Where have all the coins gone?

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Creating a false shortage of coins in the city has been a fulltime job for both — syndicated operators and individuals. These men have resorted to misusing the distribution (exchange) system of coins by the Reserve Bank of India and creating an artificial shortage, subsequently facilitating a racket where they can sell coins at higher premiums to shopkeepers. Though this racket is prevalent in all parts of the country where the RBI doesn’t have branches to disburse them directly, Mumbai as the economic capital of India, becomes the most sought after target and bears the brunt.
According to data obtained from the RBI, it has issued 8.95 crore coins of all denominations through banks for distribution in Mumbai during March 2013. It averages to about 30 lakh coins per day. Apart from this, RBI also exchanges coins from its two own centres in Mumbai — one being the headquarters at Fort and the other in Navi Mumbai.

MODUS OPERANDI
Shantaram Rambade, a tea vendor at CST, bought a bag of coins of `2,500 at a commission of `400. He said, “We are paying `500 as commission for coins worth `5,000, and `1,600 as commission for coins worth `12,500 of `5 denominations. Earlier, the RBI used to issue coins on the basis of permits, but now we don’t know why it has stopped issuing coins by permits.” With this move, the RBI has created room for middlemen, and Raju (name changed), a physically-handicapped teenager uses the loophole to earn `500 to `600 daily as he buys the coins from the RBI and sells it to shopkeepers. Even as many shopkeepers prefer to bypass the middlemen and attempt to get coins directly from the RBI, there are many who do not have the time to spare and end up dealing with the racketeers.
So how does coin racketeering work? Racketeers line up early in the morning everyday at RBI headquarters and get their hands on the coins by exchanging notes; they later approach shopkeepers who need the coins regularly and sell them at a 10-13 per cent premium. Initially, the RBI cracked down on a few of them, but these syndicates have managed to survive and continue to flourish.
However, a supervisor in the RBI’s coin issue department justified, “When someone comes to the exchange and stands in the coin exchange queue, we cannot refuse them. But why are the people paying more? Why don’t they come directly to us, why do they approach such people?”

IS THERE A SHORTAGE?
The question that needs to be asked is whether the RBI has been falling short in minting the coins as per demand? Data obtained through RTI by activist Manoranjan Roy establishes that the minting of `1 coin has doubled from what it was 10 years ago. Similarly, minting of `2 coin has gone up to 3.5 fold, and `5 coin have more than doubled as well. Data also shows that in 2001-02, the RBI minted 1,547 crore coins of `1, 1,064 crore coins of `2 and 2,025 crore coins of `5. Consider this, from 1970 till 2012, the RBI has pumped `1,02,640 crore coins of `1, `2, `5 and `10 into the market. Noting this, Mr Roy asks, “If we believe that the lifespan of a coin is 25-30 years, then there should be at least 100 coins per head in India, but where have these disappeared. What is the RBI doing about it?”
However, RBI spokesperson Alpana Killawala attributed this problem to inequality of distribution (exchanging) of coins. “I would emphasise that there is no shortage of coins, but that we have limitations on how we can distribute coins across India. A few people have been taking advantage of this shortfall,” said Ms Killawala. She also admitted that a few racketeers were responsible for the artificial shortage and were using this as an opportunity. She went on to explain inequality of distribution as “the RBI doesn’t have coin exchange branches at every corner of the country. We have tasked this job to banks also, but this provision is also falling short of expectations.”

THE RAILWAYS’ SOLUTION
To tackle the problem of ticket prices and coin availability head on, the Railways found the solution in rounding off fares. “Just like conductors in BEST buses, booking clerks across the country also complained about the shortage of coins so we thought that to sort out this problem permanently, we should adjust all the fares into the multiplication of `5,” said a senior commercial officer from Western Railway.
While the Railways has sorted out the problem for itself, the common man continues to face this problem everyday. “Whenever I have to return `2, `3, or `4 to a customer, I have to give chocolates of the same amount instead of coins,” said Gopal Sharma, who runs an eatery at CST. Interestingly, nowadays, beggars get more money when they return coins to shopkeepers, as they make around `120 for coins worth `100. “Kabhi `200 aur kabhi `300 mil jata hai, aur hotel mein bechane par, `30-40 jyada mil jata hai (Some days, I get `200 and some days I get `300 in coins, when I give these to a nearby hotel, I get `30-`40-50 more,” said Khan, a beggar in Kurla.

IMPACT OF SHORTAGE
The impact of the unavailability of coins and premium paid by shopkeepers can be seen in the prices of products, especially edibles items. Now, while fixing the prices, shop owners always try to structure it in round figures (in multiplication of 5 or 10) to avoid the problem of coins (Just like the Railways).
Mr Sharma is of the opinion that shortage of coins is even inflating the cost of edible items. He said, “A year ago, I sold masala dosa at `15, but when I wanted to hike its price by `2, I decided I couldn’t do it due to unavailability of coins in the market, so I had to simply hike it by `5.” In a lighter vein, he markedly said, “The dearth of coins has even forced businessmen like us to beg for change from the beggars.”
However, a few experts believe that the intrinsic value of coins is still higher and hence, they could be melted and turned into razor blades and ornaments. “Earlier, many cases were reported about these coins being melted and used for other purposes, but since the RBI has reduced the sizes of the coins, such cases have minimised. This doesn’t imply though that it is completely out of practice since cases are still reported in remote area of states like West Bengal,” said ex-officer-turned-activist Y.P. Singh. RBI spokesperson Ms Killawala said, “Even if coins are used for other purposes, we cannot say the coin was misused.”
A well-known scholar on Indian numismatics, Dr Dilip Rajgor, however says, “The buck ultimately stops at the RBI’s door. It has been able to curb the malpractice of coin melting, but it has yet to develop a mechanism for smooth disbursal of coins in all corners of the country, which is why the racketeers manage to take advantage of loopholes and create this situation.”