source: The Times
Ashling OConnor in Bombay - June 16, 2007
India is suffering such a severe shortage of coins that shopkeepers have resorted to begging change from beggars to keep their businesses running.
Calcutta has been the worst hit after the smuggling of one and two-rupee coins into Bangladesh, where they are made into razor blades and religious ornaments, police said. Because of the dearth of change thousands of people stood in line for hours yesterday in Calcutta outside banks to exchange notes for coins.
One woman set up a stall outside a bank selling packets of 100 rupee coins for 120 rupees. Inflation of nearly 5 per cent in India means that one rupee is worth more in its raw stainless steel form than its face value as a currency.
We have found that beggars are a good source of coins, Mum Poddar, who runs a stationery shop, said.
Officials investigating the disappearance of coins, which are thicker than their Bangladeshi counterparts, claim that a one-rupee coin can be melted down to make three or four razor blades, worth two rupees each.
The coin shortage has forced the central bank of India to enact emergency measures. This month it has issued coins worth five million rupees, including one million on Thursday alone. But demand is still outstripping supply. To get around the problem, traders are requesting that their customers buy more goods, to arrive at a round sum, or are giving sweets as change.
If I am supposed to get back one rupee or 50 paise [half a rupee], the shop owner gives me one or two toffees, saying he does not have any coins, Sandeep Kundu, a Calcutta resident, said.
Economists say that the problem is more likely to have been caused by unscrupulous middlemen hoarding coins to create an artificial shortage, then charging a hefty commission for distribution, than smugglers melting down base metals.
Wider use of one-rupee pay-phones in rural areas, where mobile phone signals are often unreliable, is also putting pressure on monetary circulation.
Indian rupees are ferrous stainless steel, which makes the process expensive. To be profitable, it would require an industrial-sized smelter. There are 4,253 deposit banks that distribute currency to the public, while four national mints have the collective capacity to issue six million coins a day, according to the central bank. As of April last year, there were 54 billion small coins in circulation. In the past six months, 900 million coins were issued. ?Officially, there is no shortage of coins anywhere in the country, a bank spokeswoman said.
In Sri Lanka last month state-owned banks urged children to break into their piggy banks to return coins to circulation. In exchange, they offered pencils, pens, drawing paper and books, promising that the gifts would be worth a fifth more than the coins handed in.
Attempts by Sri Lanka to address the shortage by minting nickel and copper coins instead of steel failed.
The cheaper metals proved popular as washers in cars, while the five-rupee coin is said to have fooled vending machines in Britain into accepting it as a Rs 1 coin.
Ashling OConnor in Bombay - June 16, 2007
India is suffering such a severe shortage of coins that shopkeepers have resorted to begging change from beggars to keep their businesses running.
Calcutta has been the worst hit after the smuggling of one and two-rupee coins into Bangladesh, where they are made into razor blades and religious ornaments, police said. Because of the dearth of change thousands of people stood in line for hours yesterday in Calcutta outside banks to exchange notes for coins.
One woman set up a stall outside a bank selling packets of 100 rupee coins for 120 rupees. Inflation of nearly 5 per cent in India means that one rupee is worth more in its raw stainless steel form than its face value as a currency.
We have found that beggars are a good source of coins, Mum Poddar, who runs a stationery shop, said.
Officials investigating the disappearance of coins, which are thicker than their Bangladeshi counterparts, claim that a one-rupee coin can be melted down to make three or four razor blades, worth two rupees each.
The coin shortage has forced the central bank of India to enact emergency measures. This month it has issued coins worth five million rupees, including one million on Thursday alone. But demand is still outstripping supply. To get around the problem, traders are requesting that their customers buy more goods, to arrive at a round sum, or are giving sweets as change.
If I am supposed to get back one rupee or 50 paise [half a rupee], the shop owner gives me one or two toffees, saying he does not have any coins, Sandeep Kundu, a Calcutta resident, said.
Economists say that the problem is more likely to have been caused by unscrupulous middlemen hoarding coins to create an artificial shortage, then charging a hefty commission for distribution, than smugglers melting down base metals.
Wider use of one-rupee pay-phones in rural areas, where mobile phone signals are often unreliable, is also putting pressure on monetary circulation.
Indian rupees are ferrous stainless steel, which makes the process expensive. To be profitable, it would require an industrial-sized smelter. There are 4,253 deposit banks that distribute currency to the public, while four national mints have the collective capacity to issue six million coins a day, according to the central bank. As of April last year, there were 54 billion small coins in circulation. In the past six months, 900 million coins were issued. ?Officially, there is no shortage of coins anywhere in the country, a bank spokeswoman said.
In Sri Lanka last month state-owned banks urged children to break into their piggy banks to return coins to circulation. In exchange, they offered pencils, pens, drawing paper and books, promising that the gifts would be worth a fifth more than the coins handed in.
Attempts by Sri Lanka to address the shortage by minting nickel and copper coins instead of steel failed.
The cheaper metals proved popular as washers in cars, while the five-rupee coin is said to have fooled vending machines in Britain into accepting it as a Rs 1 coin.
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