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

The Hilton-Young Commission (Royal Commission on Indian Currency and Finance, 1926) recommended fixing the rupee at 1 shilling 6 pence, against the pre-war 1s 4d that Indian businessmen and nationalists demanded. The rate was enacted by the Currency Act of 1927. A high (overvalued) rupee meant that the Government of India needed fewer rupees to buy the sterling it had to send to Britain every year as Home Charges — interest on debt, pensions, salaries and military costs. It also kept India’s finances sound in the London money market, so that its loans and credit stood protected. Thus the real motive was to aid remittances from India and maintain India’s creditworthiness.

The overvalued rupee made imports cheaper, but helping Indian importers was not the purpose; in fact, it hurt Indian exporters, including cotton growers and mill owners, which is why Indian industrialists such as Purshottamdas Thakurdas opposed the 1s 6d ratio. The rate was linked to sterling, not fixed to stop a fall against gold, so options (b), (c) and (d) do not explain the British decision.