Rupee was devalued for the first time in 1966, though its external value was subjected to change quite often. Exactly after 25 years, the second set of devaluations took place. But the purpose and the consequences were different. This article reviews the two events on the 40th anniversary of the first of the two events.

While the price movement of a commodity has only a commercial significance, the word devaluation has a negative connotation, as it is derived from the word `value'. Perhaps for this reason, devaluation of a currency is always an emotional issue, much more than just a change of price.

In the long history of its existence, the Indian rupee (rupee coins since Circa 6^th century BC and rupee notes since 18^th century) has undergone official devaluation only twice! But it does not mean that its exchange rate has remained steady. When it was pegged to some other currency, the devaluation of the parent currency automatically changed the external value against all other currencies irrespective of devaluation. When it was subject to market forces, the change took place continuously but was referred to as depreciation, appreciation, weakening, strengthening or floating down and not as devaluation or revaluation. It is interesting to study and compare the two devaluations on the eve of the 40^th anniversary of the first devaluation.

The first official devaluation of the Indian rupee took place on June 6, 1966. The silver jubilee of the first devaluation was celebrated with a second official devaluation in two stages, on July 1 and 3, 1991. There were a number of common factors which led to these `extreme' steps. But there were vast differences in the preparedness, market reception, public response, follow up measures and the consequences of the two similar events. The state of economy, the political setup, the global economic scenario and the receptivity to reforms had changed substantially during the intervening twenty five years. The course adopted by the economy, therefore, after the two events, was different.

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