Biography: How John Matthai, India’s second finance minister, handled the devaluation of the rupee

John Matthai told the House that he had informed Ceylon and Pakistan about the devaluation of the Indian rupee but had received no response from the latter. Matthai released an announcement in the press on 19 September, a Monday, about the devaluation and the concurrence was received from the IMF by the finance ministry on the same day. However, since Monday to Wednesday were all bank holidays, the new rate became effective only on 22 September 1949.

Matthai said that while he appreciated the difficulties faced by the British government, he found it strange that there was no mention of devaluation at the commonwealth ministers conference which was convened for discussing the dollar situation. “I cannot help thinking that in a matter which so vitally affects the whole economy of every country in the sterling area, steps should have been taken to arrange for a secret meeting of the Finance Ministers of the Commonwealth countries before this decision was sprung upon them …”

Matthai told the House that there existed a case based on economic facts for the devaluation of both the pound and the rupee, but he would have liked to have more time for deliberation on the subject. It was a decision...

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