UPSC Prelims 2026 · GS Paper I
Question 2: History and Culture
The artificially fixed rupee-sterling exchange rate prescribed by the Hilton-Young Commission (1926) was adopted by the British Government for which one of the following reasons ?
AnswerUPSC’s answer is (a).
The 1s 6d ratio set the rupee higher than its market value. A dearer rupee meant fewer rupees were needed to buy the sterling that India owed Britain every year as Home Charges (interest, pensions, administrative costs), so remittances became easier and British creditors kept confidence in India's finances. The overvalued rupee hurt Indian exporters and favoured imports, which is why nationalists wanted 1s 4d instead. Remember the ratio controversy: 1s 4d versus 1s 6d.
Why each option is right or wrong
- (a) Right: a high rupee value eased Home Charges remittances and protected creditworthiness with British lenders.
- (b) Wrong: importers gained incidentally from the dearer rupee, but supporting them was not the reason.
- (c) Wrong: an overvalued rupee made cotton and other Indian exports costlier abroad, so it discouraged exports.
- (d) Wrong: a gold bullion standard was proposed, but protecting the rupee's gold value was not the reason for choosing this ratio.
Only the provisional key (27 May 2026) was found; the final key replaces it when found.
Answer: UPSC’s key. Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 2026, General Studies Paper I, Series A. The paper on upsc.gov.in.