The Cost of Manufacturing a One Rupee Coin

The manufacturing cost of a one rupee coin in India presents an interesting economic paradox, where the production cost exceeds the coin's face value. Let's break down the various aspects of this manufacturing process and its associated costs.

Material Costs

1. The one rupee coin is made from:
   • Ferritic Stainless Steel
   • Weight: 3.09 grams
   • Diameter: 25 mm

Production Costs Breakdown

The total cost of approximately Rs 2.50 per coin includes:

1. Raw Material Cost: Rs 1.11

   • Steel procurement
   • Storage and handling

2. Manufacturing Expenses: Rs 0.89

   • Die casting
   • Stamping
   • Quality control
   • Equipment maintenance

3. Overhead Costs: Rs 0.50

   • Labor
   • Electricity
   • Transportation
   • Administrative expenses

Economic Impact

The production cost being higher than the face value creates several implications:

1. Government Subsidy

   • The government bears a loss of Rs 1.50 per coin
   • Justified as a public service necessity

2. Production Volume

   • Despite losses, millions of coins are produced annually
   • Essential for daily transactions in the economy

Manufacturing Process

The coin production involves several steps:

1. Material Preparation

   • Steel sheets are processed
   • Cut into required sizes

2. Blanking

   • Circular blanks are punched out
   • Size specifications are maintained

3. Stamping

   • Design impression
   • Value marking
   • Year of minting

4. Quality Control

   • Weight check
   • Design verification
   • Metallic composition testing

Production Centers

India mints one rupee coins at four locations:

• Mumbai
• Kolkata
• Hyderabad
• Noida

Conclusion

While manufacturing a one rupee coin costs more than its face value, it remains an essential component of India's currency system. The government continues this loss-making production to maintain smooth economic transactions and ensure currency availability across the country.