Inflation and high metals prices have taken their toll on another coin - India is dropping its smallest denomination, the 25 paise coin.
A couple of months ago, India bid goodbye to the char anna – the 25 paise coin. From 1 July, this coin ceased to be legal tender.
In practical terms, it means everything now has to priced in multiples of 50 paise. At the current rate of inflation, which is 8-10 percent, the Re 1 coin will be worth 50 paise by around 2018-20.
Put another way, by the end of this decade, the 50 paise coin, too, will have no reason for existence, as nothing will really be priced below Re 1. It will all have to be in multiples of rupees.
When the 50 paise disappears, the concept of the paisa will itself become history. Reason: there will be no physical currency—note or coin—that will physically denote the paisa.
For practical purposes, since we have the decimal system, we may still have prices quoted as Rs 10.99, but in future this transaction can be executed only when you pay by credit card or buy multiple items and write off the balance paise.
That is, you can buy 10 kg of alu priced at Rs 10.90 a kg and pay Rs 109 in currency, but you can't buy one kg of it at Rs 10.90. You will pay Rs 11.
The paisa, if it exists, will exist only in cyberspace, in digital accounts and smart cards. Only the rupee will exist in hard cash – notes or coins.
To read the complete article, see:
The paisa will soon be history; the rupee is the new pais
Wayne Homren, Editor
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