The Government of India announced that the Reserve Bank of India will launch the Rupee One denomination back into the economy. Within months the Modi Government had classified a series of notifications regarding the Indian currency. The rupee which was in the news since the end of 2016 is back again with the questions raised over its Modi-fication.
The printing of the older indigo version of the Rs 1 denomination was discontinued after 1994 and after that the Rs 1 coin was put in circulation. Printing of Rs 2 and Rs 5 notes too were discontinued in 1995 and only coins were issued for these denominations later on.
With reports of there being a chronic shortage of Rs 1 coins, the administration seems keen on come back with the pink-green combo version that is set to be launched into this fastest growing economy. The reports suspected the cause of the coin shortage to be the misuse of the melted metal that get converted into blades, ornaments and more. To be precise, there were reports of the coins being melted and earned profits over so this may be the reason to remove the coin anf return with the note. Though the need arose out of the chronic suspicion, there an equal rhetoric on the other part. The need is questioned as it was expected out of the Government that it would ease the trouble in getting the change for Rs 2000 note. The possible solution to ease the Rs 2000 outbreak would have been the launch of Rs 1000 denomination. The problem of getting change for Rs 2000 is a problem for many traders. Hope the next decision of the centre would ease this problem.
Small transactions were already smooth with the presence of the lower denomination coins, there was a need to kick another problem out. Also it may cost more to print and circulate the notes as they are always an expensive option. Rs 1 currency note incurs a cost of 94 paise to print, whereas Rs 1 coin takes only 74 paise to mint.
Since the way forward is digital does it even make sense printing the smaller denomination? We also wonder what can be bought with Rs. 1 today please share your comments on this…