A hundred years ago, a young Indian economist reached New York in the third week of July. His name was B.R. Ambedkar. Ambedkar later became famous as a relentless critic of the pernicious caste system, an inspiring political leader and the moving spirit of the Indian Constitution, but his early training was as an economist.

Ambedkar knew that the problem of the rupee is eventually linked to the problem of domestic inflation. In the preface to the book version of his thesis, he pointed out: “... nothing will stabilize the rupee unless we stabilize its general purchasing power”.

Much has changed in the Indian economy since Ambedkar did his academic work in monetary economics. But some of his general approach to the problem of the rupee is still relevant: the benefits of depreciation in an open economy, the need to take the distributional consequences into account, the need to maintain price stability in the domestic economy, and the preference for rules over discretion in monetary management. Read More