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U.P.P.C.S. (Pre) 2006

Economic Policies of the Sultanate

Authentic Past Paper Standard Evaluation

Consider the following statements: **Assertion (A):** The scheme of the token currency of Muhammad Tughluq proved unsuccessful. **Reason (R):** Muhammad Tughluq did not have the proper control over currency issue.

Solution & Analysis

Answer: A

Concept A successful fiat or token currency system requires the state to have a monopoly on minting and strict anti-counterfeiting measures to maintain public trust.

Explanation Muhammad Bin Tughluq introduced copper/brass tokens in 1330. Contemporary historian Barani notes that 'every Hindu's house became a mint', indicating a total failure of state control.

Logical Breakup
Logic 1: Assertion (A) is true. The experiment caused trade to halt as merchants refused to accept base metal tokens in place of gold/silver.
Logic 2: Reason (R) is true. The Sultan failed to restrict minting to the imperial treasury; the design was too simple, allowing citizens to easily manufacture forged tokens at home.

Active Recall

Question

What happened when Tughluq withdrew the token currency?

Answer

He offered to exchange the copper tokens for real gold and silver coins, which drained the state treasury and caused a massive financial crisis.

Core Insight

Tughluq's failure was not in the 'idea' (which was modern), but in the 'execution' and inability to manage the supply of money.

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