The Government of India has ordered the coins below 50p to make an exit from the Indian market. The decision has been taken by the government due to inflation in the Indian market. The inflation has made the existence of small change futile.
The coins are expected to exit by 30th June 2011.
Though, in big cities around the country, small changes are hardly being used.Still, small coins are used occasionally in smaller villages and towns in India.
There are still hidden facts, which propelled the government to arrive at such a decision.
Reasons why government of India ordered small coins to exit
Indian coins are made with stainless steel, and these can be melted to make razor blades. Take this example. A 5 rupees coin can be melted and 6 blades could be made out of it. One blade would be sold at Rs2.50 which means that a 5 rupees coin is converted to Rs 15, and profit of worth Rs 10.
Now these blades are smuggled out of the country to places such as Myanmar, Bangladesh and even to Nepal. The government was bent on checking this kind of smuggling, and therefore a decision to peg down such illegal smuggling was taken.
Moreover, the larger cities are not willing to accept such small coins. It was in the best interests that the government had decided to exit the change below 50p coins.
1 comment:
This move by the Indian government makes perfect sense. People could buy gold coins online and melt them--they just might get more than their money's worth. This is what happens when the assigned value of coins is lower than their face value.
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