You must understand that devaluation refers to dropping value of the Indian Rupee in contrast to the US dollar in the world market. In 1947, India became a supporter of the IMF (International Monetary Fund) which compelled fixing of exchange value of the Indian rupee as per International Monetary Fund standard. Consequently, India was indulged to devalue the rupee and so far the following devaluation takes place:
· In June, 1949 the Indian Rupee was devaluated by 30.5%. Dr John Mathai was the Finance Minister.
· Second Devaluing took place in June 1966 when Sachindra Chaudhary was the Finance Minister, whereby the Indian Rupee was further devalued by 57%.
· Third and Fourth Devaluation on 1 July 1991, the Indian Rupee was devalued by nine per cent and yet again more devalued by eleven per cent on 3 July 1991, total twenty per cent, During the course of which, Finance Minister was Dr Man Mohan Singh. The existing currency system in India i.e., after World War II is managed by the Reserve Bank of India and is based on inconvertible paper currency system.
It has two aspects: (a) internal aspect, and (b) external aspect. These are as given below:
(i) The internal aspect deals with the circulation of coins and currency notes,
(ii) The external aspect deals with the external value of currency and the way it is regulated.
