Where Have All the Coins Gone?

Achoiba leitey lupa ahumdu meethai haapaklagey — at every dukan and grocery shop at every leirak and leikai, this is inevitably the only reply we get from the shopkeepers because they don’t have the change. When was the last time you got the change from a shop? Have you ever complained when the shopkeeper returned you a fistful of toffees, as if the few rupees are nothing but insignificant? Most of the time we would take the toffees grudgingly, if not, the only thing we can do is to ask for match boxes instead of the toffees.

We know the obvious response from the neighbourhood dukan-fumbers: there is a shortage of coins in the market so they are helpless and are resorting to unasked Chrolomints and Sunflower match boxes. But there are more reasons than meet the eye.

Last year when a couple of shopkeepers’ associations in Mumbai complained to the Reserve Bank of India (RBI), which earlier used to dispense the coins directly but has given the responsibility to the bank branches now, the latter refuted and screamed that hoarding and black market are to be blamed for. Officially in India, the coins are distributed through RBI offices (in the Northeast, these are located in Guwahati and Agartala), bank branches and currency chests.

Closer home, there is another perspective. On conditions of anonymity, an official at the State Bank of India (SBI) gave me some plausible explanations. He said, ‘There was a coin dispenser installed at the SBI Imphal branch a few years back. But the unscrupulous agents would empty the container, leaving literally, no change for the unsuspecting public.’ That constituted a paltry portion of the black-market economy in Manipur.

Then there is also the high cost of transport, which results in a limited supply of coins. The anonymous SBI official added, ‘Coins are usually transported through flights. The present shortfall cannot be adjusted with more supply as frequent remittance is not possible. Besides, the coins are heavier and are relatively of lesser value than paper notes of higher denominations. So generally,the banks opt for bigger paper notes for transaction, ATMs and other dealings.’

Throughout India there is rampant hoarding and black marketing of coins as countered by the RBI officials to the shopkeepers’ association in Mumbai. For example, a hundred of one rupee is usually sold at a premium of Rs 10, but it can go up to Rs 20 in the fluctuating black market. The rate might be different in Manipur and it is open to question how the coins have vanished into thin air.

An examination of the scarcity of coins in various parts of the country might offer a bigger picture. Earlier this year, the RBI had decided to back out from retail operations and hence halted their distribution of coins from its offices. But there are allegations of procedural inexperience of the present distributors, which has further resulted in the rising price of coin and an uneven demand-supply ratio. Inadvertently this is affecting the economy very badly.

Let’s do a simple math. Suppose in Manipur, a one person loses Rs 3 a day while shopping; then the state loses Rs 81,65,268 daily, if we take into account the present population of 27,21,756 as per the 2011 census. Needless to say, some economists measure the shortage of coins is adding to 3% to 5% inflation in the national economy.

It will take a deeper analysis of the problems but there are several allegations on why the scarcity is happening at the first place, and these are not without reasons. The first of them is the rising price of metals. The RBI, for instance, has reduced the new 50-paise coins to the size of the 25-paise coins. The 25-paise coins are no more in circulation. This explains loosely the possible reduction of the number of coins being manufactured each year.

In an interesting way, there is also an allegation that coins, to the tune of crores of rupees, are in the strongboxes of temples across the country. Needless to say, all of these reasons are providing the banks to earn unethically as most of them simply round off the change.

When the whole country is reeling under the deficiency, it is no wonder our state is also pushed into the corner. But hopefully, consumer awareness could be one of the probable solutions to it.

Perhaps we could also approach the concerned banks with our queries; perhaps the financial professionals can voice on behalf of us.

A wake up call is quite a must and it should start pretty soon. Where have all the coins gone? We should have a solution right?

This article was published on 24 June 2012
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