Britain handed Indians gold sovereigns to spend, and most were never seen again
In 1900–1901 the colonial government released gold sovereigns worth 6,750,000 pounds into India, hoping they would circulate as everyday money. According to John Maynard Keynes, less than half ever came back through official accounts. The experiment was dropped, and much of the government's gold was shipped to the Bank of England.
The rupee's roots go back much further than the British. The grammarian Pāṇini, writing sometime between the sixth and fourth centuries BCE, used the word rūpya, possibly for a stamped piece of metal, and the Arthashastra attributed to Chanakya names silver, gold, copper and lead coins, from rūpa, meaning shape or form. The direct ancestor is the silver rupiya of 178 grains introduced by Sher Shah Suri during his short reign from 1540 to 1545. Its weight survived the Mughals and lasted into the twentieth century.
Being silver became a problem. As the leading economies tied their money to gold, huge silver discoveries in the United States and elsewhere helped trigger the panic of 1873 and knocked silver's value down against gold, an episode remembered as the fall of the rupee. Britain had already tried and failed to make the gold sovereign the imperial coin in India; from 1864 treasuries in Bombay and Calcutta accepted sovereigns but never paid them out, so they simply sat in the vaults.
A committee of 1898 heard 49 witnesses and backed a scheme in which notes and cheap token coins would behave as if they were gold for foreign payments. One witness, A. M. Lindsay, predicted that the change would pass unnoticed except by the intelligent few. Gold became legal tender on 15 September 1899, producing what one writer called a limping gold standard.
Today the Reserve Bank of India issues the currency, divided into 100 paise, and in April 2025 it was the world's eleventh most traded.
Source: Indian rupee
