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19 June 2016 | E-Paper

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Last Modied: Tue, Apr 28 2015. 01 54 AM IST

What does it cost to print money?

Happily for the RBI, currency notes of higher denominations offer more value for the money
invested in printing and are also in rapidly growing demand

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T.C.A. Sharad Raghavan

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Rs.14.265 trillion in currency notes was in circulation on 20 March, accounting for 12.3% of Indias gross
domestic product (GDP), according to the Reserve Bank of India (RBI). Photo: Pradeep Gaur/Mint

In light of Prime Minister Narendra Modis exhortation that the paper and ink used to print
currency be made in India, it is worth looking at what it actually costs to print the notes in
circulation.

Theamountofmoneyincirculation
Thegraphshowsthetotalvalueofthemoneyincirculationinnoteform.Theamountofmoneyavailablehasincreasedpretty
steadilyduetosustainedinflationandthegrowthinmoneysupplyhasmoreorlessmatchedthepaceofGDPgrowth.
Moneyincirculation

Moneyincirculationas%ofGDPatcurrentprices

10,558

10,000

9,421
7,902

5,000
3,625

200405

4,219

200506

4,968

200607

5,821

200708

6,811

200809

200910

201011

201112

FiguresareinRsbillionunlessotherwisementioned.

Source:RBIGetthedata

With several years of sustained ination and economic growth, the money in circulation
was sure to rise. According to the Reserve Bank of India (RBI), Rs
1.
4.265 trillion in currency
notes was in circulation on 20 March, accounting for 12.3% of Indias gross domestic product
(GDP). This is up from Rs
1.
2.835 trillion a year ago.

Thecostofprintingeachdenomination
Theabsolutecostofprintingthehigherdenominationsismore,butasapercentageofthefacevalueofthenote,thelower
denominationsbecomemorecostly.
Absolutecost(Rs)

Costasa%offacevalue

1.81

1.79

Rs50

Rs100

1.5
0.96
0.48

Rs5

Rs10

Rs20

Source:RBIGetthedata

In reply to a right to information request, the RBI in 2012 released data on what it costs to
print notes of each denomination. In absolute terms, the trend is one of increasing costs as
the denominations become larger. This can be explained by the fact that higher
denomination notes require more complex security features embedded in the note.
However, the cost of printing a note as a percentage of its value is higher for notes of lower
denominations. For example, the cost of printing a Rs
1.
0 note is almost 10% of the value of the
note whereas the cost of printing a Rs
1.
00 note is less than 2% of its value.

NumberofnotesissuedbyRBI
In201314,theRBIissuedthemostRs10notes,followedbyRs100,Rs500andRs5notes.Thenumberofnotesprintedby
theRBIisaroughestimationofthedemandforeachdenomination.
26.65

14.76

7.43
4.26

Rs2

4.28

Rs5

Rs10

Rs20

3.45

Rs50

Rs100

Allvaluesinbillion.

Source:RBIGetthedata

However, some denominations are more popular and are used much more often than others.
RBI issued the most Rs
1.
0 notes in 2013-14, a trend since 2009, followed by Rs
1.
00, Rs
5
.00 and Rs
5
.
notes. The rate at which the RBI issues notes of different denominations is a rough
indication of the demand for those denominations in the market.

Growthinsupplyofeachdenomination
ThegraphshowsthatthegrowthinsupplyofRs1000noteshasfarsurpassedthatofanyotherdenomination,followedbyRs
500notes.
13,663.27

10,000

5,000

48.69
200001 200102 200203 200304 200405 200506 200607 200708 200809 200910 201011 201112
Base:200001=100
Source:RBIGetthedata

The two highest denominations (Rs

5
.00 and Rs
1.
,000) have seen the highest growth rates by far,
followed by the Rs
2
.0 note. The Rs
5
.0 note has seen a sharp decline in production.
The RBI gets the most value for every note printed of these denominations (in terms of cost
as a percentage of value of the note). Add to that the fact that the higher denominations see
far less wear and tear and so have to be replaced less frequently, and it looks like printing
money will gradually become cheaper for the RBI.
T.C.A. Sharad Raghavan

TOPICS: RBI

CURRENCY NOTES

PRINT MONEY

NARENDRA MODI

INDIA

First Published: Thu, Apr 09 2015. 01 34 PM IST

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