Dr. Babasaheb Ambedkar began his career as an economist. Nobel laureate Dr. Amartya Sen considers Babasaheb his mentor.
Recently, the Reserve Bank completed 90 years, and grand events were organized to mark the occasion. Even before India gained independence, Babasaheb Ambedkar had conceptualized the idea of a Reserve Bank in his research thesis. Today, we talk about federal territories, the Finance Commission, and state demands—who will allocate how much funds, which state will function in what order. These ideas were presented by Babasaheb Ambedkar even before independence. He thoroughly deliberated on the Finance Commission and how financial resources should be distributed between the Centre and the states. Many institutions, including the RBI, operate today under the light of these very ideas.
The Reserve Bank is a central banking institution. It regulates India's monetary policies and financial systems, oversees currency management, and formulates developmental plans for the Government of India. It plays a crucial role in controlling India's financial system and making key decisions. The Reserve Bank of India (RBI) was established on April 1, 1935, during British rule. The conceptual foundation of the RBI, established in 1935, was based on the Hilton Young Commission's report, which drew from Babasaheb's book. The Reserve Bank of India operates seamlessly on the principles and framework laid out by Dr. Babasaheb Ambedkar.
Babasaheb’s analysis in "The Problem of the Rupee" was so impactful that it exposed the British colonial exploitation of India's traditional industries to the world. The then-Congress party leveraged Ambedkar’s arguments to pressure the British, leading to the establishment of a Royal Commission from London to investigate the matter. In 1935, after World War I, the British government decided to establish the Reserve Bank of India to stabilize the Indian economy and regulate other financial institutions and banks. The RBI was formed based on the report and details of the Royal Commission (Hilton Young Commission) appointed in 1925. The three economic treatises written by Babasaheb, along with his conceptual framework and operational methodology, became the foundation for the RBI's establishment. In 1949, the RBI officially came entirely under the control of the Indian government.
When the RBI was established in 1935, Babasaheb was actively involved in politics—leading fronts, movements, and party formations. That same year, he was appointed as the Principal of the Government Law College. Meanwhile, his scholarly work was being used to lay the foundation of the RBI. Even as economies in other countries crumbled, the guiding principles and methodologies suggested by Babasaheb continue to uphold the Indian Reserve Bank and the Indian economy with stability. Although Babasaheb was not directly involved in the RBI's establishment, its conceptualization and framework were his contributions—a fact acknowledged even by Wikipedia.
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