When Minting 1 Coins Was Cheaper
In the first few years of 1970s, the RBI had faced two problems — wage cost for currency note printing press workers and shortage of currency note papers. These two unconnected issues had forced the central bank to think in terms of introducing one-rupee currency notes. Circa 1973, RBI deputy governor RK Seshadri took up the matter with the government, and later governor S Jagannathan followed it up with finance minister YB Chavan and advocated a change-over from one-rupee notes to one-rupee coins. RBI had decided to do this shift in a phased manner because of two reasons. One, RBI was not too sure how the general public would take the change and, second, it was worried about the cost of destroying the spoiled notes. At a result, the RBI had decided that one-rupee coins would be introduced slowly. The life of a one-rupee note was about six months on an average, while the life of a cupronickel one-rupee coin was forty years! Therefore, using a one-rupee note entailed recurring forex expenditure for importing the currency note paper. The forex outgo on import of coinage metals was much lower. It was expected that the import bill would not be higher than 1 crore, because RBI was planning to use the metal retrieved by recycling cupronickel in the coins withdrawn from circulation. The mints were also expected to benefit from long-term contract for nickel, if India decided on a programme for minting onerupee coins and ordered nickel supplies accordingly. Therefore, although there was a rise in the prices of coinage metals, RBI found that minting one-rupee coins would still be economical. An improvement in the global supply of copper has helped.
— Atmadip Ray