1. What does it cost to print the Rs 500, Rs 1000 and other currency notes?

What does it cost to print the Rs 500, Rs 1000 and other currency notes?

The currency replacement is costing a little more than normal keeping the opportunity and endurance costs aside. This currency change will cost the government a whooping Rs 11,000 crore in just printing.

By: | Updated: November 15, 2016 5:47 PM
Demonetisation, Currency Chaos, Government, Note Ban, Black Money, Economy The currency replacement is costing a little more than normal keeping the opportunity and endurance costs aside. This currency change will cost the government a whopping Rs 11,000 crore in just printing. (Source: PTI)

Currently, the nation’s economy is undergoing a renovation phase with all its existing high-value currency denominations (Rs 500 and Rs 1000) is being ceased and replaced with new format currency to curb black money trading. When the entire nation is worried about the time it will take to roll out new currencies, let us calculate how much cost these new currencies will endure. The currency replacement is costing a little more than normal keeping the opportunity and endurance costs aside. This currency change will cost the government a whopping Rs 11,000 crore in just printing.

In the last fiscal, the two high-value denominations (Rs 500 notes and Rs 1,000 notes) constituted up to 24.4 per cent of currency in circulation by volume and a massive 86.4 per cent by value.

Let’s calculate how much it will cost the government to replace them with new paper? As per howindialives.com, a database and search engine of public data when it comes to printing, the government is taking a cost hit twice. On one hand, where it is effectively writing off the cost it incurred in printing the old lot i.e. Rs 5,932 crore and on the other hand it is incurring an additional cost in printing the new lot i.e. Rs 4,929 crore, making the total cost of printing up to Rs 10,861 crore.

Currently, the circulation of Rs 10 notes is as high as around 32,000 million pieces whereas circulation for Rs 500 and Rs 1000 notes are 15,000 million and 7,000 million respectively. The cost of printing a Rs 10 note is around Re 1 and a Rs. 500 and Rs 1,000 note is around Rs. 2.5 and Rs 3.2. For the old lot, the circulation is based on the cost of printing in 2012. For the new lot, the circulation is based on the 2015-16 value in circulation, the cost of printing in 2012 and the Rs 2,000 notes costing same as Rs 1,000 notes.

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