The Indian rupee lost over seventy-five per cent of its value in the last seventy-five years. In 1947, when India became an independent nation, the rupee was pegged to the Pound Sterling. At the time, the value of the rupee was equal to the dollar. One pound was around four rupees.
Post-independence, India adopted a fixed-rate currency regime. Between 1948 and 1966, the rupee was pegged at 4.79 against the dollar. In the 1960s, the two wars – 1962 and 1965 – with China and Pakistan created a significant budget deficit. Consequently, the Indian government was forced to weaken the rupee to 7.57 to the dollar.
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