The following booklet titled “India Needs a Free Market Exchange Rate” was published on May 9, 1963, and was authored by Milton Friedman. The author describes the reasons behind India’s slumping exports and the rapid exhaustion of India’s foreign exchange reserves, despite a large number of foreign exchanges being made available to the country. The resulting pressure of the crises on the balance of payment, met by enforcing direct control over imports and subsiding exports, has been critically analysed in this booklet. The author asserts that the exchange control policy has failed to stimulate exports. Moreover, cutting out whole categories of imports has had severe consequences on the economic behaviour and activities. It has resulted in domestic production at high costs and hence the failure to sell goods abroad. Thus, the whole concept of direct control has proved to be counterproductive. Additionally, direct control has also increased illegal activities and corruption in obtaining import licenses. The deliberate attempts by the Government to maintain an overvalued Rupee have not shown the expected results. The author asserts that sooner or later, the fixed rate of exchange will cause varying difficulties. In view of this predicament , he contends for a floating exchange rate determined by private transactions providing an automatic adjustment mechanism.