Remember Mohammad Bin Tughlaq? The wise fool, who came up with currency long back, and suddenly everyone was minting money because he didn’t use the right material.
Well, until 2009, India hadn’t come out of this Tughlaqian mindset!
Those Re 1 coins, which were rather huge, served a special purpose – not just of giving alms to beggars. They were being smuggled to Bangladesh and melted into safety blades and were worth Rs 5! Such was the arbitrage opportunity for the Bangladeshis (sad, the Indians couldn’t think of it!) that the coins in India started vanishing as the safety blades started taking shape in that poverty stricken country.
Finally the Government had to change the size and the content of the coin to hit at this trade, which had embarrassingly left India without at Re 1 coins out there! Mr R Gandhi chief general manager of currency management of RBI explained:
“For many years we were concerned about the practice. Last year we began changing the metallic content of the coins. The new cupronickel and lighter ferritic stainless steel coins are not lucrative for melting now. For the past many months we have not received any report hinting at or speaking of melting of our coins.”
Good we finally got it right! It surely makes sense to make a coin such that it is worth less or at most equal to its own worth! It is downright stupid to make a coin that is worth more melted than its original state.