NEW DELHI, Aug 15: Thanks to dilly-dallying on the part of Finance Ministry and the Reserve Bank (RBI), the shortage of coins has reached menacing proportions with unscrupulous elements selling the coins at exorbitant premium.

Although the new currency notes and coins have historically been traded at a premium even when there was no shortage, the premium for coins has currently shot up to 20 per cent. According to market sources, the premium used to be nominal in ordinary circumstances depending upon the availability of coins. However, 20 per cent premium significantly adds to the cost of retail trade where the margins are low.

Shortages led to acute shortage with certain the unscrupulous elements cornering the coins in a bid to make quick buck. According to sources, retail traders have no choice but to buy coins at a premium and suffer silently.

The shortage of coins, officially, is primarily on account of the decision of the government to coinise lower denomination of notes of Re 1, Rs 2 and Rs 5. This was being done by the RBI to divert the capacity to print currency notes of higher denominations. The printing of currency notes of Re 1 was stopped from September 1994, Rs 2 from January 1995 and Rs 5 from November 1995. However, what is interesting is that the RBI failed to anticipate timely measures meeting the demand of coins following the decision to gradually coinise the lower denomination currency notes.

Although the government has continued to maintain that the shortage of coins was on account of limited production capacity which was further restricted by coinising of lower denomination notes, the problem has in fact aggravated on account of delay in modernisation of mints. Similar delays in modernisation of currency printing presses also added to the problems.

The government is trying to ease the problem of coins and currency shortage by "one time" import of printed notes to the extent of 3,600 million pieces (of total face value of Rs 1,00,000 crore) and 1000 million pieces of coins (of total face value of Rs 130 crore).

The RBI, which is empowered by the RBI Act 1934, to issue notes/coins to public has failed to take timely action to prevent shortage of currency notes/coins leading to blackmarketing.The country will have to wait of completion of modernisation of mints.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.