Jan 9, 2011

Why is there a coin shortage in India?

I have often wondered why everyone is stingy with their coins here, in our India. Can't people just go to the bank and get desired coins for the desired amount of money and live in peace? Especially people whose profession demands daily dealings with a lot of change, like autokars and vendors. As ever, it turns out that I've been this naive, idiotic on-looker who whinges without understanding the way things really work.

Going into the details, Shyam's committee on the Indian Currency System Today presents the following data on the topic:

Here's why India is short on coins. The volume of rupee coins and notes is controlled by the RBI. Under its direction, the total number of rupee coins in circulation in India is around Rs. 9984 crores! (as of 2008-09)

Now coming to Rupee notes, whose printing is also the monopoly of the RBI (Issue Dept.), currencies worth around Rs. 7,88,279 crores are issued (as of 2009-10).

This explains why we're always short of coins here. Too many notes, too little coins. As simple math would point out, the note-coin ratio is atleast around 80:1. Now, I did get curious as to why the Reserve Bank has this partiality towards currency notes, but me being just a Shikari Shambu and no Sherlock Holmes, couldn't muster up the courage to go deeper and read more boring documents to get the answer. However, the wise, enlightened, economic crocodiles who read this post are welcome to give their thoughts and justifications.

Recommendations of the committee:
Let's not anymore whinge about the helpless autokars. Let's form one auto-passenger union to go and jointly whinge before the gates of the RBI!

3 comments:

Sunil said...

You will be surprised to know that in Bangalore coins are being sold at a premium of 12%. Also we traders always stock coins in huge quantities because we don't want to run out of coins.

Shyam Rajan said...

Oh dear! You're damn right, I'm surprised mate!

Anonymous said...

bro this is condition all over india..and government is involved in it