Have you every wondered why is size of Indian currency coins is decreasing?
Have you ever noticed the significant change in the size of the coins minted in the past few years?
Who Mints the Money?
The Government of India is responsible for minting coins and printing currency notes for the country. The annual report published by RBI(Reserve Bank of India) for the year 2016-17 stated that a total of Rs. 7965 crores was spent on printing the currency notes and coins. You can find the information here.
By seeing the cost of just printing the money, you can imagine how much currency is produced every year.
Coming back to the answer of the raised question, unlike Rupee notes, the value of Rupee coin isn’t guaranteed by the RBI or the government.
Rupee coins derive their value by the value of the metal used to make them.
The Government of India tries that the metallic value of any coin should remain less than it's face value. Because If the metallic value of the coins become more than the face value then the people will melt the coin and sell the metal.
In other words, if the manufacturing cost of the coin is greater than the value of the coin, the Government goes into loss and cherry on the cake, people will melt the coins as they are of more value for what they were purchased, they’ll earn profit robbing the Government.
For example, the cost of metal which is used to make 1 Rupee coin is 2 Rupees, people will either melt the coin so that 2 Rupees can be extracted from the 1 Rupee coin.
We know that price of metal is increasing day by day and the value of the metal used to make coins is becoming greater so the Government is tackling this problem by used less metal and thus reducing the size of the coin.