Ban on coins: Is this the new surprise from Narendra Modi
As India is still recovering from the effect of demonetization Prime Minister Narendra Modi and team is reportedly ready with another big bang surprise, say TV reports.
Modi is contemplating demonetizing Rs 2000 note and 10, 5, 2 and 1 coins as well. As per reports, Modi is aware of hoarding of Rs 2000 currency notes by tax- evaders. So reports say, the new pink-colored currency note may go out of circulation.
Also, the report explains the logic behind banning of coins. The cost of minting coins is higher than printing currency notes. Six currency notes can be printed in the cost of minting one coin. For example, it takes Rs 6. 10 to mint Rs 10 coin. But to print Rs 10 note it costs only 94 paise. Now imagine how much it would cost to mint Rs 1, 2 and 5 coins! Therefore, the government is thinking of banning coin and increase the printing of currency notes. If the reports are true coins will vanish all over the country.
Currency notes Cost of printing
- Rs 10 - 94 paise
- Rs 20 - 1.16
- Rs 50 - 1.65
- Rs 100 - 1.70
- Rs 500 - 2.90
- Rs 2000 - 3.80
The government can ban coins and pump in more currency notes in the market, but why the government is hesitating from the decision?
The USP of coins is its durability compared to currency notes' longevity which lasts only 9-10 months. The repeated printing of new currency notes burdens ex-chequer. Therefore, experts believe minting coins is economical instead of currency notes. Hence, coins are still in circulation.
The Central government might be thinking of banning of coins, but coins have upper hand in durability in comparison with notes. So, govt is hesitating to take the call on demonetizing coins.