Cost of production of smaller currency notes higher than value

Reserve Bank of India in a RTI query has said the selling price of currency notes varies between Rs.0.70 and Rs.4.18 for various denominations. The selling price reflects cost of production plus margin. The RBI receives notes from four currency note printing presses.

Bhartiye Reserve Bank Note Mudran (Pvt) Ltd (BRBNML), a wholly-owned subsidiary of the Reserve Bank of India, has used the word ‘selling price’ for giving information about the cost of production. Two of the currency note printing presses are owned by the Government of India and two are owned by the Reserve Bank India, through its wholly-owned subsidiary BRBNML.

In a reply on March 14, 2017, the government had informed the Rajya Sabha that the approximate cost of printing each new currency note is in the range of Rs.2.87-3.09 for a Rs.500 note and Rs.3.54-3.77 for a Rs.2,000 note.

These figures are related to fiscal year 2016-17. Since, a range has been given, it could mean that two organisations (with two presses each), supplying currencies, have different cost of production for printing notes in the various denomination.

The RTI application also asked about average life of currency notes in various denominations to which the RBI said, “The average life span of banknote depends upon many factors, including regional diversity, seasonal effects, denomination of notes and exchange of notes.”

The RBI, in its Annual Report for 2017-18, had said that expenditure incurred on the printing of note came down from 2016-17. For the last fiscal, the amount was Rs.4,912 crore as against Rs.7,965 crore during the year before. In fact, the RBI has to spend more in 2016-17 because of demonetisation. During that year, two types of Rs.500 note were printed beside note in the denomination of Rs.1,000 and Rs.2,000.

BRBNML has presses at Mysore (Southern India) and Salboni (Eastern India). The government-owned presses are at Nasik (Western India) and Dewas (Central India) and these are operated by Security Printing and Minting Corporation of India Ltd . Apart from these there are four mints for coins. These are located at Mumbai, Hyderabad, Calcutta and Noida and operated by the Government.