Chavanni Chhap

Come 1^st July 2011, 25-paise coins will cease to be legal tender in India, says the official notification, issued by the Govt. of India under Sub-section 15A of the Coinage Act, 1906. That is to say, these coins cannot be used to settle any transaction. Try hard -- can you remember when you last gave a 25-paise coin to anyone to settle a transaction? 

I have kept as a memorabilia, an abandoned, TV-shaped piggy bank which I had given to my daughters, nearly four decades ago. While searching for something else I came across this box, which seemed to be a little heavy. I emptied it to make use of this idle cash. Some coins tumbled out noisily. The contents included a few old one-rupee coins, five 50-paise coins and a few 25-paise coins. I wanted to dispose these off and took them to the milk booth from where I buy milk packets. The vendor accepted the one-rupee coins and returned the others. After a lot of persuasion, he agreed to accept only four out of the five 50-paise coins but flatly refused to touch the 25-paise coins. He said that he would accept the 50-paise coins only as whole rupees and not as fractions because he would not be able to dispose of them. And 25-paise coins were a strict no-no as nobody else would accept them from him and he would be stuck with them. Even beggars nowadays do not accept anything below one rupee!

Inflation in India has forced 25-paise and 50-paise coins out of circulation much before being officially withdrawn. The inflation rate is over 10% in India while it is about 2-3% in the UK or US, which indicates price stability. That is why in the UK and the US, coins of small denominations are still in circulation. U S A does not have currency notes valued more than 100 dollars.

When India switched over to the Decimal System of money in 1957, coins with denominations of 1, 2, 3, 5, 10, 20, 25 and 50 paise were introduced. Before that, a rupee had 16 annas and an anna had 4 pices. Even coins of adhala (half a pice) and pahula (one third of a pice) were in circulation. I do not remember to have seen adhala or pahula, but I clearly remember having handled one-pice copper coins. They used to have holes into which we kids used to insert our little fingers!

If one can remember having seen or handled the old paisa (pice), adhala or pahula (pies), he/she is a real old-timer.

Coming to the post-decimal coins age, I have handled coins of denominations of 1, 2 and 3 paise. I remember that the first movie that I watched (in 1965) was Veer Hanuman for which I had paid Rs. 1.06! I had just finished my Pre-University Exam (equivalent to the current Plus Two exams). My elder brother gave me that money and asked me to go to Hind Cinema in Cuttack and watch the movie. During 1975-78, I was working at Etah, a District Headquarters town in UP. Once I was deputed to a place called Malawan about 20 KMs away, on the Grand Trunk Road. I was traveling up and down daily. The bus-fare was most probably Rs. 1.47 paise one way. While leaving the Bank in the evening daily, I used to take 1, 2 and 3-paise coins totalling Rs. 3, spend Rs. 2.94 for the to and fro journeys, and use the remaining 6 paise as part of other expenses!

The cost of producing coins up to 20 paise became more than their face-value and so these were gradually discontinued.

Talk of inflation takes me to the price of onions which has jumped from about Rs 12 to about Rs. 70-80. A lot of potatoes and onions were being grown at Etah. During harvest season, price of onions used be about 16 KGs a rupee (not Rs. 16 a KG!). I used to buy 8 KGs of onions for 50 paise!

Does all this sound like Grandma’s tales? It is a fact that prices have gone up multi-fold in the last years; but so have the income and standard of living. In 1972, I had joined a Govt. Class II Gazetted Officer’s post with a princely sum of Rs. 422 as my salary! And television was only in General Knowledge books!!

So will expressions like Chavanni Chhap Kanjus (penny-pinching miser) disappear along with 25-paise coins? No way. Terms like chavanni and athani are too deeply entrenched in the Indian psyche to disappear along with the original objects with which these were associated. Anna was discontinued in 1957 but expressions like Solah Anna (16 annas meaning ‘the whole’) continue. A truthful person is said to be telling '16 anna’ (whole) truth. Recently, I saw a new restaurant named 'Solah Anna Oriya Restaurant’ (Restaurant serving pure Oriya dishes).

Now there are no 1-rupee or 2-rupee notes. These were replaced by coins quite a few years ago. Some years ago, 5-rupee notes were replaced by coins and a couple of years back, 10-rupee coins were introduced.

What's next? A time when the minimum value of a transaction will be Rs. 100 does not seem to be very far away!!!!!!!!!!!!!!!

ADDENDUM - Sept. 2011

Chavani goes; 1000 fills in

Inflation is eating away the value of money. The Govt. is phasing out or printing fewer low-denomination notes and printing more notes of higher denomination. 

In 2011-12, for the first time in India, an equal number of new notes of Rs. 1000 and Rs 500 will be printed. Due to inflation, Rs 500 note is losing its position of pre-eminence among currency notes printed by R B I.

Rs. 500 notes were introduced in 1987 and Rs. 1000 notes, in 2000. In 2011, R B I has ordered for printing 2000 million new Rs. 1000 notes. Last year, the number was 1000 million. While the order for Rs. 1000 notes has been doubled, that for Rs. 500 notes has been halved to 2000 million from 4000 million of last year.

The Rs. 100 note is still the most-printed one. Its print order this year is 6100 million against 4300 million of last year. Printing of Rs. 50 notes has been reduced to 1200 million from 2000 million of last year.

Currency notes of Rs. 1000 and Rs. 10000 were in circulation before independence but were demonetised in 1946 to curb black money. These notes were re-introduced in 1954 and were again demonetised for the same purpose in 1978. 

I remember this last occasion. I had joined my Bank in 1973 and in 1978, i was working at Etah (U P). We were asked to report details of the notes held by the Branch at that time. We were holding only one note of Rs. 1000 at that time. I do not remember what happened to that note.

Talking of printing currency notes it is interesting to know that it costs money to make -er- print money. Here is what the costs are:

Currency Note (Rs.) Printing Cost (Rs.) Production Cost as % of Face Value

5 0.48 9.6

10 0.75 7.5

20 0.95 4.75

50 1.23 2.46

100 1.44 1.44

500 2.64 0.53

1000 3.17 0.32

It is thus seen that technically speaking, printing one Rs. 1000 note costs least at Rs. 3.17 whereas printing the lowest denomination note of Rs. 5 costs the most at 48 paise a piece.

In India, notes of different denominations are of different sizes and colour-designs. Notes of higher denominations are of larger sizes. The sizes of our currency notes have been over time, been reduced to cut costs. In many countries like USA, notes of all denominations are of the same size and colour-design.

It is interesting to remember that earlier, the promise by the Governor of R B I printed on the notes read as 'I promise to pay the bearer on demand the sum of ..... rupees'. This promise is legally required as the currency notes only represent money and are not actual money. The central bank of a country (in our case, R B I) promises to pay actual money (?), whenever demanded. Later, may be when the sizes of the notes were reduced, the words 'on demand' were omitted. At that time, doubts were raised by some hair-splitting legal luminaries as to whether the amount would be paid by R B I immediately. Now such doubt has been forgotten as currency notes are treated as money!