Check all your trouser pockets. Search behind the couch cushions. Empty out the drawers in your desk. Because you have only till the end of banking hours on Wednesday to exchange your 25 paise coins for higher denomination coins and notes. As per a government notification, published in December 2010, the 25 paise coin, still called chaar anna by some, will cease to be legal tender from Thursday. “All banks having small coin depots have been directed to accept coins of 25 paise denomination and below for exchange for their face value at the bank branches up to close of business on June 29, 2011. This facility is also available at the Issue Offices of RBI,” says a RBI spokesperson. This news may come as no surprise. The 25 paise coin has vanished from our lives. A Mint official says none have been struck since 2002, but the larger reason is that inflation has rendered it useless, at least in the metros. A spokesman for BEST, which operates Mumbai’s buses and is probably the city’s last major handler of 25 paise coins since conductors were obliged to take them (though probably not without some cursing), says the decision will save them the hassle: “It will give relief not only to BEST but to the passengers too.” But perhaps the most telling comment comes from Cadbury’s, whose spokesperson says their cheapest product, Halls drops, are priced at 50 paise, and the éclairs are 1 each. When the sweets that shops give when they run short of change are worth more than a coin, you know its time is up. A finance ministry spokesman explains the other reason why the coin has been axed: “The ministry and RBI had been receiving complaints that the circulation of coins of the denomination of 25 paise and below has been stopped long ago since their metal value exceeded the face value, thus rendering them liable to melting and sale by unscrupulous elements.” This is the result of what is known as negative seigniorage, a reversal of an old privilege enjoyed by rulers and states when the value of the coins they issued exceeded the cost of making it. That difference in value accrued to the state, but this advantage could be reversed when the face value was low, and the price of the metals required was high. Soaring global prices for copper, nickel, zinc and stainless steel, the metals commonly used for coins these days, have resulted in most countries facing negative seigniorage on their small denomination coins, with the consequence of seeing large numbers of these coins disappearing. Essentially, the world’s Mints are subsidising the metal recycling business, which has led to bans on the practice, like the one imposed by the US Mint when they found that Jackson Metals, a company started by a metallurgist, was busy melting down its copper pennies.
The simpler solution is to recognise the reality of the situation and stop minting these coins. This, as an article by David Owen in the New Yorker explains, the US has found peculiarly hard to do thanks to a strong save-thepenny lobby that happens to be supported by one of the largest producers of metal blanks for coins and a company that operates coin changing machines. The result, as anyone who has been to the US can attest, is the almost ridiculous accumulation of pennies and nickels (the five cent coins which are even larger than pennies, so their negative seigniorage is really high). Despite this inconvenience, and the loss to the Mint, the US seems unable to stop the practice. In the rest of the world there is less attachment to coins, and other countries have reduced their use of lower denomination coins. New Zealand, for example, dropped its five cent coin in 2006 and reduced the size and weight of its other lower denomination coins. In India too, many of us can remember the one, two, three, five and 10 paise coins, all of which are no longer in use. Curiously, the RBI directive states that coins below 25 paise will also be accepted, which means this might be your last chance to use up any stacks of those old coins you still might have. But given their really low currency value, it will almost definitely make more sense to take them to the nearest metal scrap merchant.
Even if this link with the older low paise coins is inadvertent, it is appropriate since it signals that what ends with the 25 paise is not just the coin but also the long process that started in 1957 when India switched from the old system of rupees, annas, paise and pies to decimal currency. The first suggestion for use of decimal coins in India dates back to 1867, but it only became possible post-Independence when the government was able to ride on a general enthusiasm for modernity to overcome the many fears linked to the process. Even then, just days after the new coinage had come in on April 1, the Times of India grumbled in an edit that the introduction could have been postponed till after the onset of the Third Five-Year Plan, “but it serves little purpose to argue the opposite case now. All efforts should now be devoted to making the complete transition as smooth an event as possible”. The 25 paise coin played a crucial role in this change. Because we were switching from a system of 64 paise to a rupee (or 192 pies, if one really wants to consider the full complexity) to one of 100 paise to a rupee, the conversion was never going to be exact. Five paise, for example, was nine pies and 20 paise was 3 annas, 3 pies. The government issued tables that advised rounding off “by ignoring fractions of half a naya paisa and below and treating more than half a naya paisa as 1 naya paisa”. This sort of confusion was involved with all the lower denomination coins, except for the 25 paise which was deemed to be an exact substitute for the old quarter rupee or four anna coin (just as the 50 paise above it substituted the half rupee or eight anna coin). This ease of substitution is, in fact, probably why the 25 paise was introduced at all. Otherwise a strict decimal series should go in multiples of 10, yet retaining the old quarter value coin was a way to keep the transition simpler. This is probably why, even 54 years later, the old habit of saying ‘chaar anna’ never entirely died out. It is notable how, in the articles in the Times of India in the run-up to the change, the four anna is often used as the simplest way of conveying an argument. On March 22, 1957, for example, one reader, LR Patwardhan, used it to point to the common fear of being fleeced by traders: “A retailer buying 4 annas worth of articles, such as vegetable, may sell to 16 persons an old paisa’s worth each and collect 32 NP, thus gaining 7 NP on a capital of 25 NP.” In the event, transition was quite smooth, partly due to the preparation from the government and banks, which had been publishing ads announcing how to do the change. Prime Minister Jawaharlal Nehru extolled this “silent, but far-reaching revolution” which, he helpfully pointed out, was really a return of sorts to the mathematical systems of ancient India which had invented the concept of zero. In Mumbai, the railways were the first to use the new coins while, as always, enterprising street kids got in on the act by offering people the new coins at a premium. An Asian Paints ad in the Times of India declared: ‘Old coins or Naye Paise, you’ll get best value for your money with Asian Paints’. Another for Burmah-Shell started neatly with a dialogue: ‘“An anna for your thoughts?” “It will cost you 6 NP now”’. The one place real trouble was reported from was Calcutta. Bombay might have shrugged off the sort of profitable rounding up that the Times reader had warned of, but in Calcutta this caused riots. The police had to be called to protect several post offices where the staff had rounded up and were refusing to sell at the old rates. But some measure of the horror can be felt when the Times reporter wrote that at the iconic India Coffee House a cup of eight ounce coffee “which was charged at four annas till yesterday was priced at 4 annas and 9 pies, or 30 naye paise, while the six ounce mixed coffee was not served yesterday”. Of such small things are revolutions made. The fact though that a cup of coffee was priced at more than 25 paise does suggest that, at least in large cities, even then the purchasing power of the coin was never that great. The cheapest cinema ticket price in Bombay then — Guru Dutt’s Pyaasa was in its sixth week and still doing well — was 1.5 rupees (but four annas would get you entry to the Bombay Art Society’s 66th annual exhibition at the Jehangir Art Gallery). Another indication that 25 paise wasn’t seen as a particularly enduring value can be seen from the relative rarity of stamps issued by the post office at that rate. According to its list of stamps, the last large issue of 25 paise stamps was in 1974-75 (but philatelic traders MM Mukhi & Sons say that there was one more, featuring Rajarshi Shahu Chatrapati, the reformist king of Kolhapur, in 1979). Perhaps though, the fate of the 25 paise coin can best be seen in its designs. There were never many of them: several variations featuring the lions of our national emblem, commemoratives for Rural Women’s Advancement (1980), World Food Day (1981), the Asian Games (1982) and Forestry (1985). Since then there was only one last design, but it was perhaps the most striking of any modern Indian coin: the rhinoceros coin first issued in 1988. This design is something of a mystery — it is not part of a series, has no obvious explanation for use, yet it is beautifully achieved and fills the small space of the coin quite perfectly. The one sadness of the end of the 25 paise coin is that it ends use of this design and one can only wonder: given the very uncertain future of the Indian rhino, did the designer perhaps have a presentiment of the eventual extinction of this coin as well?
ET
