Finshots Daily
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In today’s episode on 15th September 2025, we look at why India still mints the ₹1 coin at a loss, and how smarter minting could fix it.
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Hello folks, you're listening to Finshots Daily. In today's episode, we look at why India still mines the rupees coin at a loss and how smarter minting could fix it.
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When UPI took over India's payment culture, it didn't just change how people paid. It also quietly pushed physical currency, especially coins, into the shadows. Now, think about it. In just eight years, UPI transactions shot up from sixty-four lakh in March 2017 to a jaw-dropping thousand eight hundred and thirty crores by March 2025. And as phones began to buzz with payments, India's currency mints began to fall silent. Just look at the numbers. Between 2017 and 2024, Coin Production by the Securities Printing and Minting Corporation of India, or SPMCIL, the sole operator of India's currency printing and minting, crashed by eighty-eight percent, down to just one-twenty crore coins.
Currency notes, on the other hand, barely moved up by only about ten percent in the same span. For the government, this shift is actually a win because minting coins isn't cheap. They're made of metal and when you look at the cost as a percentage of their value, like the cost of producing a rupee coin versus its face value for rupees five, coins are far more expensive to produce than notes. But here's where things get tricky. Despite the fall in coin use, one stubborn little denomination refuses to fade away. Now, we're talking about the humble rupee coin. Back in 2018, an RTI filed by India Today, revealed the true cost of minting. The 1 rupee coin cost 1.11 rupees to produce.
Well, in other words, the government was losing money on every single coin. And it wasn't just the 1 rupee coin skating on thin ice. The 2 rupee coin cost 1.28 rupees to make, and the 5 rupee coin, 3.58 rupees. Even those were on wafer thin margins. And remember, this was back in 2018. Seven years later, it's safe to assume those costs are even higher today. Now with the UPI booming, you'd think the government would simply cut back. After all, SPMCL's minting capacity is running at just 15%. But here's a surprise, the 1 rupee coin still dominates circulation. Nearly 40% of all coins floating in the economy today are of this denomination.
So, despite the economics being far from sustainable, the 1 rupee coin clings to life. And that leaves us with the obvious question, why does the government keep minting it? It's simple, really. The 1 rupee coin may be a loss-making venture, but it's still indispensable. Rural communities, the urban poor, street vendors, small businesses, even public transport. Now, they all rely on it. Besides, many tiny transactions can't be digitized or handled with bigger notes. And coins, after all, aren't just money. They're symbols of trust and certainty in a country where cash is still king. For someone unaccustomed to rounding off digital bills, a 1 rupee coin makes all the difference. That's why the government tolerates the loss.
In minting terms, it's called a production loss. Small enough to be written off because the coin plays a vital role in keeping the system running smoothly. But here's a thought, does it have to stay this way? What if India could still find a way to reduce these losses? Because this isn't just India's problem. Almost every country has wrestled with the economics of its lowest value coins. Take the US, for instance. It has been minting pennies for over 230 years, but each 1 cent coin costs nearly 4 cents to produce. That's why they've been mulling a phase out. Canada took the plunge in 2012. Australia ditched its pennies way back in 1992. And when countries drop their smallest coins, they usually adopt rounding values.
Malaysia, for instance, rounded cash payments upwards or downwards to the nearest five sen. That's the smallest unit of the ringgit. So, a bill of eighty-two point zero eight ringgit simply became eighty-two point one ringgit. Old coins remained legal tender, but no new ones were churned out. Now, sure, this may not be an apples-to-apples comparison since the sen is more like the Indian equivalent of paisa. But the difference is that sen is still used for paying bills in Malaysia, while paisa is no longer in the picture. India, however, doesn't have such a coin replacement policy. The Coinage Act of nineteen oh six gave the centre power to withdraw coins but never said when.
The twenty-eleven version doesn't spell it out either. Compare that to the US, when silver became too pricey in the nineteen sixties. Its Coinage Act clearly set specifications to phase silver out. But replicating similar rounding rules or coin replacement policies in India would be far more complicated. In countries like Canada and Australia, rounding applies only to cash payments and barely matters because digital transactions dominate and purchases are usually of higher values. In contrast, India's story is very different. A huge section of the population still depends on cash for everyday needs. Imagine the government suddenly saying it'll stop producing small coins and instead rounding off bills. That would spark chaos, because here, exact amounts matter.
Street vendors, small shops, daily wage earners, and informal markets rely on every single rupee. Rounding off could unfairly hit lower-income households that deal in small sums. And without widespread digital access or literacy, replacing exact change with rounded payments could fuel confusion, mistrust, and losses for those who can least afford it. So, if scrapping coins and enforcing round-offs won't work here, what's the alternative, you ask? See, if India decides to keep minting the one-rupee coin, whether because it's the lowest denomination or simply because people still need it, there's one practical option. Production costs and make minting cheaper. See, right now, the one rupee coin is made of ferrous stainless steel with iron and chromium,
and each weighs about three point seven six grams. To put that in perspective, it's about fifty percent heavier than the US penny, which is at two and a half grams, and nearly sixty percent heavier than the euro one cent coin, which is at two point three grams. See, heavier coins naturally mean higher costs, and other countries have experimented with alternatives. The US, for instance, tweaked its pennies in nineteen eighty-two, moving from a mostly copper coin to one that was copper plated with ninety-five percent zinc underneath. Over time, the copper content dropped further to just two point five percent. That kept production affordable for decades, though even now the US is wondering if twenty twenty-five should be Penny's final year. Europe went another route. In twenty seventeen, Eurozone Mint decided to standardize how they make the smallest coin.
They agreed to use the same kind of metal, allow small variations in thicknesses and diameter, and make the designs on the coins a little less deep. These tweaks made the coins cheaper and easier to produce in bulk. What they didn't change was the coin size, weight, or how it worked in vending machines. So, the public barely noticed a thing while the mints quietly save money in the background. Now, India could do something similar. By optimizing materials and streamlining processes, the government could bring down minting costs without disrupting size, weight, or the trust people place in their coins. Because every time a coin looks or feels different, public suspicion runs high. This way, the humble one rupee coin stays in circulation,
the government doesn't bleed money with each mint, and production gets standardized without tampering with what people already know and trust. Because even if it costs a little more to make, the one rupee coin still holds ground nationwide and we're not ready to part with it just yet. What do you think?
Thank you for listening to today's episode. And if you want to share your feedback or suggestions, do drop us an email to [email protected]. Until next time.
Page updated November 11, 2026 · transcript and summary are machine-generated
