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Death of India's Small Change
|by Proloy Bagchi|
The Indian central bank, the Reserve Bank of India, had been making quite a song and dance about the 25 Paise coins ceasing to become legal tender from the 30th June this year. It had been asking people to exchange them for equivalent amount of currency. A report the other day said only a little more than a hundred thousand rupees worth of these coins had been deposited in the banks in Bhopal till the 30th June.
Coins representing fractions of a rupee have long since disappeared from the market. While the coins of the denominations of one, two, five and ten paise had been withdrawn from circulation years ago, I haven’t seen a 25 P coin in a decade or two. After all, even before the recent demonetisation shops, industries, including those in the public sector, and other big commercial establishments had been refusing to accept these coins. Even the 50 P coins representing half a rupee have not been seen for years.
One cannot help wondering where the 25 P coins that had been exchanged for equivalent currency before 30th June came from. Households would never keep worthless cash which would be a drag on their finances.
The small change lost their value, over the years, so much so that even a beggar wouldn’t accept a 25 P or even a 50 P coin. Today, they frown when one drops in their palm a 1-Rupee coin. You cannot really blame them. A rupee today does not fetch anything.
Galloping inflation has driven small change out of circulation. India is a young country and not many youngsters would know when the decimal coinage came into being. Those of us who are older have lived through the transition. Earlier, until 1957 in fact, what we had was a rupee divided into 16 annas, each consisting of four paise and each paise had three pies. Thus the monetary system was made up of 192 pies.
The pie was the smallest currency unit, representing 1/12th of an anna and 192nd part of a rupee. In pre-secondary classes we used to struggle with arithmetic questions in which rupees, annas, paise and pies figured – somewhat like pounds, shilling and pence. Like in our system, a pence, called a penny, too had a fraction known as a farthing that used to be 1/960th of a pound. It, too disappeared around early 1970s for becoming valueless.
Metrification or decimalisation of currency took place in India earlier than in the UK. While decimal coinage came into being in the UK in 1971, the process was commenced in India in 1955 with the passing of the Indian Coinage Act. The new decimal coins became legal tender in 1957 with a rupee consisting of 100 paise, doing away with annas and pies. The two systems, however, ran concurrently until 1962 – the year in which the old system with all its coins stood discontinued.
During the transition six paise made an anna but two annas consisted of thirteen paise – a strange equation but perhaps there was no way out – and thus four annas were made of twenty five paise. Likewise, while twelve more paise (i.e. thirty seven) paise made six annas, addition of another thirteen made fifty paise. Over the remaining half of the rupee similar equations prevailed.
The new system, to start with, did seem a lot confusing for the illiterates and half-literates. Conversion into new from old and vice versa was somewhat complicated for them resulting in arguments and occasional fights when a hawker or a shopkeeper short-changed a customer by a paisa or two. The arguments or fights were not for nothing as a new paisa had good value. Two of them would buy, inter alia, a stick of a popular brand of cigarettes in the late ‘50s. But the earlier paisa had better purchasing power.
When I was growing up in the princely state of Gwalior my school fee in a state-run school in class III was 3 paise. It climbed up to a couple of annas as I went on to class VI. This was in early 1940s. A paisa would then fetch us a pocketful of roasted peanuts. A samosa or an ice candy (of ice shavings known then as “chuski”) would cost a mere couple of paise. Potatoes would be around an anna a seer (a then-prevalent measure little more than a kilo, converted into metric system in 1956) and tomatoes in winters (it used to be a winter crop) would be two annas a seer. If my father, a compulsive shopper, becoming a trifle extravagant, bought vegetables worth 3 rupees or so he had to hire a porter in four annas to carry the load home in a basket over a distance of about two miles.
Today, three rupees get you just about a single fruit of banana.
Grains and pulses were well below a rupee for a seer. A hundred juicy mangoes of local breed would be delivered at home for rupees two. A seer of other well-known grafted varieties could be had for around half a rupee for a seer. Even in 1960 I recall having bought a seer of mutton in just one rupee. Today it is hovering around Rs. 300.
In 1955 I had a bottle of coca cola for just four annas on India Gate lawns in Delhi while waiting for Soviet leaders Bulganin and Khrushchev to pass by. That was the kind of strength of the old money.
Looking back things appear to have been cheap and yet the middle classes had a tough time making the ends meet, incomes being very low.
My father, a professor, slogged to make a few extra rupees by way of tuitions and my mother laboured hard to run the house frugally. Although domestic helps were also cheap but money to pay for more than one part-timer was hard to come by.
Although very cheap, cars used to be very few in number yet, unlike today, out of reach of the middle classes who would go, if at all, for a bicycle, generally a used one. The rest would just leg it.
Radios had just started coming in during the late ‘40s but they were unaffordable for the vast majority. The so-called “white goods” were yet to make their appearance. Life was difficult and, by far, devoid of any frills.
It was a different world. There was a minuscule rich section at the top, a small perennially financially-tight middle class and a huge poor and deprived, poverty-stricken mass struggling at the bottom – a pyramid with a conic peak and a massively sprawling base. As prices were rising all the time, though much more slowly than their current pace, I recall Jawaharlal Nehru, the then Prime Minister, saying in one of his public speeches a few days after the Independence Day in 1947, “We have to fight the monster of rising prices.” Were he to come down today from wherever he happens to be and take a look at that “monster” he would forthwith do an about-turn and rush back to where he came from.
Successive governments have not been able to control and contain it which has now assumed mammoth proportions. It continues to grow relentlessly feeding on economic mismanagement and rampant corruption. Successive “oil shocks”, too, have nourished the “monster”.
The prices having risen thousands of times since independence the half a century old small-change, becoming worthless, had to die, appearing like ghosts only in paper transactions for want of corresponding action to reset the prices. However, regardless of the run-away prices in today’s India, the poverty of abject type of yore, strangely, is no longer around and the middle classes have inflated manifold becoming much more prosperous, not to mention numerous billionaires, even of (US) dollar variety who, earlier, had hardly ever been heard of.
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