India’s currency production costs 21,000 crore annually | Fusion - WeRIndia

India’s currency production costs 21,000 crore annually

India's currency

The Reserve Bank of India annually spends Rs 21,000 crore in currency operation costs. The citizens of Delhi alone spend Rs 9.1 crore and 60 lakh hours in collecting cash. This problem is very big for India as it is one of the most cash intensive economies in the world with a cash-to-GDP ratio of 12 percent. This is four times as much as other countries like Brazil, Mexico, and South Africa.

There are several reasons that why India has to pay such high price for its payments. One of the reasons is the need to reissue notes due to poor handling of them. Low value notes are needed to be replaced in less than a year in India. Other reasons include having to upgrade notes with new security features and replace the old ones. There is also a huge cost in pulling old notes out of circulation and replace them. Due to some logistic issues, in some places the notes would have to be carried by helicopter which will cause even more costs.

The over dependence on cash for payments is also another reason for this increased costs. Many people are not used to online banking and digital transactions. It is even sad to know that one third of population do not even have a bank account.

Image by Melanie Simon from Pixabay (Free for commercial use)

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