From Rupee to Petrodollar: The Truth Behind Bharat’s Currency, Gulf Trade, and the Global Dollar Order - Bharat deserves the TRUTH...

1. India’s Historic Rupee Ties with the Middle East

In the decades after independence, the Indian rupee wasn’t just a national currency—it was *the* regional currency across the Gulf. Countries like Kuwait, Bahrain, Oman, and Qatar all used it for trade.

The Gulf Rupee

To prevent gold smuggling and black-market losses, India introduced a **special 'Gulf Rupee' in 1959**—valid only outside its borders. This was a clever move to separate domestic currency stability from international misuse.

2. 1966: Indira Gandhi Devalues the Rupee

India faced twin crises:

- Costly wars with China and Pakistan

- Economic drought and trade deficits

The rupee was fixed at ₹4.76 = $1 since 1949. But under pressure from the IMF and foreign lenders, **Prime Minister Indira Gandhi devalued the rupee by 57% to ₹7.50 per dollar on June 6, 1966**.

> This caused outrage. Parliament saw walkouts. Kamaraj called it a betrayal. But it stabilized the economy.

By 1970, India’s trade deficit dropped, and the **Green Revolution** improved food production.

3. The Rise of the Petrodollar

In 1971, the U.S. abandoned the gold standard. The dollar was no longer pegged to gold.

By 1973, **global oil trade shifted entirely to USD payments**. This “Petrodollar” system created:

- Permanent demand for U.S. dollars

- Control of global trade flows through American financial institutions

**Oil-rich countries earned billions in USD**, and recycled it into global markets—cementing U.S. dominance.

4. India’s Place in This Story

- **Gulf countries ditched the rupee** after India’s 1966 devaluation.

- **Kuwait launched its dinar (1961), Bahrain (1965), Oman (1970)**.

India, which once anchored regional finance, became **a dollar-dependent importer of oil**.

Reflections: Why This Matters

| Topic | Then | Now |

|----------------------|------------------------------|------------------------------|

| Currency in Gulf | Indian Rupee | Local Gulf currencies |

| Oil Trade | Bilateral or rupee-based | USD-dominated (petrodollar) |

| India's strategy | Export-led, domestic control | Dollar-reliant |

| Current shift | Gulf deals in rupees | Rise of rupee-internationalization |

India is now returning to rupee-denominated oil and gold trades (e.g., with UAE), attempting to break free from 50 years of dollar dominance.

5. The People of Bharat Deserve the Truth…

This is not just economic history. It’s about lost sovereignty, external pressure, and a long journey to monetary independence.

The world is shifting. And Bharat must reclaim its economic narrative.