Finshots Daily Why India needs a coin replacement policy
Sep 16, 2025
Explore the economic challenges of minting India's ₹1 coin, where production costs exceed its value. Discover how the rise of digital payments is impacting coin usage, especially for low-income communities that still rely on them. The discussion also touches on innovative cost-reduction strategies from other countries that could help revitalize the minting process. It's a fascinating look at how small coins reflect larger economic issues!
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UPI Changed Currency Demand
- UPI exploded and pushed physical currency, especially coins, into the shadows over eight years.
- Coin production fell 88% while note production barely rose, showing digital payments reshaped currency demand.
Lowest Denominations Often Lose Money
- Minting small coins costs more than their face value, creating production losses for low denominations.
- In 2018 the ₹1 coin cost ₹1.11, the ₹2 cost ₹1.28 and the ₹5 cost ₹3.58 to make, implying sustained fiscal waste.
₹1 Coin Still Dominates Circulation
- Despite low demand and losses, the ₹1 coin still makes up nearly 40% of coins in circulation.
- The government tolerates production losses because many people and small businesses rely on exact change.