India’s Rupee Coin: Will It Survive?

Aakhir Tak – In Shorts

Trump ordered a halt to the minting of pennies.
India’s one-rupee coin costs more to mint than its face value.
The one-rupee coin remains important in daily transactions.
It continues to hold significance despite the rise of digital payments.
It is also used in traditions and customs.

Aakhir Tak – In Depth

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US President Donald Trump has ordered a halt to the minting of pennies, the coins denoting a cent of the dollar, over high production costs. In India, the minting cost of India’s Re 1 coin is also more than its face value. Yet, the ‘ek rupiya ka sikka’ holds ground and has high relevance in everyday transactions and traditions. This raises the question: Is the future of India’s one-rupee coin also at stake?

Trump’s Decision

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Trump directed the Treasury Department to stop minting new pennies, citing the rising cost of producing the one-cent coin. Trump’s move to junk the penny, the coin that denotes a hundredth part of a dollar, came as part of his efforts to reduce what he perceives as wasteful spending. As the US considers phasing out its lowest denomination, the penny, the continued presence of the one-rupee coin in India presents an interesting contrast.

Significance of the One-Rupee Coin in India

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The Re 1 coin, a staple of India’s currency for decades, is far from obsolete. Whether stuck on a ‘shagun ka lifafa’ (gift envelope) or exchanged for chewing gum, the little coin still packs a punch. Even as digital payments have seen an uptick in India, the Re 1 coin refuses to be sidelined. The persistence of the one-rupee coin underscores its enduring value in everyday life.

Penny vs. Rupee: A Comparison

Technically, a penny, which represents one cent in the US, is not equivalent to an Indian rupee. The Indian rupee is a standalone unit, comprising 100 paise, just as a US dollar consists of 100 cents. However, the economic principle behind questioning the necessity of both coins is similar: are they worth the cost of production?

Why Trump Called for Junking the Penny

Trump has noted that producing pennies costs more than their face value, with each penny costing over two cents to make. “For far too long the United States has minted pennies which literally cost us more than 2 cents. This is so wasteful!” Trump posted on Truth Social. His stance reflects a broader concern about government efficiency and fiscal responsibility.

Coin Production in India

In India, the Reserve Bank of India (RBI) and the Union Finance Ministry have historically managed to keep the cost of producing coins relatively low by using cost-effective materials and efficient production processes. The Indian government recognizes the importance of maintaining a diverse range of currency denominations.

Cost of Minting the Re 1 Coin

India’s one-rupee coin is minted by the Security Printing and Minting Corporation of India Limited (SPMCIL), which operates under the Department of Economic Affairs of the Finance Ministry. While recent production costs for the one-rupee coin are not publicly available, an RTI filed in 2018 revealed that manufacturing a single one-rupee coin costs more than its face value. The RBI stated that the average cost of minting a Re 1 coin was 11 paise more than its face value.

Future of the One-Rupee Coin

Despite the increasing cost of production, the one-rupee coin continues to play a vital role in the Indian economy and culture. The government and RBI have ensured its continued circulation to enable small transactions and maintain financial inclusion, especially in rural areas with limited access to digital payments. It remains an integral part of daily life and traditional ceremonies.

Aakhir Tak – Key Takeaways to Remember