B.R. AMBEDKAR’S The Problem of the Rupee: Its Origin and Its Solution is a foundational anti-colonial text. Based on his doctoral thesis at the London School of Economics (‘LSE’) and first published in 1923, it is an empirically grounded indictment of how the British Empire manipulated India’s currency system to serve metropolitan interests. The book was published two decades before the Bretton Woods Conference reshaped global monetary governance, and half a century before post-colonial critiques of international economic law became a scholarly tradition. Yet Ambedkar’s analysis of how monetary arrangements serve metropolitan interests at the expense of global south economies remains, a century later, among the most rigorous of its kind.
The book spans approximately 303 pages and is divided into seven substantive chapters. Professor Edwin Cannan, a British economist, who was Ambedkar’s thesis supervisor at the LSE, wrote in the Foreword to the text that he does not “share Mr. Ambedkar’s hostility to the system, nor accept most of his arguments against it and its advocates” but concedes that Ambedkar “hits some nails very squarely on the head” and that “even when I have thought him quite wrong, I have found a stimulating freshness in his views and reasons.”
This article provides a detailed overview of Ambedkar's Problem of the Rupee. It examines how Ambedkar systematically dismantled the theoretical foundations of the gold exchange standard and exposed its function as an instrument of colonial resource extraction rather than a neutral monetary arrangement. In doing so, it situates his contribution as an early and empirically grounded critique of the international monetary system.
Dissecting the Problem of the Rupee
Ambedkar opens the book with a sweeping historical survey of India’s monetary system from the Mughal period to the early British Raj. Ambedkar notes that since the time of Akbar, the units of currency had been the gold mohur and the silver rupee, both identical in weight at 175 grains troy, but circulating without any fixed ratio of exchange between them—a system he describes, following English economist W.S. Jevons, as a “parallel standard” rather than a double standard.
He adds, however, that an alleviating contrivance existed: both coins bore a fixed ratio to the copper dam, permitting them to circulate at an effectively fixed ratio to each other. He notes that in Southern India, gold pagodas served as the standard of value, entirely independently of the silver rupee system. The disintegration of the Mughal Empire led to monetary chaos: regional rulers debased coinage, and the market was flooded with coins of inconsistent purity.
