failed as did those made in 1766 and 1769.

    The like endeavors of the Government of Madras^[f21]proved more futile than those of Bengal. The first attempt at bimetalism under the British in that Presidency was made in the year 1749, when 350 Arcot rupees were legally rated at 100 Star pagodas. As compared with the then market ratio this rating involved an under-valuation of the pagoda, the gold coin of the Presidency. The disappearance of the pagoda caused a monetary stringency, and the Government in December, 1750, was obliged to restore it to currency. This it did by adopting the twofold plan of causing an import of gold on Government account, so as to equalise the mint ratio to the market ratio, and of compelling the receipts and payments of Government treasuries to be exclusively in pagodas. The latter device proved of small value ; but the former by its magnitude was efficacious enough to ease the situation. Unluckily, the case was only temporary. Between 1756 and 1771 the market ratio of the rupee and the pagoda again underwent a considerable change. In 1756 it was 364 to 100, and in 1768 it was 370 to 100. It was not till after 1768 that the market ratio became equal to the legal ratio fixed in 1749 and remained steady for about twelve years. But the increased imports of silver, rendered necessary for the prosecution of the second Mysore war, once more disturbed the ratio, which at the close of the war stood at 400 Arcot rupees to 100 Star pagodas. After the end of the war, the Government of Madras made another attempt to bring about a concurrent circulation between the rupee and the pagoda. But instead of making the market ratio of 400 to 100 the legal ratio, it was led by the then increasing imports of gold into the Presidency to hope that the market ratio would in time rise to that legally established in 1749. In an expectant mood so induced it decided, in 1790, to anticipate the event by fixing the ratio first at 365 to 100. The result was bound to be different from that desired, for it was an under-valuation of the pagoda. But instead of rectifying the error, the Government proceeded to aggravate it by raising the ratio still further to 350 to 100 in 1797, with the effect that the pagoda entirely went out of circulation, and the final attempt at bimetallism thus ended in a miserable failure.

    The Government of Bombay seemed better instructed in the mechanics of bimetallism, although that did not help it to overcome the practical difficulties of the system. On the first occasion when bimetallism was introduced in the Presidency, [f22] the mohur and the rupee were rated 'at the ratio of 15.70 to 1. But at this ratio the mohur was found to be over-rated, and accordingly, in August, 1774, the Mint Master was directed to coin gold mohur of the fineness of a Venetian and of the weight of the silver rupee. This change brought down the legal ratio to 14.83 to 1, very nearly, though not exactly, to the then prevailing market ratio of 15 to 1, and had nothing untoward happened, bimetallism would have had a greater success in Bombay than it actually had in the other two Presidencies. But this was not to be, for the situation was completely altered by the dishonesty of the Nawab of Surat, who allowed his rupees,       which were of the same weight and fineness as the Bombay rupees, to be debased to the extent of 10, 12, and even 15 per cent. This act of debasement could not have had any disturbing effect on the bimetallic system prevalent in the Bombay Presidency, had it not been for the fact that the Nawab's (or Surat) rupees were by agreement admitted to circulation in the Company's territories at par with the Bombay rupees. As a result of their being legal tender the Surat rupees, once they were debased, not only drove out the Bombay rupees from circulation, but also the mohur, for as rated to the debased Surat rupees the ratio became unfavourable to gold, and the one chance for a successful bimetallic system vanished away. The question of fixing up a bimetallic ratio between the mohur and the rupee again cropped up when the Government of Bombay permitted the coinage of Surat rupees at its Mint. To have continued the coinage of the gold mohur according to the Regulation of 1774 was out of the question. One Bombay mohur contained 177.38 grs. of pure gold, and 15 Surat rupees of the standard of 1800 contained 247.11 grs. of silver. By this Regulation the proportion of silver to gold would have been 247.11 / 177.38 i.e. 13.9 to 1 Here the mohur would have under-valued. It was therefore resolved to alter the standard of the mohur to that of the Surat rupee, so as to give a ratio of 14.9 to 1. But as the market ratio was inclined towards 15.5 to 1, the experiment was not altogether a success.

    In the light of this experience before them, the Court of Directors of the East India Company did well in fixing upon a monometallic standard as the basis of the future currency system of India. The principal object of all currency regulations is that the different units of money should bear a fixed relation of value to one another. Without this fixity of value, the currency would be in a state of confusion, and no precaution would be too great against even a temporary disturbance of that fixity. Fixity of value between the various components of the currency is so essential a requisite in a well-regulated monetary system that we need hardly be surprised if the Court of Directors attached special importance to it, as they may well have done, particularly when they were engaged in the task of placing the currency on a sound and permanent footing. Nor can it be said that their choice of monometallism was ill-advised, for it must be admitted that a single standard better guarantees this fixity than does the double standard. Under   the former it is spontaneous, under the latter it is forced.

    These recommendations of the Court of Directors were left to the different Governments in India to be carried into effect at their discretion as to the time and manner of doing it. But it was some time before steps were taken in consonance with these orders, and even then, it was on the realisation of those parts of the program of the Court which pertained to the establishment of a uniform currency that the efforts of the different Governments were first concentrated.

    The task of reducing the existing units of currency to that proposed by the Court was first accomplished in Madras. On January 7, 1818, the Government issued a Proclamation^[f23] by which its old units of currency—the Arcot rupee and the Star pagoda—were superseded by new units, a gold rupee and a silver rupee, each weighing 180 grs. troy and containing 165 grs. of fine metal. Madras was followed by Bombay six years later by a Proclamation^[f24] of October 6, 1824, which declared a gold rupee and a silver rupee of the new Madras standard to be the only units of currency in that Presidency. The Government of Bengal had a much bigger problem to handle. It had three different principal units of silver currency to be reduced to the standard proposed by the Court. It commenced its work of reorganisation by a system of elimination and alteration. In 1819, it discontinued^[f25] the coinage of the Benares rupee and substituted in its place the Furrukabad rupee, the weight and fineness of which were altered to 180.234 and 135.215 grs. troy respectively. Apparently this was a step away from the right direction. But even here, the purpose of uniformity, so far as fineness was concerned, was discernible, for it made the Furrukabad rupee, like the new Madras and Bombay rupees, eleven-twelfth fine. Having got rid of the Benares rupee, the next step was to assimilate the standard of the Furrukabad rupee to that of Madras and Bombay, as may be seen from the following table.

    Thus, without abrogating the bimetallic system, substantial steps were taken in realising the ideal unit proposed by the Court, as may be seen from the following table.

    TABLE III UNIFORMITY OF COINAGE AT THE END OF AD. 1833

    Issued the Government of	Silver Coins			Gold Coins			Legal Ratio
    	Denomina-	Weight	Fine-	Denomina-	Weight	Fine-
    	nation		ness	nation		ness
    Bengal	Sicca Rupee   FurrukabadRupee	192   180	176 or 11/12 165 or 11/12	Mohur	204.710	187.651	1 to 15
    Bombay	Silver Rupee	180	165 or 11/12	Gold Rupee	180	165 or 11/12	1 to 15
    Madras	Silver Rupee	180	165 or 11/12		180	165 or 11/12	1 to 15

    Taking stock of the position as it was at the end of 1833, we find that with the exception of the Sicca rupee and the gold mohur of Bengal, that part of the scheme of the Directors which pertained to the uniformity of coinage was an accomplished fact. Nothing more remained to carry it to completion than to discontinue the Sicca rupee and to demonetise gold. At this point, however, arose a conflict between the Court of Directors and the three Governments in India. Considerable reluctance was shown to the demagnetisation of gold. The Government of Madras, which was the first to undertake the reform of its currency according to the plan of the Court, not only insisted upon continuing the coinage of gold along with that of the rupee,^[f26] but stoutly refused to deviate from the system of double legal tender at a fixed ratio prevalent in its territories,

    ^[f27]notwithstanding the repeated remonstrance's addressed by the Court.[f28] The Government of Bengal clung to the bimetallic standard with equal tenacity. Rather than demonetise the gold mohur, it took steps to alter its standard^[f29] by reducing its pure contents^[f30] from 189.4037 to 187.651 troy grs., so as to re-establish a bimetallic system on the basis of the ratio adopted by Madras in 1818. So great was its adherence to the bimetallic standard that in 1833 it undertook to alter^[f31] the weight and fineness of the Sicca rupee to 196 grs. troy and 176 grs. fine, probably to rectify a likely divergence between the legal and the market ratios of the mohur to the rupee^[f32]

    But in another direction the Government in India wanted to go further than the Court desired. The Court thought a uniform currency (i.e. a currency composed of like but independent units) was all that India needed. Indeed, they had given the Governments to understand that they did not wish for more in the matter of simplification of currency and were perfectly willing to allow the Sicca and the mohur to remain as they were, unassimilated.^[f33] A uniform currency was no doubt a great advance on the order of things such as was left by the successors of theMoghuls. But that was not enough, and the needs of the situation demanded a common currency based on a single unit in place of a uniform currency. Under the system of uniform currency each Presidency coined its own money, and the money coined at the Mints of the other Presidencies was not legal tender in its territories except at the Mint. This monetary independence would not have been very harmful if there had existed also financial independence between the three Presidencies. As a matter of fact, although each Presidency had its own fiscal system, yet they depended upon one another for the finance of their deficits. There was a regular system of " supply " between them, and the surplus in one was being constantly drawn upon to meet the deficits in others. In the absence of a common currency this resource operation was considerably hampered. The difficulties caused by the absence of a common currency in the way of the " supply " operation made themselves felt in two different ways. Not being able to use as legal tender the money of other Presidencies, each was obliged to lock up, to the disadvantage of commerce, large working balances in order to be self-sufficient.^[f34] The very system which imposed the necessity of large balances also rendered relief from other Presidencies less efficacious. For the supply was of necessity in the form of the currency of the Presidency which granted, it, and before it could be utilised it had to be re-coined into the currency of the needy Presidency. Besides the loss on recoinage, such a system obviously involved inconvenience to merchants and embarrassment to the Government.^[f35]

    At the end of 1833, therefore, the position was that the Court desired to have a uniform currency with a single standard of silver, while the authorities in India wished for a common currency with a bimetallic standard. Notwithstanding these divergent views, the actual state of the currency might have continued as it was without any substantial alteration either way. But the year 1833 saw an important constitutional change in the administrative relations between the three Presidential Governments in India. In that year by an Act of Parliament^[f36]there was set up an Imperial system of administration with a centralisation of all legislative and executive authority over the whole of India. This change in the administrative system, perforce, called forth a change in the prevailing monetary systems. It required local coinages to be replaced by Imperial coinage. In other words, it favoured the cause of a common currency as against that of a mere uniform currency. The authorities in India were not slow. to realise the force of events. The Imperial Government set up by Parliament was not content to act the part of the Dewans or agents of the Moghuls, as the British had theretofore done, and did not like that coins should be issued in the name of the defunctMoghul emperors who had ceased to govern. It was anxious to throw off the false garb^[f37] and issue an Imperial coinage in its own name, which being common to the whole of India would convey its common sway. Accordingly, an early opportunity was taken to give effect to this policy. By an Act of the Imperial Government (XVII of 1835) a common currency was introduced for the whole of India, as the sole legal tender. But the Imperial Government went beyond and, as if by way of concession to the Court—for the Court did most vehemently protest against this common currency in so far as it superseded the Sicca rupee^[f38]—legislated " that no gold coin shall henceforward be a legal tender of payment in any of the territories of the East India Company. ^[f39]

    That an Imperial Administration should have been by force of necessity led to the establishment of a common currency for the whole of India is quite conceivable. But it is not clear why it should have abrogated the bimetallic system after having maintained it for so long. Indeed, when it is recalled how the authorities had previously set their faces against the destruction of the bimetallic system, and how careful they were not to allow their coinage reforms to disturb it any more violently than they could help, the provision of the Act demonetising gold was a grim surprise. However, for the sudden volte-face displayed therein, the Currency Act (XVII of 1835) will ever remain memorable in the annals of the Indian history. It marked the culminating-point of a long and arduous process of monetary reform and placed India on a silver monometallic basis, with a rupee weighing 180 grs. troy and containing 165 grs. fine as the common currency and sole legal tender throughout the country.

    No piece of British India legislation has led to a greater discontent in later years than this Act XVII of 1835. In so far as the Act abrogated the bimetallic system, it has been viewed with a surprising degree of equanimity. Not all its critics, however, are aware[f40] that what the Act primarily decreed was a substitution of bimetallism by monometallism. The commonly entertained view of the Act seems to be that it replaced a gold standard by a silver standard. But even if the truth were more generally known, it would not justify any hostile attitude towards the measure on that score. For, what would have been the consequences to India of the gold discoveries of California and Australia in the middle of the nineteenth century, if she had preserved her bimetallic system ? It is well known how this increase in the production of gold relatively to that of silver led to a divergence in the mint and the market ratios of the two metals after the year 1850. The under-valuation of silver, though not very great, was great enough to confront the bimetallic countries with a serious situation in which the silver currency, including the small change, was rapidly passing out of circulation. The United States[f41]was obliged by the law of 1853 to reduce the standard of its small silver coins sufficiently to keep them, dollar for dollar, below their gold value in order to keep them in circulation. France, Belgium, Switzerland, and Italy, which had a uniform currency based on the bimetallic model of the French with reciprocal legal tender*,  were faced with similar difficulties.

    *The cultural influence of France had led the other countries of Latin origin to adopt the French monetary system. The political independence acquired by Belgium in 1831 was followed by a change in her monetary system. By the law of 1832, Belgium from a monetary point of view, became a satellite of France. By that law she adopted in its entirety the monetary system of France, and even went so far as to give the French gold pieces of 20 and 40 francs and to the French silver 5-franc pieces the power of legal tender in Belgium. In Switzerland, Art. 36 of the Constitution of 1848 had vested in the Federal Government the authority to coin money. The law of May 7, 1850, adopted the French monetary system for Switzerland : Art. 8 declared " that such foreign silver coins as were minted in sufficiently close proximity with the French system might be granted a legal status as regular media for the payment of debts in Switzerland." The various Italian States, prior to unification, had, like the Swiss Cantons, each its own currency. But with the desire for uniformity of coinage consequent upon unification, there arose a problem either of selecting one of the old systems or of adopting a new one which would be common to the whole country. Some form of a grateful memorial to France was uppermost in the minds of the Italians for the help the French gave in the matter of their independence, and the adoption of the French monetary system for Italy was deemed to serve the purpose. Fortunately, Sardinia already possessed the French system, and the law of August 24, 1862, extended it to the whole of Italy, with the lire as the unit, and also conferred legal-tender power on the coins of France, Belgium, and Switzerland, Cf. H.-P. Willis, History of the Latin monetary Union,Chicago, 1910, pp. 15, 27, 36, 37.

     

    Lest a separatist policy on the part of each nation, [f42] to protect their silver currency and particularly the small change, should disrupt the monetary harmony prevailing among them all, they were compelled to meet in a convention, dated November 20, 1865, which required the parties, since collectively called the Latin Union, to lower, in the order to maintain them in circulation, the silver pieces of 2 francs, 1 franc, 50 centimes and 20 centimes from a standard of 900 / 1000 fine to 835 / 1000 and to make them subsidiary coins. [f43] It is true that the Government of India also came in for trouble as a result of this disturbance in the relative value of gold and silver, but that trouble was due to its own silly act.^[f44] The currency law of 1835 had not closed the Mints to the free coinage of gold, probably because the seignorage on the coinage of gold was a source of revenue which the Government did not like to forego. But as gold was not legal tender, no gold was brought to the Mint for coinage, and the Government revenue from seignorage fell off. To avoid this loss of revenue, the Government began to take steps to encourage the coinage of gold. In the first place, it reduced the seignorage^[f45] in 1837 from 2 per cent. to 1 per cent. But even this measure was not sufficient to induce people to bring gold to the Mint, and consequently the revenue from seignorage failed to increase. As a further step in the same direction, the Government issued a Proclamation on January 13, 1841, authorising the officers in charge of public treasuries to receive the gold coins at the rate of 1 gold mohur equal to 15 silver rupees. For some time no gold was received, as at the rate prescribed by the Proclamation gold was undervalued ^[f46]But the Australian and Californian gold discoveries altered the situation entirely. The gold mohur, which was undervalued at Rs. 15, became overvalued, and the Government which was at one time eager to receive gold, was alarmed at its influx. By adopting the course it did of declaring gold no longer legal tender, and yet undertaking to receive it in liquidation of Government demands, it laid itself under the disadvantage of being open to be embarrassed with a coin which was of no use and must ordinarily have been paid for above its value. Realising its position, it left aside all considerations of augmenting revenue by increased coinage, and promptly issued on December 25, 1852, another Proclamation withdrawing that of 1841. Whether it would not have been better to have escaped the embarrassment by making gold general legal tender than depriving it of its partial legal-tender power is another matter. But, in so far as India was saved the trials and tribulations undergone by the bimetallic countries to preserve the silver part of their currency, the abrogation of bimetallism was by no means a small advantage. For, the measure had the virtue of fore-arming the country against changes which, though not seen at the time, soon made themselves felt.

    The abrogation of bimetallism in India, accomplished by the Act of 1835, cannot therefore be made a ground for censure. But it is open to argument that a condemnation of bimetallism is not per se a justification of silver monometallism. If it was to be monometallism it might well have been gold monomentallism. In fact, the preference for silver monometallism is not a little odd when it is recalled that Lord Liverpool, the advocate of monometallism,^[f47] whose doctrines the Court had sought to apply to India, had prescribed gold monometallism for similar currency evils then prevalent in England. That the Court should have deviated from their guide in this particular has naturally excited a great deal of hostile comment as to the propriety of this grave departure.^[f48] At the outset any appeal to ulterior motives must be baseless, for Lord Liverpool was not a " gold bug," nor was the Court composed of " silver men." As a matter of fact, neither of them at all considered the question from the standpoint as to which was a better standard of value, gold or silver. Indeed, in so far as that was at all a consideration worth attending to, the choice of the Court, according to the opinion of the time, was undoubtedly a better one than that of Lord Liverpool. Not only were all the theorists, such as Locke, Harris, and Petty, in favour of silver as the standard of value, but the practice of the whole world was also in favour of silver. No doubt, England had placed herself on a gold basis in 1816. But that Act, far from closing the English Mint to the free coinage of silver, left it to be opened by a Royal Proclamation^[f49]The Proclamation, it is true, was never issued, but it is not to be supposed that therefore Englishmen of the time had regarded the question of the standard as a settled issue. The crisis of 1825 showed that the gold standard furnished too narrow a basis for the English currency system to work smoothly, and, in the expert opinion of the time.^[f50]the gold standard, far from being the cause of England's commercial superiority, was rather a hindrance to her prosperity, as it cut her off from the rest of the world, which was mostly on a silver basis. Even the British statesmen of the time had no decided preference for the gold standard. In 1826, Huskisson actually proposed that Government should issue silver certificates of full legal tender.^[f51] Even as late as 1844 the question of the standard was far from being settled, for we find Peel, in his Memorandum^[f52] to the Cabinet, discussing the possibility of abandoning the gold standard in favour of the silver or a bimetallic standard without any compunction or predilection one way or the other. The difficulties of fiscal isolation were evidently not so insuperable as to compel a change of the standard, but they were great enough to force Peel to introduce his famous proviso embodying the Huskisson plan in part in the Bank Charter Act of 1844, permitting the issue of notes against silver to the extent of one-fourth of the total issues ^[f53]. Indeed, so great was the universal faith in the stability of silver that Holland changed in 1847 from what was practically a gold monometallism^[f54] to silver monometallism because her statesmen believed that

    " it had proved disastrous to the commercial and industrial interests of Holland to have a monetary system identical with that of England, whose financial revulsion's, after its adoption of the gold standard, had been more frequent and more severe than in any other country, and whose injurious effects were felt in Holland scarcely less than in England. They maintained that the adoption of the silver standard would prevent England from disturbing the internal trade of Holland by draining off its money during such revulsion's, and would secure immunity from evils which did not originate in and for which Holland was not responsible."^[f55]

    But stability was not the ground on which either the Court or Lord Liverpool made their choice of a standard metal to rest. If that had been the case, both probably would have selected silver. As it was, the difference in the choice of the two parties was only superficial. Indeed, the Court differed from Lord Liverpool, not because of any ulterior motives, but because they were both agreed on a fundamental proposition that not stability but popular preference should be the deciding factor in the choice of a standard metal. Their differences proceeded logically from the agreement. For, on analysing the composition of the currency it was found that in England it was largely composed of gold and in India it was largely composed of silver. Granting their common premise, it is easy to account why gold was selected for England by Lord Liverpool and silver for India by the Court. Whether the actual composition of the currency is an evidence of popular preference cannot, of course, be so dogmatically asserted as was done by the Court and Lord Liverpool. So far as England is concerned, the interpretation of Lord Liverpool has been questioned by the great economist David Ricardo. In his High Price of Bullion, Ricardo wrote:—

    " For many reasons given by Lord Liverpool, it appears proved beyond dispute that gold coin has been for near a century the principal measure of value; but this is, I think, to be attributed to the inaccurate determination of the mint proportions. Gold has been valued too high; no silver can therefore remain in circulation which is of its standard weight. If a new regulation were to take place, and silver be valued too high...... gold would then disappear, and silver become the standard money."^[f56]

    And it is possible that mint proportions rather than popular preference^[f57] could have equally well accounted for the preponderance of silver in India.^[f58]

    Whether any other criterion besides popular; preference could have led the Court to adopt gold monometallism is a moot question. Suffice it to say that the adoption of  silver monometallism, though well supported at the time when the Act was passed, soon after proved to be a measure quite inadequate to the needs of the country. It is noteworthy that just about this time great changes were taking place in the economy of the Indian people. Such a one was a change from kind economy to cash economy. Among the chief causes contributory to this transformation the first place must be given to the British system of revenue and finance. Its effects in shifting Indian society on to a cash nexus have not been sufficiently realised^,[f59] although they have been very real. Under the native rulers most payments were in kind. The standing military force kept and regularly paid by the Government was small. The bulk of the troops consisted of a kind of militia furnished byJageerdars and other landlords, and the troops or retainers of these feudatories were in great measure maintained on the grain, forage, and other supplies furnished by the districts in which they were located. The hereditary revenue and police officers were generally paid by grants of land on tenure of service. Wages of farm servants and labourers were in their turn distributed in grain. Most of its officers being paid in kind, the State collected very little of its taxes in cash. The innnovations made by the British in this rude revenue and fiscal system were of the most sweeping character. As territory after territory passed under the sway of the British, the first step taken was to substitute in place of the rural militia of the feudatories a regularly constituted and a well-disciplined standing army located at different military stations, paid in cash ; in civil employ, as in military, the former revenue and police officers with their followers, who paid themselves by perquisites and other indirect gains received in kind, were replaced by a host of revenue collectors and magistrates with their extensive staff, all paid in current coin. The payments to the army, police, and other officials were not the only payments which the British Government had placed on a money basis. Besides these charges, there were others which were quite unknown to the native Governments, such as the " Home Charges " and " Interest on Public Debt," all on a cash basis. The State, having undertaken to pay in cash, was compelled to realise all its taxes in cash, and as each citisen was bound to pay in cash, he in his turn stipulated to receive nothing but cash, so that the entire structure of the society underwent a complete transformation.

    Another important change that took place in the economy of the Indian people about this time was the enormous increase of trade. For a considerable period, the British tariff policy and the navigation laws had put a virtual check on the expansion of Indian trade. England compelled India to receive her cotton and other manufactures at nearly nominal .(2 1/2 per cent.) duties, while at the same time she prohibited the entry of such Indian goods as competed with hers within her territories by prohibitory duties ranging from 50 to 500 per cent. Not only was no reciprocity shown by England to India, but she made a discrimination in favour of her colonies in the case of such goods as competed with theirs. A great agitation was carried on against this unfair treatment,^[f60] and finally Sir Robert Peel admitted Indian produce to the low duties levied by the reformed tariff of 1842. The repeal of the navigation laws gave further impetus to the expansion of Indian commerce. Along with this, the demand for Indian produce had also been growing. The Crimean War of 1854 cut off the Russian supplies, the place of which was taken by Indian produce, and the failure of the silk crop in 1853 throughout Europe led to the demand for Asiatic, including Indian, silks.

    The effect of these two changes on the currency situation is obvious. Both called forth an increased demand for cash. But cash was the one thing most difficult to obtain. India does not produce precious metals in any considerable quantity. She has had to depend upon her trade for obtaining them. Since the advent of the European Powers, however, the country was not able to draw enough for the precious metals. Owing to the prohibitions on the export of precious metals then prevalent in Europe,^[f61] one avenue for obtaining them was closed. But there was little chance of obtaining precious metals from Europe, even in the absence of such prohibition ; indeed, precious metals did not flow to India when such prohibitions were withdrawn. [f62]The reason of the check to the inflow of precious metals was well pointed out by Mr. Petrie in his Minute of November, 1799, to the Madras Committee of Reform.^[f63] According to Mr. Petrie, the Europeans before they acquired their territorial possessions

    " purchased the manufactures of India with the metals of Europe: but they were henceforward to make these purchases with gold and silver of India, the revenues supplied the place of foreign bullion and paid the native the price of his industry with his own money. At first this revolution in the principles of commerce was but little felt, but when opulent and extensive dominions were acquired by the English, when the success of war and commercial rivalship had given them so decided a superiority over the other European nations as to engross the whole of the commerce of the East, when a revenue amounting to millions per annum was to be remitted to Europe in the manufactures of the East, then were the effects of this revolution severely felt in every part of India. Deprived of so copious a stream, the river rapidly retired from its banks and ceased to fertilise the adjacent fields with overflowing water. "

    The only way open, when the prohibitions were withdrawn to obtain precious metals, was to send more goods than this amount of tribute, so that the balance might bring them in. This became possible when Peel admitted Indian goods to low tariff, and the country was for the first time able to draw in a sufficient quantity of precious metals to sustain her growing needs. But this ease in the supply of precious metals to serve as currency was short-lived. The difficulties after 1850, however, were not due to any hindrance in the way of India's obtaining the precious metals. Far from being hindered, the export and import of precious metals was entirely free, and India's ability to procure them was equally great. Neither were the difficulties due to any want of precious metals ; for, as a matter of fact, the increase in the precious metals after 1850 was far from being small. The difficulty was of India's own making, and was due to her not having based her currency on that precious metal, which it was easy to obtain. The Act of 1835 had placed India on an exclusive silver basis. But, unfortunately, it so happened that after 1850, though the total production of the precious metals had increased that of silver had not kept pace with the needs of the world, a greater part of which was then on a silver basis, so that as a result of her currency law India found herself in an embarrassing position of an expanding trade with a contracting currency, as is shown in the Table IV on page 364.

    On the face of it, it seems that there need have been no monetary stringency. The import of silver was large, and so was the coinage of it. Why then should there have been any stringency at all ? The answer to this question is not far to seek. If the amount of silver coined had been retained in circulation it is possible that the stringency could not have arisen. India has long been notoriously the sink of the precious metals. But in interpreting this phenomenon, it is necessary to bear in mind the caution given by Mr. Cassels that

    "its silver coinage has not only had to satisfy the requirements of commerce as the medium of exchange, but it has to supply a sufficiency of material to the silversmith and the jeweller. The Mint has been pitted against the smelting-pot, and the coin produced by so much patience and skill by the one has been rapidly reduced into bangles by the other."^[f64]

     

    TABLE   IV ^[f65]

    TRADE  AND CURRENCY

    Years	Merchandise.		Treasure. Net Imports of		Total Coinage of		Excess ( + ) or Defect (-) of Coinage on Net Imports of		Annual Production  (in £, 00,000 omitted) of
    	Imports. £	Exports. £	Silver. £	Gold. £	Silver. £	Gold. £	Silver. £	Gold. £	Gold.	Silver.
    1850-51	11,558,789	18,164,150	2,117,225	1,153,294	3,557,906	123,717	+1,440,681	-1,029,577	8,9	7,8
    1851-52	12,240,490	19,879,406	2,865,357	1,267,613	5,170,014	62,553	+2,304,657	-1,205,060	13,5	8,0
    1852-53	10,070,863	20,464,633	3,605,024	1,172,301	5,902,648	Nil	+2,297,624	-1,1-72,301	36,6	8,1
    1853-54	11,122,659	19,295,139	2,305,744	1,061,443	5,888,217	145,679	+3,582,473	- 915,764	31,1	8,1
    1854-55	12,742,671	18,927,222	29,600	731,490	1,890,055	2,676	+1,860,455	- 728,814	25,5	8,1
    1855-56	13,943,494	23,038,259	8,194,375	2,506,245	7,322,871	167,863	+ 871,504	-2,338,382	27,0.	8,1
    1856-57	14,194,587	25,338,451	11,073,247	2,091,214	11,220,014	128,302	+ 146,767	-1,962,912	29,5	8,2
    1857-58	15,277,629	27,456,036	12,218,948	2,783,073	12,655,308	43,783	+ 436,360	-2,739,290	26,7	8,1
    1858-59	21,728,579	29,862,871	7,728,342	4,426,453	6,641,548	132,273	-1,086,794	-4,294,180	24,9	8,1
    1859-60	24,265,140	27,960,203	11,147,563	4,284,234	10,753,068	64,307	- 394,495	-4,219,927	25,0	8,2

     

    Now it will be seen from the figures given that all the import of silver was coined and used up for currency purposes. Very little or nothing was left over for the industrial and social consumption of the people. That being the case, it is obvious that a large part of the coined silver must have been abstracted from monetary to non-monetary purposes. The hidden source of this monetary stringency thus becomes evident. To men of the time it was as clear as daylight that it was the rate of absorption of currency from monetary to non-monetary purposes that was responsible as to why (to quote from the same authority)

    "notwithstanding such large importation's the demand for money has so far exceeded...... that serious embarrassment has ensured and business has almost come to a stand from the scarcity of circulating medium. As fast as rupees have been coined they have been taken into the interior and have there disappeared from circulation, either in the Indian substitute for stocking-foot or in the smelting-pot into bangles."^[f66]

    The one way open was to have caused such additional imports of silver as would have sufficed both for the monetary as well as the non-monetary needs of the country. But the imports of silver were probably already at their highest. For, as was argued by Mr. Cassels,

    "the annual production of silver of the whole world does not exceed ten million sterling. During the last few years, therefore, India alone has annually taken, and to a great extent absorbed, more of the metal than has been produced by the whole world. It is clear that this cannot long continue without producing serious embarrassment. Either the European markets will be unable or unwilling to supply us, or the value of silver will rise to an extravagant extent. Under such circumstances it is not difficult to foresee that the present crisis must continually recur, and the commerce in this country must be periodically, if not permanently, crippled by the scarcity of the circulating medium.''^[f67]

    Had there been any credit media the contraction of currency might not have been felt as severely as it was. But there was no credit money worth the name. The Government issued interest-bearing Treasury notes, which formed a part of the circulating medium of the country. But, apart from being insignificant in amount,^[f68] these Treasury notes had

    "proved a failure, owing, firstly, to the condition that they would not be received in payment of revenue for twelve months; secondly, they would be paid off or received only where issued, so that as the issues were confined to Calcutta, Madras and Bombay, their use and employment for purposes of circulation were limited to those cities...... and lastly, because their amounts were too large and their period of running at interest too short.''^[f69]

    Nor was banking so widely developed as to satisfy the currency needs of commerce. The chief hindrance to its growth was the attitude of the Court. Being itself a commercial body largely dealing in exchange, the Court was averse to the development of banking institutions lest they should prove rivals. As this traditional policy of hostility continued even after the Court had ceased to be a body of merchant princes, banks did not grow with the growth of trade. Indeed, as late as 1856 banks in India numbered few and their issues were small, as shown in the table on page 367. (Table V).

    The insufficiency of silver and the want of credit currency caused such an embarrassment to trade that there grew up a change in the attitude toward the Currency Act of 1835, and people for once, began to ask whether, although it was well to have changed from bimetallism to monometallism, it would not have been better to have preferred gold monometallism to silver monometallism. As more and more of gold was imported and coined, the stronger grew the demand for giving it a legal status in the existing system of Indian currency.^[f70]

     

     

    TABLE V

    BANKS IN INDIA [f71]

    Name of the Bank.	Year ofEstab lishment.	HeadOffices.	Branches and Agencies.	Capital.		Notes in Circulation. £	Specie in Coffers. £	Bills underDiscount. £
    				Subscribed. £	Paid up. £
    Bank of Bengal	1809	Calcutta		1,070,000	1,070,000	1,714,771	851,964	125,251
    Bank of Madras	1843	Madras		300,000	300,000	123,719	139,960	59,871
    Bank of Bombay	1840	Bombay		522,000	522,000	571,089	240,073	195,836
    Oriental Bank .	1851			1,215,000	1,215,000	199,279	1,146,529	2,918,399
    Agra and U.P. .	1833	Calcutta	Agra, Madras, Lahore,  Canton, and London	700,000	700,000	—	74,362	—
    			Bombay, Simla,Mus-
    N.W. Bank .	1844	,,	sowri and AgraAg-   encies in Delhi and	220,560	220,000	—	—	—
    			Cawnpore
    London & East- ern Bank	1854			250,000	—	325,000	—	—
    			Agents in London,
    Commercial Bank	1854	Bombay	Calcutta, Canton, &	1,000,000	456,000	—	—	—
    			Shanghai
    			Agents in London,
    Delhi Bank .	1844	Delhi	Calcutta, Bombay,	—	180,000	—	—	—
    			and Madras
    Simla Bank	1844			—	63,850	—	—	—
    Dacca Bank	1846			30,000	—	—	—	—
    			London, Calcutta, Col-
    Mercantile Bank		Bombay	ombo, Kandy,Can-	500,000	328,826	777,156	77,239	109,547
    			ton, and Shanghai
    India, China and Australian Bank				had not Commenced Business

     

     All were agreed on the principle of a gold currency: whatever difference there was, was confined to the method of its adoption. The introduction of gold on a bimetallic basis was out of the question, for the Government refused to make what it deemed to be the "hopeless attempt" to fix the value of gold and silver and compel their acceptance at that value.^[f72] The projects which the Government was willing to consider^[f73]were : (1) to introduce the " sovereign " or some other gold coin and to let it circulate at its market price from day to day as measured in silver; (2) to issue a new gold coin, bearing the exact value of a given number of rupees, and make it a legal tender for a limited period, when it might be readjusted and again valued, and made a legal tender for a similar period at the new rate ; (3) to introduce the English sovereign as a legal tender for Rs. 10, but limited in legal tender to the amount of Rs. 20 or two sovereigns ; or (4) to substitute a gold standard for the silver standard.

    Of these projects, the first three were evidently unsafe as currency expedients. Fixity of value between the various components of the currency is an essential requisite in a well-regulated monetary system. Each coin must define a fixed value, in terms of the others realisable by the most untutored intellect. When it ceases to do so, it becomes a mere commodity, the value of which fluctuates with the fluctuations of the market. This criterion ruled out the first two projects. To have introduced a coin as money, the value of which could not be vouched for— as would have been the case under the first project—from one day to another, apart from the trouble of computing and ascertaining the fluctuations, would have been a source of such embarrassment that the Government, it must be said, acted wisely in not adopting it. There was no saving grace in the second project to recommend its adoption in preference to the first. If it had been adopted the result would have been that during the period when a rate remained fixed, gold would have been forced into circulation supposing that its market value was lower, and at the end of the year, if it was known that the rate would be revised and the value of the coin be reduced in conformity with the fall of gold, a general struggle to get rid of the overrated gold coin and shift the inevitable loss to the shoulders of others would have certainly ensued. The third was a somewhat strange proposal. It is possible with a low-priced metal to strike coins of less than full value for the purposes of small payments and limit their tender. But this is not possible with a high-priced metal, the raison d'etre of which is to facilitate large transactions. The objections to the plan could hardly be concealed. So long as gold was undervalued, it would not circulate at all. But once it became overvalued owing to changes in the market ratio, the rupee would go out of circulation, and shopkeepers and traders would remain possessed of a coin which would be of no use in liquidating large transactions.

    The only project free from these faults was the adoption of a gold standard, with silver as a subsidiary currency. The strongest argument, the Government could advance against this demand was that " in a country where all obligations have been contracted to be paid in silver, to make a law by which they could forcibly be paid in anything else would simply be to defraud the creditor for the advantage of the debtor, and to break public faith." [f74]However sound the argument might have been, it was hopelessly inadequate to meet the growing demand to place the Indian currency on an expanding basis. Indeed, it cannot be said that the Government was really serious in its opposition to a gold currency. For the strength of its position, it relied not so much on the soundness of its arguments against gold, but on its discovery that a better solution than a gold currency existed at hand. If what was wanted was a supplement to the existing currency, then the remedy proposed by the Government was unassailable. Gold would have been uneconomical and inconvenient. Silver backed by paper would make the currency economical, convenient, and expansive. Indeed, the advantages were so much in favour of the official alternative that this first attempt against the silver standard resulted not in the establishment of a gold standard, but in the introduction of a Government paper currency to supplement the existing silver standard.

    None the less, the desire for a gold standard on the part of the people was too great to be altogether ignored, though the demand for it was supposed to have been met by the alternative measure. The paper currency, as originally conceived by Mr. Wilson, was a complete counterblast to the gold agitation. But his successor, Mr. Laing, differed from him in what he regarded as the " barbarous " exclusion of gold from Indian currency. He therefore introduced two important provisos in the original Bill, when the task of carrying it through fell upon him, owing to the untimely death of Mr. Wilson. One was to raise the lowest denomination of notes from Rs. 5 to Rs. 20. The other was

    "to authorise the governor-general in Council from time to time to direct by order to be published in the Gazettes of Calcutta, Madras and Bombay, that notes to an extent not exceeding one-fourth of the total amount of issues represented by coin and bullion...... be issued in exchange for gold coin...... or bullion computed at rates to be fixed by such order........."

    The Act, which afterwards embodied the Bill, adopted the second proviso in toto, and the first after being modified so as to fix Rs. 10 as the lowest denomination of notes to be issued. Although its general tenor is clear, the immediate aim of the second proviso does not become quite clear from a perusal of the official papers. The Select Committee on the Paper Currency Bill seem to have held that the proviso was innocuous, if not good. It thought

    "that on special occasions and in particular transactions it might be a great advantage to the mercantile community to know that gold could be made available as money at a fixed rate. If, on the other hand, at the rate fixed gold did not enter into circulation it would prove that silver, with a secure and convertible paper currency, gave perfect confidence and answered all the wants of the trade and of the community, and the enactment would remain a dead letter and be perfectly harmless."

    But there is no doubt that Mr. Laing looked upon it as an easy means of making a transition to the gold standard. In his Minute on Currency and Banking, dated May 7, 1862, he wrote :

     "The object of this proviso was simply to leave the door open for cautious and tentative experiments with regard to the future use of gold. The importation of gold already exists and is increasing, and the metal is much appreciated by the native population as generally to command a premium......... Thus, after a time, if the use of gold becomes more general, and its value more fixed, some further step might be taken." And such seems to have been the impression of the Secretary of State at the time, for he understood the force of the recommendation in favour of issuing notes against gold was that it would "effectively contribute to the introduction of a gold currency in India."^[f75]

    But whether conceived as a relief to the mercantile community or as an avenue for introducing a gold currency the proviso was not put into effect. The Secretary of State objected^[f76] to any action being taken with regard thereto. In the meantime the paper currency did not prove the panacea, it was avowed to be. The extent it reached and the economy it effected were comparatively insignificant.

    TABLE VI

    EXTENT AND ECONOMY OF PAPER CURRENCY

    Presidencies	Bullion	Coin	Government Securities	Value of Notes in Circulation
    Calcutta on Oct. 31, 1863	---	1,84,55,922	1,10,44,078	2,95,00,000
    Madras on Oct. 31, 1863	---	73,00,000	---	73,00,000
    Bombay on Jan. 4, 1864	1,17,00,000	1,19,00,000	---	2,36,00,000
    Total	1,17,00,000	3,76,55,922	1,10,44,078	6,04,00,000

     

    As was pointed out by Mr. Cassels^[f77]the currency notes, after three years, had been taken only to the extent of about 6 per cent. of the whole metallic currency, which was then estimated by Mr. Wilson to be £100,000,000 in sterling, and that they had actually fulfilled their primary object of releasing the reproductive capital of the country only to the extent of a million sterling or 1 per cent. of the whole. Owing to the demand for Indian cotton in the Liverpool market to take the place of American cotton, the export of which was stopped during the Civil War, the growing foreign trade assumed enormous proportions. And as the paper currency gave no relief, the entire stress fell upon silver. The production of silver, however, was not increasing much faster than it did previously, and its absorption by India had not slackened. The inadequacy of a currency medium therefore continued to be felt as acutely as before, notwithstanding the introduction of a paper currency. Not only was gold imported in large quantities, but was employed for monetary purposes, although it was not legal tender. The fact was brought to the notice of the government of India by the Bombay Chamber of Commerce^[f78] in a memorial praying for the introduction of a gold currency in India, in which it was pointed out

    " that there is an increasing tendency to the creation of a gold ingot currency, but the natives of this country, as a rude remedy for the defects of the existing silver one, "

    and

    " that gold bars, stamped with the mark of Bombay banks, are for this purpose circulated in several parts of the country." This led to an agitation for requiring the Government to give effect to the proviso in the Paper Currency Act,^[f79] and the movement assumed such dimensions that it forced the hands of the Government. On this occasion, the plan for effecting the change was boldly conceived. Sir Charles Trevelyan saw through the weak point of the proviso on which the Government was called upon to act. He argued that the currency notes were payable only in the current coin of the country, which in India was the silver rupee, and to hold a portion of the reserve gold which could not be tendered in payment of the notes was seriously to endanger their convertibility in times of political distrust or commercial panic.^[f80]

     

    TABLE VII^[f81]

    TRADE AND CURRENCY

    Years.	Merchandise.		Treasure.		Total Coinage of		Excess (+) or Defeet(—) of Coinage on Net Imports of		Annual Production (in £, 00,000 omitted) of
    			Net Imports of
    	Imports. £	Exports. £	Silver. £	Gold. £	Silver. £	Gold. £	Silver. £	Gold. £	Gold.	Silver.
    1860-61	23,493,716	32,970,605	5,328,009	4,232,569	5,297,150	65,038	- 30,859	-4,167,531	23,9	8,2
    1861-62	22,320,432	36,317,042	9,086,456	5,184,425	7,470,030	58,667	-1,616,426	-5,125,758	22,8	8,5
    1862-63	22,632,384	47,859,645	12,550,155	6,848,156	9,355,405	130,666	-3,194,750	-6,717,490	21,6	9,0
    1863-64	27,145,590	65,625,449	12,796,717	8,898,306	11,556,720	54,354	-1,239,997	-8,843,952	21,4	9,8
    1864-65	28,150,923	68,027,016	10,078,798	9,839,964	10,911,322	95,672	+ 832,524	-9,744,292	22,6	10,3
    1865-66	29,599,228	65,491,123	18,668,673	5,724,476	14,639,353	17,665	-4,029,320	-5,706,811	24,0	10,4
    1866-67	29,038,715	41,859,994	6,963,073	3,842,328	6,183,113	27,725	- 779,960	-3,814,603	24,2	10,1
    1867-68	35,705,783	50,874,056	5,593,961	4,609,466	4,385,080	21,534	-1,208,881	-4,587,932	22,8	10,8
    1868-69	35,990,142	53,062,165	8,601,022	5,159,352	4,269,305	25,156	-4,331,717	-5,134,196	22,0	10,0
    1869-70	32,927,520	52,471,376	7,320,337	5,592,016	7,510,480	78,510	+ 190,143	-5,513,506	21,2	9,5

     

    He therefore ventured beyond the scope of the agitation, and pronounced that instead of allowing gold a backdoor entry into the currency system it ought to be made the standard of value in India. He did not agree with Mr. Wilson that the substitution of gold for the silver standard would be " to break faith with the creditor." Nor was he much deterred by the fact that before the silver currency could be reduced to a subsidiary position, the introduction of gold in India would give rise to a double standard for the time being ; for he argued that " all nations must pass through a transition stage of a double standard before they arrive at a single standard." Accordingly he proposed that (1) sovereigns and half-sovereigns of British or Australian standard should be legal tender in India, at the rate of one sovereign for Rs. 10, and that (2) Government currency notes should be exchangeable either for rupees or sovereigns at the rate of one sovereign for Rs. 10, but that they should not be exchangeable for bullion.

    His proposals were accepted by the Government of India and were communicated to the Secretary of State^[f82] for his sanction. But the Secretary of State, impatient and intolerant of any deviation from a monometallic system, whittled down the whole project with scant courtesy. His reply^[f83] is a grotesque piece of reasoning and terribly shallow. He was unwilling to allow the measure, because he felt satisfied that the rate of Rs. 10 to a sovereign underrated the sovereign too much to permit its circulation. Here he was on solid ground. The cost of producing a sovereign at a Mint in India was estimated ^[f84]at the time to be Rs. 10-4-8; while the cost of importing it to Calcutta from England was estimated at Rs. 10-4-10, and from Australia at Rs. 10-2-9. Whichever was the proper rate, it was certain that sovereigns could not circulate at the rate of Rs. 10 to 1. It was a pity that Sir Charles Trevelyan did not propose a higher ratio^[f85] so as to make the circulation of the sovereign an assured event. But the Secretary of State would have been averse to the measure just the same, even if the ratio had been favourable to the sovereign. To the Secretary of State, the measure, based as it was on an unfavourable ratio, was useless. But if based on a favourable ratio it was none the less pernicious, for, it portended the possibility of what he considered as the most vicious system of double standard, however temporary it might have been. The mere contingency of giving rise to a bimetallic system was enough to frighten the Secretary of State into opposition to the whole measure, for he refused to admit that " it may be for the public advantage to pass through a period of double standard in order to change the basis of the currency from silver to gold."

    The only concession that the Secretary of State was willing to make was to permit " that gold coin should be received into public treasuries at a rate to be fixed by Government and publicly announced by Proclamation " without making it a general legal tender in India. It will be recalled that this was a revival of that foolish measure which was abandoned in 1852 for having embarrassed the Government. To offer to receive coin which you cannot pay back is to court trouble, and it was to obviate the too-well-known danger inherent in the project that this more complete measure was proposed. But the currency stringency was so great that the Government of India, rather than obstinately cling to their view, consented to avail themselves of the suggestion of the Secretary of State, and issued a Government Notification in November, 1864, which proclaimed that

    "sovereign and half-sovereigns coined at any authorised Royal Mint in England or Australia of current weight, shall until further notice be received in all the Treasuries of British India and its dependencies in payment of sums due to Government, as the equivalent of 10 and 5Rs. respectively ; and that such sovereigns and half-sovereigns shall, whenever available at any Government Treasury, be paid at the same rates to any person willing to receive them in payment of claims against the Government."

    The real par, however, was somewhat above Rs. 10 to the sovereign,^[f86] and the notification was therefore inoperative. The currency situation, on the other hand, continued to be as acute as ever, and the Government of India was again moved in 1866 by the Bengal Chamber of Commerce to take steps to make the circulation of gold effective. This time the Chamber insisted on the institution of a Commission of Inquiry " as to the expediency of introducing gold into the monetary system of India." But the Government of India held^[f87] that " instead of a gold a paper currency has been introduced, in the expectation that it would prove a more convenient and acceptable circulating medium than either of the precious metals," and consequently " it must be shown that paper has not proved and is not likely to prove a circulating medium adequate to the wants and suitable to the habits of the country, before an endeavour is made to introduce gold in suppression of, or in addition to, paper." A commission was therefore appointed to inquire into the " operation of the existing currency arrangements which were established under Act XIX of 1861, " and to report as to "what may be the advantage, as based on expediency, of the introduction of the legal tender of gold into India, in addition to that of silver." After an exhaustive investigation, the Commission came to the conclusion^[f88] that owing to several causes the paper currency had failed to establish itself among the circulating media of the country, but that gold was finding a larger place in the transactions of the people. The Commission ended by urging upon the Government " to cause a legal tender of gold to be a part of the currency arrangements of India." Now it was the turn of the Government to give effect to the recommendation. But, curiously enough, it did not go to the extent of adopting the recommendation of the Commission which it had itself appointed. Instead of making gold legal tender, as advised by the Commission, the only action the Government took was to issue another Notification on October 28, 1868, which simply altered the rate of the sovereign to Rs. 10-8, without doing anything further to avoid the evil consequence attendant upon that one-sided measure. Fortunately for the Government, even this correction of the rate did not induce any flow of gold into the circulation of the country. The currency troubles had by then subsided, and as no new pressure was exerted upon the Government, this proved the last of two abortive attempts the Government made to introduce gold into India.

    For the time being, the problem was solved by the natural course of events. But, as subsequent events showed, the change to a gold standard would have been better for India.^[f89] and would have been welcomed^[f90] in the interests of Europe, which was then suffering from high prices due to the superfluity of gold. At this particular juncture, the Government of India was really at the crossing of ways, and could have averted the misfortunes that were to befall it and its people if it had sided with the forces of change and replaced the silver standard by a gold standard, as it could most easily have done. That those in charge of Indian affairs should have thrown the weight of their authority against the change was no dishonest act deserving of reproach,^[f91] but it does furnish one more illustration of those disastrous human ways, which often lead people to regard the situation in which they live as most secure, just when it is most precarious. So secure did they feel about the currency situation that in 1870, when the Mint Law came to be revised and consolidated, they were content, as though nothing had happened or was likely to happen, to allow the silver standard of 1835 to continue pure and unsullied by any admixture of gold.^[f92] *

    Alas ! those, who then said ^[f93] that they were not called upon to take more than a "juridical" view of the Indian currency question, knew very little what was in store for them.

     

      Contents                                                                 Chapter II

    ---

     [f1]Cf. W. C. Mitchell. " The Rationality of Economic Activity," Journal of Political Economy, 1910, Vol. XVIII, pp. 97 and 197, also "The Role of Money in Economic Theory," by the same, in the American Economic Review (Supplement), Vo. VI, No. 1, March 1916.

     [f2]For the whole of this discussion, cf. H. J. Davenport, The Economics of Enterprise (1913), Chapters II and III.

     [f3]Princep, J., Useful Tables, Calcutta, 1834, pp. 15-16

     [f4]Robert Chalmers, History of Colonial Currency, 1893, pp. 336, 340.

     [f5]§Dr. P. Kelly The Universal Cambist, 1311, p. 115.

     [f6]Money and Mechanism of Exchange (1890), p. 95.

     [f7] Dr. P. Kelly's view is that they circulated at their market ratio (/oc. cit.). On the other hand, Sir R. Temple says: " In ancient and mediaeval India the relative value of the coins of each metal was fixed by the State, and all were legal tender virtually without any formal limitation " (" General Monetary Practice in India," Journal of the Institute of Bankers. Vol. II, p. 406). On another occasion he said : " The earliest Hindu currency was in gold with a single standard. The Mohammendans introduced silver, and in later times up to British rule there was a double standard, gold and silver " (ibid., Vol. XV, p. 9). In contrast to this it may be noted that the Preamble to Currency Regulations XXXV of 1793 and other Currency Regulations of early date make it a point to emphasize that under pre-British regime there was no fixed ratio between the mohur and the rupee.

     [f8]Cf. Prof. S. V. Venkateswara, on " Moghul Currency and Coinage " in the Indian Journal of Economics, July, 1918, p. 169; and F. Atkinson, The Indian Currency Question (1894), p. 1.

     [f9] According to the Mohammedan historian, Khafi Khan, it enraged the Emperor Aurangzeb when the East India Company in 1694 coined some rupees at Bombay "with the name of their impure king " (Imperial Gazetteer of India, Vol. IV, p. 515).

     [f10] It is stated in the Imperial Gazetteer of India (Vol. IV., p. 514), that in the early days of the Moghul rule, there was only one Mint—at Delhi—which struck the Imperial coins. The Emperor Sher Sha was the first to introduce a plurality of Mints for coniage purposes—a practice continued and extended by the later emperors until between the reigns of Akbar and Bahadur Shah II the Mints numbered about 200. From the East India Moral and Material Progress Report for 1872-73 it is clear that not every Mint was open to the coinage of all three metals, gold, silver and copper; but that some Mints coined only gold, others silver, and the rest copper: (see Report, pp. 11-12).

     [f11]Prinsep, J., op. cit., p. 18.

     [f12] It was this necessity for ascertaining the true bullion value of the debased coins which gave rise to that class of money-changers known as Shroffs, who specialised in the business of evaluating the coins at their proper discount from the standard purity by means of the dates and other characteristics engraved upon them.

     [f13]It is stated that Dr. Roxburgh, who was an eye-witness, was so much impressed by the sufferings of the poor owing to the bad state of the currency that he urged upon A. Dalrymple, in a letter dated June 30, 1791, to give prominence to the evils by inserting a paper in his Oriental Repertory (2 vols., London, 1808), " on the current coin in circulation over the Company's Territories which might be productive of the most solid and lasting advantage to the Governing and the Governed," and added, "You may be able to correct the evil, by which you will certainly go to heaven, if the prayers of the poor avail, and I may get a step nearer paradise." Observations on the Copper Coinage wanted in the Circars, by A. Dalrymple, London, 1794, p. 1.

     [f14] Capital Currency and Banking, 1847, p. 15.

     [f15]H. of C. Return 127 of 1898.      

     [f16]Cf.The Dispatch, op. cit., para. 8.

     [f17]Cf. para. 26-28 of the letter from James Prinsep to the Calcutta Mint Committee, printed in the Appendix to the Indian Tables by John Muller, Calcutta, 1836.

     [f18] Attention may be drawn in this connection to the dissenting opinion of Captain Jervis on the project of 180 grs. troy as the unit of weight for the rupee. Cf. his most exhaustive treatise called The Expediency and Facility of establishing the Metrological and Monetary Systems throughout India on a Scientific and Permanent Basis, grounded on an Analytical Review of the Weights, Measures and Coins of India...... Bombay, 1836, pp. 49-64.

     [f19]Cf.The Dispatch, op. cit., para. 9.

     [f20]F. C. Harrison, " The Past Action of the Indian Government with regard to Gold," in Economic Journal, Vol. Ill, p. 54 et seq. Also Minute by Sir John Shore, in Bengal Public Consultations, dated September 29, 1796.

     [f21]H. Dodwell, "Substitution of Silver for Gold in South India," in the Indian Journal of Economics, January, 1921.

     [f22]Report of Dr. Scott on the History of Coinage in the Bombay Presidency, with Appendices, Public Consultations (Bombay, dated January 27, 1801).

     [f23]Cf. Fort St. George Public Depart. Consultations, No. 19, dated January 7, 1818.

     [f24]Cf. Bombay Financial Consultations, dated October 6, 1824

     [f25]Bengal Regulation XI of 1819.

     [f26]The Court of Directors were willing to permit the coinage and circulation of gold unlinked to the rupee, for they had observed in their Dispatch:—

    "16. Although we are fully satisfied of the propriety of the silver rupee being the principal measure of value and the money of account, yet we are by no means desirous of checking the circulation of gold, but of establishing a gold coin on a principle fitted for general use. This coin in our opinion should be called a gold rupee and be made of the same standard as the silver rupee."

     [f27]Cf. Fort St. George Public Consultations of August 19, 1817, particularly the letter of the Accountant-General entered thereon

     [f28]Cf. The Public Dispatches to Madras dated March 6, 1810; July 10, 1811 ; and

    June 12, 1816

     [f29]Preamble to the Bengal Regulation XIV of 1818

     [f30]It, however, increased its weight from 190.895 to 204.710 troy grs

     [f31]Bengal Regulation VII of 1833.

     [f32]It may be that this alteration was also intended to make the Sicca rupee eleven-twelfths fine

     [f33]Cf. Dispatch to Bengal dated March 11, 1829.

     [f34]The Accountant-General of Bengal, in a letter to the Calcutta Mint Committee, dated November 21, 1823 wrote—

    " Para. 32. The amount of the balance must also necessarily depend upon the state of the currency. If the Madras, Bombay, and Furrukabad rupees instead of differing in weight and intrinsic value were coined of one standard weight and value bearing one inscription and in no way differing, the surplus of one Presidency would at all times be available for the deficiency of another, without passing through the Mint, and the balance of India might be reduced in proporion to the increased availability of currency for the disbursements of the three Presidencies " (Bombay Financial Consultations, February 25, 1824).

     [f35]The evil of the system had already made itself felt in Bombay, where the Government had been obliged by a Proclamation dated April 9, 1824, to declare the Furrukabad rupee of 1819 standard as legal tender within its territories on a par with the Bombay rupee, in order to facilitate the supply operation from Bengal. Cf. Bombay Financial Consultations, dated April 14, 1824.

     [f36]3 & 4 Will, IV, c; 85.

     [f37]Cf. the sentiments of Tucker in his Memorials of Indian Government (ed. by Kaye), 1853, pp. 17-19.

     [f38]Cf. their Financial Dispatch to India, No. 9, dated July 27, 1836

     [f39]Section 9 of Act XVII of 1835.

     [f40]To mention only one, cf. S. V. Doraiswami, Indian Currency, Madras, 1915. passim

     [f41] Laughlin, J. L, History of Bimetallism. New York, 1886, pp. 79-83.

     [f42] Switzerland was the first to reduce the amount of silver in her small coins in order to keep them in circulation. But these Swiss coins of reduced fineness crossed the national frontier and, as they were legal tender in other countries of Latin origin, began to displace their dearer coins of similar denominations, which contained more silver but which passed current at the same nominal value. This brought forth a decree in France (April 14, 1864) which revoked the legal tender power to a concerted action on the part of all the Latin countries concerned.

     [f43]For more particulars of the Latin Union, cf. Laughlin, op. cit, pp. 146-9.

     [f44]Cf. H. of C. Return, East Indian (Coinage) 254 of 1860.

     [f45]Ibid., p. 8

     [f46]Ibid., p. 10.

     [f47]The author of A Treatise on the Coinage of the Realm was anticipated by Sir John Shore, the Governor of Bengal, in his Minute, op. cit., par 55.

     [f48]Cf. H. M. Dunning, Indian Currency, 1898, passim,also S. V. Doraiswami, op. cit., passim.

     [f49]Cf. Dana Norton, The Silver Pound, 1887, p. 161.

     [f50]Cf. the evidence of A. Baring (afterwards Lord Ashuburton) before the Committee for Coin (1828), H. of C. Return 31 of 1830.

     [f51]See his Memorandum to the Cabinet printed by Gibbs, A Colloquy on Currency

    (1894), Appendix, p. xlvii.

     [f52]For which, see Andreades, History of the Bank of England, Supplement 1. 

     [f53] For the original purpose of this defunct proviso, see Peel's Speech on the Bank Charter Act, dated May 20, 1844, Hansard, Vol. LXXIV, pp. 1334-35.

     [f54]In theory Holland had adopted bimetallism in 1816. But the legal ratio of 15.873 to 1 had undervalued silver so much that it had made gold the chief circulating medium of Holland.

     [f55]Report of the U. S. Silver Commission of 1876, p. 68

     [f56]Works, p. 271

     [f57]Mr. Dodwell, in his otherwise excellent article, op. cit., seems to convey that silver was substituted for gold in Southern India as a result of the natural preference of the people for the former metal. So eager is he in meeting the contentions of writers like Mr. Doraiswami that he fails to see how his own facts controvert his own thesis.

     [f58]The total coinage of India from 1800 to 1835 was, according to Mr. F. C. Harrison's estimate in the Calcutta Review, July, 1892:—

    Gold                      ...          ...             3,845,000 ounces

     Silver                     ...          ...          3,781,250,000 ounces

    N.B.—In the case of silver, rupees are converted into ounces for comparison.

     [f59]Cf. the article " The Silver Question as regards India," in the Bombay Quarterly Review, April, 1857.

     [f60]Cf. Debates at the East India House on Duties affecting Indian Commerce, vide the Asiatic Journal and Monthly Register for British and Foreign India, China, Australia (London, New Series, Vol. XXXVII, January, and Vol. XXXVIII, May, 1842).

     

     [f61]For the History of those imposed by England, cf. Ruding, Annals of Coinage, 3rd. ed. Vol. I, pp. 353-4, 372, 376, 386-7 ; Thomas Violet, An Appeal to Caesar, London, 1660, p. 26.

     [f62]The following figures of the export of precious metals to India from England are interesting:—

    1652-1703                ...          £1,131,653 (from Mr. Petrie's Minute).

    1747-1795                ...          £1,519,654    

     

     [f63]For the proceedings of the Committee, see India Office Records, " Home Miscellaneous" Series. Vol. 456.

     [f64]Minute on Gold Currency for India, dated December 8, 1863, in the Report of the Bombay Chamber of Commerce, 1863-64. App. I, p. 189

     [f65] Prepared from figures given in Palgrave's "Memorandum on Currency and Standard of Value," Appendix B to Third Report of the Royal Commission on Depression of Trade and Industry. C4797 of 1886. Figures for the production of gold and silver, which are for calendar years, are added from the " Silver Question and the Gold Question," by R. Barclay.

     [f66]Minute on Gold Currency for India, dated December 1, 1863. Report, op. cit. p. 184

     [f67]Report, op. cit. p. 189

     [f68]Amount of Indian Treasury notes outstanding —

    On April 30 1850       £804,988 

    On April 30 1851       802,036

    On April 30 1852       770,301          Extracted from Table No. 2 of the Return

    On April 30 1853       850,432 -       relating to East India Revenues, etc.,

    On April 30 1854       850,627          Parliamentary paper 201, VIII, 1858.

    On April 30 1855       889,875

    On April 30 1856       967,711.

     

     [f69]How to meet the Financial Difficulties of India, by A. C. B., London, 1859, p. 13. This is in many ways a most remarkable pamphlet, which suggested many of the later reforms in Indian currency and banking.

     [f70]The matter was first broached by the native shroffs and merchants of Calcutta in April. 1859, in a letter to the President of the Bengal Chamber of Commerce. Both agreed to urge upon the Government the necessity of a gold currency in India. Cf. Papers relating to the Introduction of a Gold Currency in India,   Calcutta, 1866, pp. 1-3.

     [f71]R. M. Martin, The Indian Empire, Vol. I, p. 665. N.B. evidence shows that it is about 1856.

    -The table in original does not specify dates, but internal

     

     [f72]Ibid., p. 6.

     [f73]Cf. Minute by the Rt. Hon. James Wilson, dated December 25, 1859, Ibid., p. 23.

     [f74]lbid., p. 26.

     [f75]Par. 59 of the Secretary of State's Dispatch, No. 158, dated September 16, 1862.

     [f76]See par. 64 of his Dispatch, supra

     [f77] Cf. his letter to the Government of bombay, dated January 1, 1864. Vide Papers, etc., on the Introduction of Gold in India, pp. 51-69

     [f78]Report of the Bombay Chamber of Commerce, 1863-64, App. I, p. 206

     [f79]This time the Government was memorialised by all the Chambers of Commerce— Bengal, Bombay, and Madras. Action was also urged by the Bombay Association and the Manchester Chamber of Commerce. But the movement derived its greatest strength from the support of the Government of Bombay, particularly by Sir William mansfield's famous Minute on Gold Currency for India

     [f80]Cf. his Minute dated June, 20, 1864. Vide Papers, etc., on Gold in India p. 147 et seq. He was even opposed to holding silver bullion in the paper currency reserve, for this involved on the Currency Department the obligation to get the silver coined, which was a matter of time, having regard to the limited capacity of the Indian Mints at the time, while the notes issued were payable in coin on demand. There was a run on the Paper Currency Department, which found itself short of coin.

     [f81]Sources same as those used in the case of Table IV.

     [f82]Cf. Government of India's Dispatch No. 89, dated Simla, July 14, 1864

     [f83]Financial Dispatch from the Secretary of State, No. 224, dated September 26, 1864.

     

     [f84]Cf. Letter from the Hon. Claud Brown to the Hon. Sir C. E. Trevelyan, dated Calcutta, May 28, 1864. Vide Papers, etc., on Gold, p. 265

     [f85] The reason why he preferred the ratio of 10 to 1 was that that was the prevalent market ratio in India. His argument was that " the sovereign must be rated for circulation in India, not with reference to its English, but to its Indian price estimated in silver." Probably he was unwilling to overrate the sovereign because of his fear that " the existing Indian currency would be rapidly revolutionised and creditors would receive much less than their due." Cf. his Minute dated November 23, 1864 Vide Papers, etc.      on Gold in India.

     [f86]Cf. Appendix A to the Minute by Sir William Mansfield on Gold Currency for India,

    H. of C. Return 79 of 1865

     [f87].  Resolution in the Financial Department, dated February 3, 1866, in the Fort William

    Gazette of the same date, under Notification No. 592.

     [f88]For the Report: of the Commission, see H. of C. Return 148 of 1868.

     [f89]It is true Prof. J. E. Cairnes was against the introduction of a gold standard in India ; but later he withdrew his objections. Cf. his Essays in Political Economy (London, 1873, pp. 88-90).

     [f90]Cf. J. R. McCulloch, Dictionary of Commerce, Ed. 1869, p. 1131.

     [f91]Mr. H. B. Russell says that they retained the silver standard because they profited by it on their remittances. Cf. his International Monetary Conferences, 1898, p. 32.

     [f92]The original Mint and Coinage Bill contained clauses embodying the notification of 1868, compelling the Government to receive sovereigns at Public Treasuries, Cf. Gazette of India, Part V, dated July 23, 1870. But such was the degree of indifferences shown that they were afterwards dropped by the Select Committee, which preferred to leave the matter to the discretion of the Executive.

     

     [f93]Cf. the speech of the Hon. Mr. Stephen on September 6, 1870, introducing the Coinage and Mint Bill, Vide Supreme Legislative Council Proceedings (abbreviated into S.L.C.P.),Vol. IX, p. 398.

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