Rupees 20 may be lower in denomination than ₹50, but the cost of production of ₹20 note is greater than ₹50.
According to information gathered by BusinessLine under Right to Information Act (RTI), the Reserve Bank of India stated the selling price of currency notes varies between ₹0.70 and ₹4.18 for several denominations. The selling price reflects the cost of production plus margin. The RBI gets notes from four currency note printing presses.
Bharatiya Reserve Bank Note Mudran (Pvt) Ltd (BRBNML), a wholly-owned subsidiary of the Reserve Bank of India, has chosen the word ‘selling price’ for giving information about the cost of production. Two of the currency note printing presses are owned by the Government of India and two are owned by the Reserve Bank India, through its completely-owned subsidiary BRBNML.
The selling price of several currency notes has been unchanged during the last fiscal and the current fiscal, although there seems to be changed in cost from 2016-17.
In a reply on March 14, 2017, the government had informed the Rajya Sabha that the approximate cost of printing each new currency note is in the range of ₹2.87-3.09 for a ₹500 note and ₹3.54-3.77 for a ₹2,000 note.
These figures are considered to the fiscal year 2016-17. Since a range has been given, it could mean that two organizations (with two presses each), supplying currencies, have different cost of production for printing notes in the several denominations.
The RTI application also questioned about the average life of currency notes in various denominations to which the RBI said, “The average life span of banknote depends upon many factors, covering regional diversity, seasonal effects, the denomination of notes and exchange of notes.”
When asked has RBI done any study on the velocity of currencies in several denominations, the reply was in negative.
The RBI, in its Annual Report for 2017-18, had alleged that expenditure incurred on the printing of note came down from 2016-17. For the last fiscal, the amount was ₹4,912 crore as against ₹7,965 crore in the year before. In fact, the RBI has to spend more in 2016-17 because of demonetization. During that year, two types of ₹500 note were printed beside note in the denomination of ₹1,000 and ₹2,000.
BRBNML has presses at Mysore (Southern India) and Salboni (Eastern India). The government-owned presses are at Nasik (Western India) and Dewas (Central India) and these are operated by Security Printing and Minting Corporation of India Ltd. Apart from these, there are four mints for coins. These are located at Mumbai, Hyderabad, Calcutta, and Noida and operated by the Government.