Overview
The Indian rupee (symbol: ₹; code: INR) is the official currency of India. The rupee is subdivided into 100 paise (singular: paisa), though as of 2019, coins of denomination of 1 rupee is the lowest value in use. The issuance of the currency is controlled by the Reserve Bank of India. The Reserve Bank manages currency in India and derives its role in currency management on the basis of the Reserve Bank of India Act, 1934.
History
The history of the Indian rupee traces back to ancient India in circa 6th century BCE, ancient India was one of the earliest issuers of coins in the world,[22] along with the Chinese wen and Lydian staters.
Arthashastra, written by Chanakya, prime minister to the first Maurya emperor Chandragupta Maurya (c. 340–290 BCE), mentions silver coins as rūpyarūpa, other types including gold coins (suvarṇarūpa), copper coins (tamrarūpa) and lead coins (sīsarūpa) are mentioned. Rūpa means ‘form’ or ‘shape’; for example, in the word rūpyarūpa: rūpya ‘wrought silver’ and rūpa ‘form’.
In the intermediate times there was no fixed monetary system as reported by the Da Tang Xi Yu Ji.
During his five-year rule from 1540 to 1545, Sultan Sher Shah Suri issued a coin of silver, weighing 178 grains (or 11.53 grams), which was also termed the rupiya. During Babur’s time, the brass to silver exchange ratio was roughly 50:2.[28] The silver coin remained in use during the Mughal period, Maratha era as well as in British India. Among the earliest issues of paper rupees include; the Bank of Hindustan (1770–1832), the General Bank of Bengal and Bihar (1773–75, established by Warren Hastings), and the Bengal Bank (1784–91)
1800s
Historically, the rupee was a silver coin. This had severe consequences in the nineteenth century when the strongest economies in the world were on the gold standard (that is, paper linked to gold). The discovery of large quantities of silver in the United States and several European colonies caused the panic of 1873 which resulted in a decline in the value of silver relative to gold, devaluing India’s standard currency. This event was known as “the fall of the rupee.” In Britain the Long Depression resulted in bankruptcies, escalating unemployment, a halt in public works, and a major trade slump that lasted until 1897.
India was unaffected by the imperial order-in-council of 1825, which attempted to introduce British sterling coinage to the British colonies. India, at that time, was controlled by the British East India Company. The silver rupee coin continued as the currency of India through the British Raj and beyond. In 1835, British India adopted a mono-metallic silver standard based on the rupee coin; this decision was influenced by a letter written by Lord Liverpool in 1805 extolling the virtues of mono-metallism.
Following the First war of Independence in 1857, the British government took direct control of India. Since 1851, gold sovereigns were produced en masse at the Royal Mint in Sydney. In an 1864 attempt to make the British gold sovereign the “imperial coin”, the treasuries in Bombay and Calcutta were instructed to receive (but not to issue) gold sovereigns; therefore, these gold sovereigns never left the vaults. As the British government gave up hope of replacing the rupee in India with the pound sterling, it realised for the same reason it could not replace the silver dollar in the Straits Settlements with the Indian rupee (as the British East India Company had desired). Since the silver crisis of 1873, several nations switched over to a gold exchange standard (wherein silver or banknotes circulate locally but with a fixed gold value for export purposes), including India in the 1890s.
India Council Bill
In 1870, India was connected to Britain by a submarine telegraph cable.Telegraphy Around 1875, Britain started paying India for exported goods in India Council (paper) Bills (instead of silver).
If, therefore, the India Council in London should not step in to sell bills on India, the merchants and bankers would have to send silver to make good the (trade) balances. Thus a channel for the outflow of silver was stopped, in 1875, by the India Council in London.
The great importance of these (Council) Bills, however, is the effect they have on the Market Price of Silver : and they have in fact been one of the most potent factors in recent years in causing the diminution in the Value of Silver as compared to Gold.
The Indian and Chinese products for which silver is paid were and are, since 1873–74, very low in price, and it there fore takes less silver to purchase a larger quantity of Eastern commodities. Now, on taking the several agents into united consideration, it will certainly not seem very mysterious why silver should not only have fallen in price
the great nations had recourse to two expedients for replenishing their exchequers, – first, loans, and, second, the more convenient forced loans of paper money۔
Fowler Committee (1898)
The Indian Currency Committee or Fowler Committee was a government committee appointed by the British-run Government of India on 29 April 1898 to examine the currency situation in India.[35] They collected a wide range of testimony, examined as many as forty-nine witnesses, and only reported their conclusions in July 1899, after more than a year’s deliberation.[30]
The prophecy made before the Committee of 1898 by Mr. A. M. Lindsay, in proposing a scheme closely similar in principle to that which was eventually adopted, has been largely fulfilled. “This change,” he said, “will pass unnoticed, except by the intelligent few, and it is satisfactory to find that by this almost imperceptible process the Indian currency will be placed on a footing which Ricardo and other great authorities have advocated as the best of all currency systems, viz., one in which the currency media used in the internal circulation are confined to notes and cheap token coins, which are made to act precisely as if they were bits of gold by being made convertible into gold for foreign payment purposes.The committee concurred in the opinion of the Indian government that the mints should remain closed to the unrestricted coinage of silver, and that a gold standard should be adopted without delay…they recommended that the British sovereign be given full legal tender power in India, and that the Indian mints be thrown open to its unrestricted coinage (for gold coins only).
These recommendations were acceptable to both governments, and were shortly afterwards translated into laws. The act making gold a legal tender was promulgated on 15 September 1899; and preparations were soon thereafter undertaken for the coinage of gold sovereigns in the mint at Bombay.This law was just to defraud Indian people, as gold sovereign coins were never minted in India.
Silver, therefore, has ceased to serve as standard; and the Indian currency system of to-day (that is 1901) may be described as that of a “limping” gold standard similar to t he systems of France, Germany, Holland, and the United States.
The Committee of 1898 explicitly declared themselves to be in favour of the eventual establishment of a gold currency.
This goal, if it was their goal, the Government of India have never attained.
1900s
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In 1913 John Maynard Keynes writes in his book Indian Currency and Finance that during financial year 1900–1901, gold coins (sovereigns) worth of £6,750,000 were given to Indian people in the hope that it will circulate as currency. But against the expectation of Government, even half of that were not returned to Government, and this experiment failed spectacularly, so Government abandoned this practice (but did not abandon the narrative of gold standard). As a punishment to this loss of gold, all gold held by Government of India was shipped to Bank of England in 1901
Problems caused by the gold standard
See also: Gold standard
At the onset of the First World War, the cost of gold was very low and therefore the pound sterling had high value. But during the First World War, the value of the pound fell alarmingly due to rising war expenses. At the conclusion of the war, the value of the pound was only a fraction of what it used to be prior to the commencement of the war. It remained low until 1925, when the then Chancellor of the Exchequer (finance minister) of the United Kingdom, Winston Churchill, restored it to pre-War levels. As a result, the price of gold fell rapidly. While the rest of Europe purchased large quantities of gold from the United Kingdom, there was little increase in her gold reserves. This dealt a blow to an already deteriorating British economy. The United Kingdom began to look to its possessions as India to compensate for the gold that was sold.
However, the price of gold in India, on the basis of the exchange rate of the rupee around 1S.6d., was lower than the price prevailing abroad practically throughout; the disparity in prices made the export of the metal profitable, which phenomenon continued for almost a decade. Thus, in 1931–32, there were net exports of 7.7 million ounces, valued at Rs. 579.8 million. In the following year, both the quantity and the price rose further, net exports totaling 8.4 million ounces, valued at Rs. 655.2 million. In the ten years ended March 1941, total net exports were of the order of 43 million ounces (1337.3 Tons) valued at about Rs. 3.75 billion, or an average price of Rs. 32-12-4 per tola.
In the autumn of 1917 (when the silver price rose to 55 pence), there was danger of uprisings in India (against paper currency) which would handicap seriously British participation in the World War. In-convertibility (of paper currency into coin) would lead to a run on Post Office Savings Banks. It would prevent the further expansion of (paper currency) note issues and cause a rise of prices, in paper currency, that would greatly increase the cost of obtaining war supplies for export, to have reduced the silver content of this historic [rupee] coin might well have caused such popular distrust of the Government as to have precipitated an internal crisis, which would have been fatal to British success in the war.
During 1931 to 1941, the United Kingdom purchased large amount of gold from India and its many other colonies just by increasing price of gold, as Britain was able to pay in printable paper currency. Similarly, on 19 June 1934, Roosevelt made Silver Purchase Act (which increased price of silver) and purchased about 44,000 tons of silver by paying paper certificates (silver certificate).
In 1939, Dickson H. Leavens wrote in his book Silver Money: “In recent years the increased price of gold, measured in depreciated paper currencies, has attracted to the market (of London) large quantities (of gold) formerly hoarded or held in the form of ornaments in India and China”.
The Indian rupee replaced the Danish Indian rupee in 1845, the French Indian rupee in 1954 and the Portuguese Indian escudo in 1961. Following the independence of India in 1947 and the accession of the princely states to the new Union, the Indian rupee replaced all the currencies of the previously autonomous states (although the Hyderabadi rupee was not demonetised until 1959). Some of the states had issued rupees equal to those issued by the British (such as the Travancore rupee). Other currencies (including the Hyderabadi rupee and the Kutch kori) had different values.
The values of the subdivisions of the rupee during British rule (and in the first decade of independence) were:
| Subdivisions of rupee during 20th century | ||
| Value (in anna) | Popular name | Value (in paise) |
| 16 anna | 1 rupee | 100 paise |
| 8 anna | 1 ardharupee / 1 athanni (dheli) | 50 paise |
| 4 anna | 1 pavala / 1 chawanni | 25 paise |
| 2 anna | 1 beda / 1 duanni | 12 paise |
| 1 anna | 1 ekanni | 6 paise |
| 1⁄2 anna | 1 paraka / 1 taka / 1 adhanni | 3 paise |
| 1⁄4 anna | 1 kani (pice) / 1 paisa (old paise) | 11⁄2 paise |
| 1⁄8 anna | 1 dhela | 3⁄4 paisa |
| 1⁄12 anna | 1 pie | 1⁄2 paisa |
| · In 1957, the rupee was decimalised and divided into 100 naye paise (Hindi for ‘new paise’);· In 1964, the initial “naye” was dropped.· Many still refer to 25, 50 and 75 paise as 4, 8 and 12 annas respectively.· similar to the usage of “two bits” in American English for a quarter-dollar. |
East India Company, 1835
The three Presidencies established by the British East India Company (Bengal, Bombay and Madras) each issued their own coinages until 1835. All three issued rupees and fractions thereof down to 1⁄8– and 1⁄16-rupee in silver. Madras also issued two-rupee coins.
Copper denominations were more varied. Bengal issued one-pie, 1⁄2-, one- and two-paise coins. Bombay issued 1-pie, 1⁄4-, 1⁄2-, 1-, 11⁄2-, 2- and 4-paise coins. In Madras there were copper coins for two and four pies and one, two and four paisa, with the first two denominated as 1⁄2 and one dub (or 1⁄96 and 1⁄48) rupee. Madras also issued the Madras fanam until 1815.
All three Presidencies issued gold mohurs and fractions of mohurs including 1⁄16, 1⁄2, 1⁄4 in Bengal, 1⁄15 (a gold rupee) and 1⁄3 (pancia) in Bombay and 1⁄4, 1⁄3 and 1⁄2 in Madras.
· In 1835, a single coinage for the EIC was introduced. It consisted of copper 1⁄12, 1⁄4 and 1⁄2 anna, silver 1⁄4, 1⁄3 and 1 rupee and gold 1 and 2 mohurs. In 1841, silver 2 annas were added, followed by copper 1⁄2 pice in 1853. The coinage of the EIC continued to be issued until 1862, even after the company had been taken over by the Crown.
Regal issues, 1862–1947
In 1862, coins were introduced (known as “regal issues”) which bore the portrait of Queen Victoria and the designation “India”. Their denominations were 1⁄12 anna, 1⁄2 pice, 1⁄4 and 1⁄2 anna (all in copper), 2 annas, 1⁄4, 1⁄2 and one rupee (silver), and five and ten rupees and one mohur (gold). The gold denominations ceased production in 1891, and no 1⁄2-anna coins were issued after 1877.
In 1906, bronze replaced copper for the lowest three denominations; in 1907, a cupro-nickel one-anna coin was introduced. In 1918–1919 cupro-nickel two-, four- and eight-annas were introduced, although the four- and eight-annas coins were only issued until 1921 and did not replace their silver equivalents. In 1918, the Bombay mint also struck gold sovereigns and 15-rupee coins identical in size to the sovereigns as an emergency measure during the First World War.
In the early 1940s, several changes were implemented. The 1⁄12 anna and 1⁄2 pice ceased production, the 1⁄4 anna was changed to a bronze, holed coin, cupro-nickel and nickel-brass 1⁄2-anna coins were introduced, nickel-brass was used to produce some one- and two-annas coins, and the silver composition was reduced from 91.7 to 50 percent. The last of the regal issues were cupro-nickel 1⁄4-, 1⁄2– and one-rupee pieces minted in 1946 and 1947, bearing the image of George VI, King and Emperor on the obverse and an Indian Lion on the reverse.
Post-independence issues
Independent pre-decimal issues, 1950–1957
India’s first coins after independence were issued in 1950 in denominations of 1 pice, 1⁄2, one and two annas, 1⁄4, 1⁄2 and one-rupee. The sizes and composition were the same as the final regal issues, except for the one-pice (which was bronze, but not holed).
Independent decimal issues, 1957–present
In 1964, India introduced aluminium coins for denominations up to 20p.
The first decimal-coin issues in India consisted of 1, 2, 5, 10, 25 and 50 naye paise, and 1 rupee. The 1 naya paisa was bronze; the 2, 5, and 10 naye paise were cupro-nickel, and the 25 naye paise (nicknamed chawanni; 25 naye paise equals 4 annas), 50 naye paise (also called athanni; 50 naye paise equalled 8 old annas) and 1-rupee were nickel. In 1964, the words naya/naye were removed from all coins. Between 1957 and 1967, aluminium one-, two-, three-, five– and ten-paise coins were introduced. In 1968 nickel-brass 20-paise coins were introduced, and replaced by aluminium coins in 1982. Between 1972 and 1975, cupro-nickel replaced nickel in the 25- and 50-paise and the 1-rupee coins; in 1982, cupro-nickel two-rupee coins were introduced. In 1988 stainless steel 10-, 25- and 50-paise coins were introduced, followed by 1- and 5-rupee coins in 1992. Five-rupee coins, made from brass, are being minted by the Reserve Bank of India (RBI).
In 1997 the 20 paise coin was discontinued, followed by the 10 paise coin in 1998, and the 25 paise in 2002.
Between 2005 and 2008 new, lighter fifty-paise, one-, two-, and five-rupee coins were introduced, made from ferritic stainless steel. The move was prompted by the melting-down of older coins, whose face value was less than their scrap value. The demonetisation of the 25-paise coin and all paise coins below it took place, and a new series of coins (50 paise – nicknamed athanni – one, two, five, and ten rupees with the new rupee sign) were put into circulation in 2011. In 2016 the 50 paise coin was last minted, but small commodities of prices are in 50 paise. Coins commonly in circulation are one, two, five, ten, and twenty rupees. Although it is still legal tender, the 50-paise (athanni) coin is rarely seen in circulation.
| Circulating coins | |||||||||
| Value | Technical parameters | Description | Year of | ||||||
| Diameter | Mass | Composition | Shape | Obverse | Reverse | First minting | Last minting | ||
| 50 paise | 19 mm | 3.79 g | Ferritic stainless steel | Circular | Emblem of India | Value, the word “PAISE” in English and Hindi, floral motif and year of minting | 2011 | 2016 | |
| 50 paise | 22 mm | 3.79 g | Ferritic stainless steel | Circular | Emblem of India | Value, hand in a fist | 2008 | ||
| ₹1 | 25 mm | 4.85 g | Ferritic stainless steel | Circular | Emblem of India, value | Value, two stalks of wheat | 1992 | 2004 | |
| ₹1 | 25 mm | 4.95 g | Ferriticstainless steel | Circular | Unity from diversity,cross dividing 4 dots | Value, Emblem of India, Yearof minting | 2004 | 2007 | |
| ₹1 | 25 mm | 4.85 g | Ferritic stainless steel | Circular | Emblem of India | Value, hand showing thumb (an expression in the Bharata Natyam Dance) | 2007 | 2011 | |
| ₹1 | 22 mm | 3.79 g | Ferritic stainless steel | Circular | Emblem of India | Value, new rupee sign, floral motif and year of minting | 2011 | 2018 | |
| ₹2 | 26 mm | 6 g | Cupro-Nickel | Eleven-sided | Emblem of India, Value | National integration | 1982 | 2004 | |
| ₹2 | 26.75 mm | 5.8 g | Ferriticstainless steel | Circular | Unity from diversity,cross dividing 4 dots | Value, Emblem of India, Yearof minting | 2005 | 2007 | |
| ₹2 | 27 mm | 5.62 g | Ferritic stainless steel | Circular | Emblem of India, year of minting | Value, hand showing two fingers (Hasta Mudra – hand gesture from the dance Bharata Natyam) | 2007 | 2011 | |
| ₹2 | 25 mm | 4.85 g | Ferritic stainless steel | Circular | Emblem of India | Value, new rupee sign, floral motif and year of minting | 2011 | 2018 | |
| ₹2 | 23 mm | 4.07 g | Ferritic stainless steel | Circular | Emblem of India | Value, rupee sign, year of issue, grains depicting the agricultural dominance of the country | 2019 | ||
| ₹5 | 23 mm | 9 g | Cupro-Nickel | Circular | Emblem of India | Value | 1992 | 2006 | |
| ₹5 | 23 mm | 6 g | Ferritic stainless steel | Circular | Emblem of India | Value, wavy lines | 2007 | 2009 | |
| ₹5 | 23 mm | 6 g | Brass | Circular | Emblem of India | Value, wavy lines | 2009 | 2011 | |
| ₹5 | 23 mm | 6 g | Nickel-Brass | Circular | Emblem of India | Value, new rupee sign, floral motif and year of minting | 2011 | 2018 | |
| ₹5 | 25 mm | 6.74 g | Nickel-Brass | Circular | Emblem of India | Value, rupee sign, year of issue, grains depicting the agricultural dominance of the country | 2019 | ||
| ₹10 | 27 mm | 7.62 g | Bimetallic | Circular | Emblem of India andyear of minting | Value with outward radiating pattern of 15 spokes | 2006 | 2010 | |
| ₹10 | 27 mm | 7.62 g | Bimetallic | Circular | Emblem of India and year of minting | Value with outward radiating pattern of 10 spokes, new rupee sign | 2011 | 2018 | |
| ₹10 | 27 mm | 7.74 g | Bimetallic | Circular | Emblem of India | Value, rupee sign, year of issue, grains depicting the agricultural dominance of the country | 2019 | ||
| ₹20 | 27 mm | 8.54 g | Bimetallic | Dodecagonal | Emblem of India | Value, rupee sign, year of issue, grains depicting the agricultural dominance of the country | 2020 |
The coins are minted at the four locations of the India Government Mint. The ₹1, ₹2, and ₹5 coins have been minted since independence. The Government of India is set to introduce a new ₹20 coin with a dodecagonal shape, and like the ₹10 coin, also bi-metallic, along with new designs for the new versions of the ₹1, ₹2, ₹5 and ₹10 coins, which was announced on 6 March 2019.
Pre-independence issues
In 1861, the Government of India introduced its first paper money: ₹10 note in 1864, ₹5 note in 1872, ₹10,000 note in 1899, ₹100 note in 1900, ₹50 note in 1905, ₹500 note in 1907 and ₹1,000 note in 1909. In 1917, ₹1 and ₹21⁄2 notes were introduced. The Reserve Bank of India began banknote production in 1938, issuing ₹2, ₹5, ₹10, ₹50, ₹100, ₹1,000 and ₹10,000 notes while the government continued issuing ₹1 note but demonetized the ₹500 and ₹21⁄2 notes.
Post-independence issues
After independence, new designs were introduced to replace the portrait of George VI. The government continued issuing the Re1 note, while the Reserve Bank of India (RBI) issued other denominations (including the ₹5,000 and ₹10,000 notes introduced in 1949). All pre-independence banknotes were officially demonetised with effect from 28 April 1957.[58][59]
During the 1970s, ₹20 and ₹50 notes were introduced; denominations higher than ₹100 were demonetised in 1978. In 1987, the ₹500 note was introduced, followed by the ₹1,000 note in 2000 while ₹1 and ₹2 notes were discontinued in 1995.
The design of banknotes is approved by the central government, on the recommendation of the central board of the Reserve Bank of India.[5] Currency notes are printed at the Currency Note Press in Nashik, the Bank Note Press in Dewas, the Bharatiya Reserve Bank Note Mudran (P) Ltd at Salboni and Mysore and at the Watermark Paper Manufacturing Mill in Hoshangabad. The Mahatma Gandhi Series of banknotes are issued by the Reserve Bank of India as legal tender. The series is so named because the obverse of each note features a portrait of Mahatma Gandhi. Since its introduction in 1996, this series has replaced all issued banknotes of the Lion capital series. The RBI introduced the series in 1996 with ₹10 and ₹500 banknotes. The printing of ₹5 notes (which had stopped earlier) resumed in 2009.
As of January 2012, the new ‘₹’ sign has been incorporated into banknotes of the Mahatma Gandhi Series in denominations of ₹10, ₹20, ₹50, ₹100, ₹500 and ₹1,000.[60][61][62][63] In January 2014 RBI announced that it would be withdrawing from circulation all currency notes printed prior to 2005 by 31 March 2014. The deadline was later extended to 1 January 2015. The dead line was further extended to 30 June 2016.[64]
On 8 November 2016, the RBI announced the issuance of new ₹500 and ₹2,000 banknotes in a new series after demonetisation of the older ₹500 and ₹1000 notes. The new ₹2,000 banknote has a magenta base colour, with a portrait of Mahatma Gandhi as well as the Ashoka Pillar Emblem on the front. The denomination also has a motif of the Mars Orbiter Mission (MOM) on the back, depicting the country’s first venture into interplanetary space. The new ₹500 banknote has a stone grey base colour with an image of the Red Fort along with the Indian flag printed on the back. Both the banknotes also have the Swachh Bharat Abhiyan logo printed on the back. The banknote denominations of ₹200, ₹100 and ₹50 have also been introduced in the new Mahatma Gandhi New Series intended to replace all banknotes of the previous Mahatma Gandhi Series.[15] On 13 June 2017, RBI introduced new ₹50 notes, but the old ones continue being legal tender. The design is similar to the current notes in the Mahatma Gandhi (New) Series, except they will come with an inset ‘A’.