Coin Making Cost: Half of India doesn't know the production cost of a ₹1 coin; the figure will leave you stunned.
Coin Making Cost: You will be surprised to learn the actual cost of producing a ₹1 coin. Find out how much the government spends on minting coins versus the relatively low cost of printing banknotes.
Coin Making Cost: Have you ever wondered how much the government spends to produce the ₹1 coin in your pocket—the one you use to buy a toffee or chocolate? At first glance, it might seem like making a one-rupee item would cost only a few paise, but that is not the case. According to information provided by the Reserve Bank of India (RBI) in response to an RTI query, the government incurs a cost of ₹1.11 to produce a single ₹1 coin. This means the government suffers a direct loss of 11 paise on the minting of each coin.
Let us understand how coins and banknotes are produced in India's mints and why the government continues to mint coins despite the losses.
How much does it cost to make coins?
The responsibility for minting coins lies with the Government of India; they are primarily minted at government facilities in cities like Mumbai and Hyderabad. The cost breakdown for other coins—not just the ₹1 coin—is also interesting:
₹1 coin: Cost ₹1.11 (Profit/Loss: -11 paise)
₹2 coin: Cost ₹1.28
₹5 coin: Cost ₹3.69
₹10 coin: Cost ₹5.54
The ₹1 coin is made of stainless steel. It weighs 3.76 grams, has a diameter of 21.93 mm, and a thickness of 1.45 mm.
How much profit does the government make from printing banknotes?
Compared to coins, printing paper banknotes proves to be a highly profitable venture for the government and the RBI. While the government controls the issuance of ₹1 notes and coins, the Reserve Bank (RBI) is responsible for printing banknotes ranging from ₹2 to ₹500.
The breakdown of printing costs is as follows:
Note Denomination Cost of Printing 1,000 Notes Cost Per Note| ₹100 | ₹1,770 | ₹1.77 |
| ₹200 | ₹2,370 | ₹2.37 |
| ₹500 | ₹2,290 | ₹2.29 |
This essentially means that printing a single ₹500 note—which circulates in the market—costs merely ₹2.29, even though its face value is a full ₹500.
Why does the government mint coins despite the loss involved?
The question arises: if minting a ₹1 coin results in a loss, why doesn't the government simply stop producing them?
There is a visionary and strategic rationale behind this:
Durability and Longevity: Paper notes tend to wear out or tear within a few years and require frequent replacement. In contrast, coins made of stainless steel remain intact for decades and stay in circulation for years on end.