By removing the Rs. 1,000 note, the government is doing away with the cheapest note to print in relation to the face value of the note.
Replacing all the Rs. 500 and Rs. 1,000 denomination
notes with other denominations, as ordered by the government, could cost
the Reserve Bank of India at least Rs. 12,000 crore, based on the
number of notes in circulation and the cost incurred in printing them.
Data
from a Right to Information answer by the RBI in 2012 shows that it
costs Rs. 2.50 to print each Rs. 500 denomination note, and Rs. 3.17 to
print a Rs. 1,000 note.
That means that it cost the
central bank Rs. 3,917 crore to print the 1,567 crore Rs. 500 notes in
circulation, and Rs. 2,000 crore to print the 632 crore Rs. 1,000 notes
in circulation currently.
Assuming that the new Rs.
500 notes cost the same to print, then that is an additional Rs. 3,917
crore spent in simply maintaining the same number of notes in
circulation.
The new Rs. 2,000 notes are likely to
cost about the same or a little more than the Rs. 1,000 notes, which
means an additional cost of Rs. 2,000 crore to print them.
In
total, removing the old notes and replacing them with the new Rs. 500
and Rs. 2,000 notes will cost the central bank a total of at least Rs.
12,000 crore. This figure is likely to go up since additional security
measures, which the new notes are set to have, will only add to the cost
of printing.
By removing the Rs. 1,000 note, the
government is doing away with the cheapest note to print in relation to
the face value of the note.
Highest cost
The
Rs. 3.17 it costs to print a Rs. 1,000 note is the highest in absolute
terms across denominations, but it is the lowest when compared to the
face value of the note.
For example, a Rs. 10 note
costs only Rs. 0.48 to print, but that works out to 9.6 per cent of the
face value of the note. Printing a Rs. 10 note costs 10 per cent of what
that note is worth. This, for a Rs. 1,000 note, is 0.3 per cent.
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