History · Colonial Economy
UGC NET December 2014 History
Under the 'Old Guarantee System', the British companies investing in railways were assured a guaranteed dividend of:
A10%
B8%
C5% ✓ Correct
D3%
Correct answer: (C) 5% — The guaranteed dividend was five percent, so the answer is five percent.
Explanation
★The guaranteed dividend was five percent, so the answer is five percent.
★Under the Old Guarantee System the government promised this return.
★British companies that built railways in India were assured a five percent dividend.
★This was paid even if the lines did not earn enough.
★The burden of this guarantee fell on Indian revenues.
★So Indian taxpayers bore the risk while British investors gained.
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