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. He had come to Columbia University to study under Edwin Seligman, who also happened to be a friend of Lala Lajpat Rai.

The young scholar would sit for hours in the university library. In his three years at Columbia, Ambedkar took 29 courses in economics, 11 in history, six in sociology, five in philosophy, four in anthropology, three in politics and one each in elementary French and German, according to the Columbia website.

Ambedkar was one of the first generation of professionally trained economists in India. He was also the first Indian political leader with formal training in economics, with research papers published in noted academic journals. He came back from the US in 1916, taught economics at a Mumbai college for three years, and then went to London to do his doctorate at the London School of Economics under Edwin Canaan. The London doctorate was awarded in 1923 and the Columbia one in 1927. He also became a lawyer during his stay in London.

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Ambedkar looked into the problem of the rupee at a time when there was a clash between the colonial administration and Indian business interests on its value. The latter argued that the government was maintaining an overvalued exchange rate to help British exporters who sold their goods in India.

The Congress backed Indian business in calling for a devaluation. London eventually agreed to set up a royal commission in 1925 to examine the matter.

The main focus of the doctoral thesis was on how Indian monetary affairs should be arranged. Ambedkar argued in favour of a gold standard as opposed to the suggestion by John Maynard Keynes that India should embrace a gold exchange standard. His interest in economics, however, was never purely theoretical—it also lay in what implications it had for public policy, as economic historian S. Ambirajan pointed out in a 2001 speech on Ambedkar’s contributions to Indian economics.

In his statement to the royal commission on the rupee, Ambedkar defined the controversy in a way that is relevant today as well: “At the outset, it is necessary to realize that this controversy involves two distinct questions: (i) Should we stabilize our exchange and (ii) What should be the ratio at which we should stabilize?"

The current context is very different, but the way Ambedkar framed the problem is still relevant today: Should the Reserve Bank of India try to defend the rupee and what value should it defend?

Ambedkar eventually argued in favour of a limited devaluation of the rupee, somewhere between the exchange rates that the two competing groups were in favour of: the colonial government representing British business interests that wanted to maintain the existing exchange rate and the Congress speaking for Indian business interests that wanted a cheaper rupee. A cheaper rupee at the end of the 19th century had helped Indian exporters.

His reasoning for such a compromise settlement was fascinating, because it looked at the distributional consequences of exchange rate management.

Ambedkar said that a limited devaluation would help the business class as well as the earning class. A very steep devaluation would harm the latter since they would be hit by high inflation if the fall in the rupee was too steep. In effect, he said that the interests of these two groups should be balanced while thinking of the value of the rupee, because a very steep devaluation would reduce real wages of the earning class because of inflation.

In his statement to the Royal Commission on Indian Currency and Finance, Ambedkar said: “The more important point is, supposing that there is a gain arising from low exchange, whence does this gain arise? It is held by most businessmen that it is a gain to the export trade and so many people have blindly believed in it that it must be said to have become an article of faith common to all that a low exchange is a source of gain to the nation as a whole. Now if it realized that low exchange means high internal prices, it will at once become clear that this gain is not a gain coming to the nation from outside, but is a gain from one class at the cost of another class in the country."

Ambedkar also 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". Ambirajan also pointed out that Ambedkar was clearly in favour of price stability and automatic monetary management (or what may today be termed as rule-based monetary policy).

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.

Ambedkar was very much an economist of his time, firmly wedded to the quantity theory of money and the gold standard.

His views too changed as the years went by, and as he moved closer to socialism. It is unfortunate that he almost abandoned economics after the mid-1920s, though an early paper published in 1918 on the problem of small holdings in Indian agriculture is almost prophetic in its anticipation of several themes in later development economics, including the existence of disguised unemployment in farming. He showed why India needs to industrialize to absorb this surplus labour, in stark contrast to the pastoral vision of his political opponent, M.K. Gandhi.

Unfortunately, Ambedkar never came back to economic research. But he later looked back at his years in the US and the UK with pleasure: “My five years of staying in Europe and America has completely wiped out of mind any consciousness that I was an untouchable, and that an untouchable wherever he went in India was a problem to himself and to others."

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