Minting of Rs 10 coins reduced due to shortage in raw material

A delay in the procurement of raw materials for coins has compelled the Reserve Bank of India (RBI) to cut its demand for Rs 10 coins by half, raising concerns of a potential shortage in circulation.

The RBI, responsible for managing the supply, adjusted the entire coin indent plan for FY19 by increasing the demand for smaller denominations of coins instead of Rs 10 coins. This decision was made due to the failure of India Government Mints to procure Rs 10 coin blocks on time, according to official documents.

The Security Printing & Minting Corporation of India (SPMCIL), overseeing four government minting units in Kolkata, Mumbai, Hyderabad, and Noida, informed the RBI in August about the unavoidable delays in the procurement of Rs 5 and Rs 10 coin blocks, leading to a revision in the denomination-wise production plan. Consequently, the four units under SPMCIL were instructed to mint 200 crore pieces of Rs 10 coins, a reduction from the previous indent of 400 crore pieces. This decision was discussed at a production planning meeting at the Department of Economic Affairs on October 3, where RBI representatives were present.

The Corporation communicated the ratified indent to the heads of the four minting units on October 4, signaling a potential disruption in RBI's coin management plan. People familiar with RBI's currency management system noted that the central bank had favored increasing the circulation of Rs 10 coins, the highest-denomination coin minted in India since its introduction in 2005, especially amid persistent high inflation over an extended period.

In FY18, RBI had indented 300 crore pieces of Rs 10 coins, but due to logistic issues, the mints supplied only 76 crore pieces. As of the end of March, 505 crore pieces of Rs 10 coins were in circulation. Under the revised plan approved by the monetary authority, SPMCIL instructed the minting units to increase the production of Rs 5 coins to 113.2 crore pieces, up from the earlier order of 100 crore pieces. It also raised the demand for Rs 2 coins by nearly fivefold to 100 crore pieces from 11.3 crore pieces, and ordered 200 crore of Rs 1 coins instead of the previous demand of 101.9 crore.

The Mints were urged to make all efforts to achieve the revised denomination-wise production targets, leading the mints to instruct workers to work 54 hours per week, up from 44-48 hours, from October 6 to March 31, 2019. Workers will be eligible for overtime benefits and other allowances, according to an office memo posted by all four mints.