BAUMOL’S SALES MAXIMISATION,

W.J. BAUMOL’S SALES MAXIMISATION

(Without Advertisement)

Baumol’s findings of oligopoly firms in America reveal that they follow the sales maximization objective. According to Baumol, with the separation of ownership and control in Morden Corporation, managers seek prestige and higher salaries by trying to expand company sales even at the expense of profits. Being a consultant to a number of firms, Baumol observes that when asked how their business went last year, the business managers often respond, ‘’our sales were up to 3 million $’’. Thus, according to Baumol, revenue or sales maximization rather than profit maximization is consistent with the actual behavior of firms.

Baumol cites evidence suggesting that shot-run revenue maximization may be consistent with long-run profit maximization. But sales maximization is regarded as the short-run and long-run goal of management. Sales maximization is not only a means but an end in itself. He gives a number of arguments is the support of his theory. According to him, a firm attaches great importance to the magnitude of sales and is much concerned about declining sales. If the sales of the firm are declining, banks, creditors and the capital market are not prepared to provide finance to it. Its own distributors and dealers might stop taking interest in it. Consumers might not buy its products because of their unpopularity. But if sales are large, the size of the firms expands which, in turn, larger profits.

Baumol’s model is illustrated in fig. 1 where TC is the total cost curve, TR is the total revenue curve, TP is total production curve and MP is the minimum profit constraint line. The firm maximizes its profits at the OQ level of the output corresponding to the highest point B on the TP curve. But the aim of the firm is not maximize the profit but it want to maximize the sales. Its sales maximization output is OK where the total revenue KL is the maximum at the highest point of the TR. This sales maximization output OK is higher than the profit maximization output OQ. But sales maximization is subject to minimum profit constraints.

(Sales maximization model without advertisement.)

Suppose the minimum profit level of the firm is represented by the line MP. The output OK will not maximize sales as the minimum profit OM are not being covered by total profit KS. For sales maximization, the firm should produce profit but also gives the highest total revenue consistent with it. This level is represented by the OD level of output where the minimum profit is DC (=OM) are consistent with DE amount of total revenue at the price DE/OD, (I.e., total revenue /total output).

Criticism:

The sales maximization objective of the firms has been criticized on a number of points. First, Rosenberg criticized the use of the profit constraint for maximizing sales. He has shown that it is difficult to specify exactly the relevant profit constraint for a firm, and choose the sales maximization and minimum profit constrain in Baumol’s analysis. Second, if expenditure on advertising is introduced in a Baumol’s theory, the likelihood of sales maximization is increased. But this view point is not realistic because the expenditure on advertising increase or decrease with the rise of fall in output. Third, the objective of sales maximization subject to profit constraint implies that ‘’the firm will not make any sacrifice in sales no matter how large an increment in wealth would thereby be achievable.’’ Despite these criticisms, sales maximization is an important objective being pursued by business firms.   

Merchant Banking

Merchant Banking Meaning

Meaning:

Merchant Banking is a combination of Banking and consultancy services. It provides consultancy to its clients for financial, marketing, managerial and legal matters. Consultancy means to provide advice, guidance and service for a fee. It helps a businessman to start a business. It helps to raise (collect) finance. It helps to expand and modernize the business. It helps in restructuring of a business. It helps to revive sick business units. It also helps companies to register, buy and sell shares at the stock exchange.

 MERCHANT BANKS DO TWO TYPES OF WORKS.

1 BANKING SERVICES-

IT HELP TO BUSINESSMEN TO START  A BUSINESS AND HELP TO COLLECT MONEY.

2 CONSULTANCY SERVICES- 

IT PROVIDES CONSULTANCY TO ITS CLIENTS FOR FINANCE, MARKETING ETC.

In short, merchant banking provides a wide range of services for starting until running a business. It acts as Financial Engineer for a business.

Merchant banking was first started in India in 1967 by Grind lays Bank. It has made rapid progress since 1970.

Functions of Merchant Banking

The functions of merchant banking are listed as follows:

1.       Raising Finance for Clients: Merchant Banking helps its clients to raise finance through issue of shares, debentures, bank loans, etc. It helps its clients to raise finance from the domestic and international market. This finance is used for starting a new business or project or for modernization or expansion of the business.

2.       Broker in Stock Exchange: Merchant bankers act as brokers in the stock exchange. They buy and sell shares on behalf of their clients. They conduct research on equity shares. They also advise their clients about which shares to buy, when to buy, how much to buy and when to sell. Large brokers, Mutual Funds, Venture capital companies and Investment Banks offer merchant banking services.

3.       Project Management: Merchant bankers help their clients in the many ways. For e.g. advising about location of a project, preparing a project report, conducting feasibility studies, making a plan for financing the project, finding out sources of finance, advising about concessions and incentives from the government.

4.       Advice on Expansion and Modernization: Merchant bankers give advice for expansion and modernization of the business units. They give expert advice on mergers and amalgamations, acquisition and takeovers, diversification of business, foreign collaborations and joint-ventures, technology up-gradation, etc.

5.       Managing Public Issue of Companies: Merchant bank advice and manage the public issue of companies. They provide following services:

v  Advise on the timing of the public issue.

v  Advise on the size and price of the issue.

v  Acting as manager to the issue, and helping in accepting applications and allotment of securities.

v  Help in appointing underwriters and brokers to the issue.

v  Listing of shares on the stock exchange, etc.

6.       Handling Government Consent for Industrial Projects: A businessman has to get government permission for starting of the project. Similarly, a company requires permission for expansion or modernization activities. For this, many formalities have to be completed. Merchant banks do all this work for their clients.

7.       Special Assistance to Small Companies and Entrepreneurs: Merchant banks advise small companies about business opportunities, government policies, incentives and concessions available. It also helps them to take advantage of these opportunities, concessions, etc.

8.       Services to Public Sector Units: Merchant banks offer many services to public sector units and public utilities. They help in raising long-term capital, marketing of securities, foreign collaborations and arranging long-term finance from term lending institutions.

9.       Revival of Sick Industrial Units: Merchant banks help to revive (cure) sick industrial units. It negotiates with different agencies like banks, term lending institutions, and BIFR (Board for Industrial and Financial Reconstruction). It also plans and executes the full revival package.

10.   Portfolio Management: A merchant bank manages the portfolios (investments) of its clients. This makes investments safe, liquid and profitable for the client. It offers expert guidance to its clients for taking investment decisions.

11.   Corporate Restructuring: It includes mergers or acquisitions of existing business units, sale of existing unit or disinvestment. This requires proper negotiations, preparation of documents and completion of legal formalities. Merchant bankers offer all these services to their clients.

12.   Money Market Operation : Merchant bankers deal with and underwrite short-term money market instruments, such as:

v  Government Bonds.

v  Certificate of deposit issued by banks and financial institutions.

v  Commercial paper issued by large corporate firms.

v  Treasury bills issued by the Government (Here in India by RBI).

13.   Leasing Services : Merchant bankers also help in leasing services. Lease is a contract between the lessor and lessee, whereby the lessor allows the use of his specific asset such as equipment by the lessee for a certain period. The lessor charges a fee called rentals.

14.   Management of Interest and Dividend : Merchant bankers help their clients in the management of interest on debentures / loans, and dividend on shares. They also advise their client about the timing (interim / yearly) and rate of dividend.

DEMONETIZATION

DEMONETIZATION

INTRODUCTION:-

There is a background to the current decision of demonetization of Rs 500 and Rs 1000 rupee notes. The government has taken few steps in this direction much before its November 8, 2016 announcement. As a first step the government had urged people to create bank accounts under Jan Dhan Yojana. They were asked to deposit all the money in their Jan Dhan accounts and do their future transaction through banking methods only. The second step that the government initiated was a tax declaration of the income and had given October 30, 2016 deadline for this purpose. Through this method, the government was able to mop up a huge amount of undeclared income.

However, there were many who still hoarded the black money, and in order to tackle them; the government announced the demonetization of 500 and 1000 currency notes.

The sudden announcement by the govt on the night of 8^th Nov. 2016 that currency of the denomination of Rs. 500 and Rs 1000 notes would cease to be a legal tender stunned the country. Doubts and confusion started creating in the minds of various sections of the people as regards the effect of demonetisation.

MEANING

Demonetization of currency means discontinuity of the particular currency from circulation and replacing it with a new currency. In the current context it is the banning of the 500 and 1000 denomination currency notes as a legal tender. Demonetisation as is globally defined is a step to withdraw certain note from circulation in order and also expose the people who are indulges in hording block money and tax evasion.

History and background

1. The sudden move to demonetize Rs 500 and Rs 1,000 currency notes is not new. Rs 1,000 and higher denomination notes were first demonetized in January 1946 and again in 1978.
2. The highest denomination note ever printed by the Reserve Bank of India was the Rs 10,000 note in 1938 and again in 1954. But these notes were demonetized in January 1946 and again in January 1978, according to RBI data.

3.     Rs 1,000 and Rs 10,000 bank notes were in circulation prior to January 1946. Higher denomination banknotes of Rs 1,000, Rs 5,000 and Rs 10,000 were reintroduced in 1954 and all of them were demonetized in January 1978.

4. The Rs 1,000 note made a comeback in November 2000. Rs 500 note came into circulation in October 1987. The move was then justified as attempt to contain the volume of banknotes in circulation due to inflation. However, this is the first time that Rs 2,000 currency note is being introduced.

5.      While announcing currently circulated Rs 500 and Rs 1,000 notes as invalid from midnight 8 Nov, Prime Minister Shri Narendra Modi said new Rs 500 note and a Rs. 2,000 denomination banknote will be introduced from November 10.

6. Bank notes in Ashoka Pillar watermark series in Rs 10 denomination were issued between 1967 and 1992, Rs 20 in 1972 and 1975, Rs 50 in 1975 and 1981 and Rs 100 between 1967-1979.
7. The banknotes issued during this period contained the symbols representing science and technology, progress and orientation to Indian art forms.
8. In the year 1980, the legend Satyameva Jayate — ‘truth alone shall prevail’ — was incorporated under the national emblem for the first time.
9. In October 1987, Rs 500 banknote was introduced with the portrait of Mahatma Gandhi and Ashoka Pillar watermark. Mahatma Gandhi (MG) series banknotes – 1996 were issued in the denominations of Rs 5, (introduced in November 2001), Rs 10 (June 1996), Rs 20 (August 2001), Rs 50 (March 1997), Rs 100 (June 1996), Rs 500 (October 1997) and Rs 1,000 (November 2000).
10. The Mahatma Gandhi Series – 2005 bank notes were issued in the denomination of Rs 10, Rs 20, Rs 50, Rs 100, Rs 500 and Rs 1,000 and contained some additional/new security features as compared to the 1996 MG series.
11. The Rs 50 and Rs 100 banknotes were issued in August 2005, followed by Rs 500 and Rs 1,000 denominations in October 2005 and Rs 10 and Rs 20 in April 2006 and August 2006, respectively.

Even thought this move may be now to the younger generation. As regards the demonetisation in India recently, the objective of the govt. seems to be Nobel although some hue and cry by certain political parties was the headline for a few days. But the question arises    will the government achieves its objectives?

OBJECTIVE

The government’s stated objective behind the demonetization policy are as follows;

1.     It is an attempt to make India corruption free.

2.     It is done to curb black money,

3.     To control escalating price rise,

4.     To stop funds flow to illegal activity,

5.     To curve terrorism, curruption, flow of fake currency

6.     To make people accountable for every rupee they possess and pay income tax return.     Finally, it is an attempt to make a cashless society and create a Digital India.

The demonetization policy is being seen as a financial reform in the country but this decision is fraught with its own merits and demerits.

Merits of Demonetisation

The demonetization policy will help India to become corruption-free. Those indulging in taking bribe will refrain from corrupt practices as it will be hard for them to keep their unaccounted cash. This move will help the government to track the black money. Those individuals who have unaccounted cash are now required to show income and submit PAN for any valid financial transactions. The government can get income tax return for the income on which tax has not been paid. The move will stop funding to the unlawful activities that are thriving due to unaccounted cash flow. Banning high-value currency will rein in criminal activities like terrorism etc. The ban on high value currency will also curb the menace of money laundering. Now such activity can easily be tracked and income tax department can catch such people who are in the business of money laundering. This move will stop the circulation of fake currency. Most of the fake currency put in circulation is of the high value notes and the banning of 500 and 1000 notes will eliminate the circulation of fake currency. This move has generated interest among those people who had opened Jan Dhan accounts under the Prime Minister’s Jan Dhan Yojana. They can now deposit their cash under this scheme and this money can be used for the developmental activity of the country. The demonetization policy will force people to pay income tax returns. Most of the people who have been hiding their income are now forced to come forward to declare their income and pay tax on the same. Even though deposits up to Rs 2.5 lakh will not come under Income tax scrutiny, individuals are required to submit PAN for any deposit of above Rs 50,000 in cash. This will help the income tax department to track individuals with high denominations currency.

The ultimate objective is to make India a cashless society. All the monetary transaction has to be through the banking methods and individuals have to be accountable for each penny they possess. It is a giant step towards the dream of making a digital India. If these are the merits, there are demerits of this policy as well.

Demerits of Demonetisation

The announcement of the demonization of the currency has caused huge inconvenience to the people. They are running to the banks to exchange, deposit or withdraw notes. The sudden announcement has made the situation become chaotic. Tempers are running high among the masses as there is a delay in the circulation of new currency. It has deeply affected business. Due to the cash crunch, the entire economy has been made to come to a standstill. Many poor daily wage workers are left with no jobs and their daily income has stopped because employers are unable to pay their daily wage. The government is finding it hard to implement this policy. It has to bear the cost of printing of the new currency notes. It is also finding it difficult to put new currency into circulation. The 2000 rupees note is a burden on the people as no one likes to do transaction with such high value currency. Some critics think it will only help people to use black money more easily in future.

Further, many people have clandestinely discarded the demonetized currency notes and this is a loss to the country’s economy.

Conclusion

Economists are busy in listing out many more merits and demerit of this policy. The government is saying that there are only advantages of demonetization policy and this will be seen in the long term. Former Prime Minister Man Mohan Singh who is a noted economist, former RBI governor and former Finance Minister of the country, dubs the demonetization move as an 'organized loot and legalized plunder'.

However, if we compare the merits verses demerits, it will be safe to conclude that the former outweighs the latter.

Even though there is suffering and agony among the masses right at the moment but the forecast is that its benefits will be seen in the long run. The government is taking all the necessary steps and actions to meet the currency demand and soon the trial and tribulations of the people will be over with the smooth flow of the new currency. The impact of demonetisation and the resultant cashless and less cash transactions has always had a healthy effect on the economy of any country. Whether a developed or a developing economy. As regard India which is a developing country. Its good effects on the economy may not be visible in the beginning but in the long run it will definitely give a boost to the economy.

Objective of Economic Planning of India

The objective of planning in India has been to achieve rapid and balanced economic development while addressing the country's social and economic challenges. India is a diverse country with a large population and varied economic and social conditions. Planning has been crucial in ensuring that the benefits of economic development reach all sections of the society.The planning process in India started with the adoption of the First Five-Year Plan in 1951. Since then, India has had a series of Five-Year Plans that have set targets for various sectors of the economy. The objective of these plans has been to accelerate economic growth, reduce poverty, increase employment, and improve the standard of living of the people. Over the years, India's planning process has evolved to incorporate new challenges and opportunities. The planning process has been decentralized, with greater involvement of the states and local bodies. There has also been a shift towards a more market-oriented approach, with a focus on private sector-led growth. The objective of planning in India has been to create a self-reliant and self-sustaining economy that can meet the needs of its citizens. The planning process has helped India to achieve significant progress in various sectors, including agriculture, industry, and infrastructure. However, there are still challenges that need to be addressed, such as reducing regional disparities and ensuring inclusive growth.Overall, the objective of planning in India has been to achieve sustainable and inclusive economic development that benefits all sections of society. The planning process has been instrumental in shaping India's economic and social landscape, and continues to be an important tool for achieving the country's development goals.

1. Economic Development:The main objective of Indian planning is to achieve the goal of economic development economic development is necessary for under developed countries because they can solve the problems of general poverty, unemployment and backwardness through it. Economic development is concerned with the increase in per capita income and causes behind this increase.In order to calculate the economic development of a country, we should take into consideration not only increase in its total production capacity and consumption but also increase in its population. Economic development refers to the raising of the people from inhuman elements like poverty unemployment and ill heath etc.

Attainment of higher rate of economic growth received topmost priority in almost all the Five Year Plans of the country. As the economy of the country was suffering from acute poverty thus by attaining a higher rate of economic growth eradication of poverty is possible and the standard of living of our people can be improved.

The First Plan envisaged a target of 11 per cent increase in national income against which 18 per cent growth in national income was achieved. The Second, Third and Fourth Plan envisaged targets for annual growth rate of 5 per cent. 5.6 per cent and 5.7 per cent respectively against which the achievements were 4 per cent, 2.6 per cent and 3.4 per cent respectively.

Again the Fifth and Sixth Plan also proposed the annual growth rate of 4.37 per cent and 5.2 per cent against which the achievements were 5.0 per cent and 5.2 per cent respectively. The Seventh Plan also set the target of 5 per cent in respect of annual growth rate of national income.The Eighth Plan and the Ninth Plan set the target of 5.6 per cent and 7.0 per cent annual growth rate of national income against which the achievements were 6.5 per cent and 5.4 per cent respectively. The Tenth and Eleventh Plan set the target of 8.0 per cent and 9.0 per cent in its annual average growth rate of GDP. Thus attaining higher rate of economic growth is found as a common objective for all the Five Year Plans of our country.

2. Increase Employment:Another objective of the plans is better utilization of man power resource and increasing employment opportunities. Measures have been taken to provide employment to millions of people during plans. It is estimated that by the end of Tenth Plan (2007) 39 crore people will be employed.

To achieve this target the major programmes which were introduced during this Plan were Integrated Rural Development Programme (IRDP), the National Rural Employment Programme (NREP), the Operation Flood II Dairy Development Project, schemes in the villages and small industries sector the national Scheme of Training Rural Youth for Self Employment (TRYSEM) and various other components of the Minimum Needs Programme.

One of the major objectives of the Seventh Plan was a faster growth of employment opportunities. Thus the plan aimed that the employment potential would grow at 4 per cent as against the 2.6 per cent growth in the labour force. Again, the Eighth Plan envisages an annual employment growth of 2.6 to 2.8 per cent over the next ten years 1992-2002.

3. Self-Sufficient:It has been the objective of the plans that the country becomes self-sufficient regarding food grains and industrial raw material like iron and steel etc. Also, growth is to be self sustained for which rates of saving and investment are to be raised. With the completion of Third Plan, Indian economy has reached the take off stage of development. The main objective of the Tenth Plan is to get rid of dependence on foreign aid by increasing export trade and developing internal resources.

4. Economic Stability:Stability is as important as growth. It implies absence of frequent end excessive occurrence of inflation and deflation. If the price level rises very high or falls very low, many types of structural imbalances are created in the economy.

Economic stability has been one of the objectives of every Five year plan in India. Some rise in prices is inevitable as a result of economic development, but it should not be out of proportions. However, since the beginning of second plan, the prices have been rising rather considerably.

5. Social Welfare and Services:The objective of the five year plans has been to promote labour welfare, economic development of backward classes and social welfare of the poor people. Development of social services like education, health, technical education, scientific advancement etc. has also been the objective of the Plans.

6. Regional Development:Different regions of India are not economically equally developed. Punjab, Haryana, Gujarat, Maharashtra, Tamil Nadu, Andhra Pradesh etc. are relatively more developed. But U.P., Bihar, Orissa, Nagaland, Meghalaya and H.P. are economically backward. Rapid economic development of backward regions is one of the priorities of five year plans to achieve regional equality.

7. Comprehensive Development:All round development of the economy is another objective of the five year plans. Development of all economic activities viz. agriculture, industry, transport, power etc. is sought to be simultaneously achieved. First Plan laid emphasis on the development of agriculture. Second plan gave priority to the development of heavy industries. In the Eighth Plan maximum stress was on the development of human resources.

8. To Reduce Economic Inequalities:Every Plan has aimed at reducing economic inequalities. Economic inequalities are indicative of exploitation and injustice in the country. It results in making the rich richer and the poor poorer. Several measures have been taken in the plans to achieve the objectives of economic equality specially by way of progressive taxation and reservation of jobs for the economically backward classes. The goal of socialistic pattern of society was set in the second plan mainly to achieve this objective.

9. Social Justice:Another objective of every plan has been to promote social justice. It is possible in two ways, one is to reduce the poverty of the poorest section of the society and the other is to reduce the inequalities of wealth and income. According to Eighth Plan, a person is poor if the spends on consumption less than Rs. 328 per month in rural area and Rs. 454 per month in urban area at 1999-2000 prices. About 26 percent of Indian population lives below poverty line. The tenth plan aims to reduce this to 21%.

10. Increase in Standard of Living:The other objective of the plan is to increase the standard of living of the people. Standard of living depends on many factors such as per capita increase in income, price stability, equal distribution of income etc. During the period of Plans, the per capita income at current prices has reached only up to Rs. 20988.

All round development of the economy is another objective of the five year plans. Development of all economic activities viz. agriculture, industry, transport, power etc. is sought to be simultaneously achieved. First Plan laid emphasis on the development of agriculture. Second plan gave priority to the development of heavy industries. In the Eighth Plan maximum stress was on the development of human resources.

11. Modernization of Various Sectors: Another very important objective of Five Year Plans of our country was the modernization of various sectors and more specifically the modernization of agricultural and industrial sectors. The Fourth Plan laid much emphasis on the modernization of agricultural sector and undertook a vigorous scheme for modernization of agriculture in the name of Green Revolution. The successive plans also continued their efforts in the same direction but at a reduced rate.

The Sixth Plan categorically mentioned this objective of modernization for the first time. Here the objective of modernization means those structural and institutional changes in economic activities which can transform a feudal and colonial economy into a progressive and modern economy. Thus through modernization economy may be diversified.

It requires setting up of various types of industries and advancement of technology. In the mean time some sort of modernization always gone against employment generation thus the country is facing a conflict between the objective of modernization and the objective of removal of unemployment and poverty. 

The Indian Currency History....

The rupee in your pocket has a mysterious past. Behind Mahatma Gandhi’s smiling face lies a long history of struggle, exploration, and wealth that can be traced back to the ancient India of the 6th century BC. Let’s demystify this history by bringing you the interesting stories about how Indian currency has evolved over the ages into the rupee of today.Ancient Indians were the earliest issuers of coins in the world, along with the Chinese and Lydians (from the Middle East). The first Indian coins – punch marked coins called Puranas, Karshapanas or Pana – were minted in the 6th century BC by the Mahajanapadas (republic kingdoms) of ancient India. These included Gandhara, Kuntala, Kuru, Panchala, Shakya, Surasena, and Saurashtra.

Then came the Mauryas who punch marked their coins with a royal standard. Chanakya, prime minister to the first Mauryan emperor Chandragupta Maurya, mentions the minting of coins such as rupyarupa (silver),  suvarnarupa (gold), tamararupa (copper) and sisarupa (lead) in his Arthashastra treatise.

The Indo-Greek Kushan kings who came next introduced the Greek custom of engraving portrait heads on coins. Their example was followed for eight centuries. The extensive coinage of the Kushan empire also influenced a large number of tribes, dynasties, and kingdoms, which began issuing their own coins.

The Gupta Empire produced large numbers of gold coins depicting the Gupta kings performing various rituals. This tradition of intricately engraved coins continued till the arrival of the Turkish Sultanate in North India.

By the 12th century AD, the Turkish Sultans of Delhi had replaced the royal designs of Indian kings with Islamic calligraphy. The currency – made in gold, silver and copper – was now referred to as tanka, with the lower valued coins being called jittals. The Delhi Sultanate also attempted to standardise the monetary system by issuing coins of different values.

By the time the British East India Company set itself up in India in the 1600s, Sher Shah’s silver rupiya had already become the popular standard currency in the country. Despite many attempts to introduce the sterling pound in India, the rupaiya grew in popularity and was even exported as a currency to other British colonies.

In 1717 AD, the English obtained permission from Mughal emperor Farrukh Siyar to coin Mughal money at the Bombay Mint. The British gold coins were termed carolina, the silver coins angelina, the copper coins cupperoon, and the tin coins tinny.

Paper money was first issued in British India in the 18th century, with the Bank of Hindostan, General Bank in Bengal and the Bengal Bank becoming the first banks in India to issue paper currency.

In 1862, the Victoria portrait series of bank notes and coins were issued in honour of Queen Victoria and later, many emperors followed suit. For security reasons, the notes of this series were cut in half; one half was sent by post and upon confirmation of receipt, the other half was sent.

The Reserve Bank of India was formally set up in 1935 and was empowered to issue Government of India notes.  RBI also printed 10,000 rupee notes (the highest denomination RBI has ever printed in its history) that were later demonetised after independence.

On August 15, 1950, the new ‘anna system’ was introduced – the first coinage of the Republic of India. The British King’s portrait was replaced with the engraving of Ashoka’s Lion Capital of Sarnath, and the tiger on the 1 rupee coin was replaced with a corn sheaf. One rupee now consisted of 16 annas.

The 1955 Indian Coinage (Amendment) Act, which came into force on April 1, 1957, introduced a ‘decimal series’. The rupee was now divided into 100 paisa instead of 16 annasor 64 pice.The coins were initially called naye paise, meaning new paise, to distinguish them from the previous coins.

Also, prior to Independence, the Indian currency was pegged against silver. The silver-based rupee fluctuated according to the value of silver and had a distinct disadvantage when trading against currencies that were based on the gold standard. This was rectified post-Independence.

Later, in 1996, the ‘Mahatma Gandhi Series’ was introduced with prominent new features such as changed watermarks, windowed security threads, latent images, and intaglio features for the visually handicapped. This was replaced in 2005 by the ‘MG series’ notes that had some additional security features.

In 2010, India celebrated its hosting of the Commonwealth Games with commemorative 2 and 5 Rupee coins. One side of these coins features the logo of the Games while the other features the three lions from the pillar of Ashoka. In the same year, India also adopted the new symbol for the rupee ₹, with new coins bearing this symbol being launched in 2011.

Since 2010, other commemorative coins have also been issued – 60th anniversary of the Indian Parliament, 150th anniversary of Swami Vivekananda, and more recently, International Day of Yoga.

Thanks.....