First up, the writer is no economist. The hope through this write up is to merely shine the spotlight on a couple of issues that have not really been discussed in any forum – print or social media (at least the writer has not come across any such). So, without further ado, here are the questions.

1. What is the value of the Indian rupee overseas?

The question is not about the numerical currency rate which was hovering around the 67 to a dollar mark at the time of writing this piece. Naturally, the writer will be delighted if it reached the 45 mark in medium term and progress to 20 in the long term like how well respected economists like Prof. R. Vaidyanathan think it belongs [1]. However, going back to the question, the word value refers to the respect the Indian rupee enjoys outside of India. Over the last year or so, the writer had the chance to visit two wonderful places in Bali, Indonesia and Siem Reap in Cambodia - both of them renowned for their rich Hindu heritage and temples. Nevertheless, the money changer displays in airports in both these places simply do not carry the INR. And worse, in Siem Reap, the money changer refused to exchange the INR. The writer suspects a similar issue exists in many countries in the world visited by Indians.

Money Changers displays in Denpasar, Bali (left) and Siem-Reap (right) International Airports

The problem, to a lay man at least, appears to have a cascading effect. The low acceptance of the INR overseas forces the average traveller to carry few hundreds of dollars to be on the safe side and most travel agents advice outbound tourists to do exactly this. The double conversion (INR to USD and then USD to local currency) can cost the traveller up to 10 percent in commission. The conversion from INR to USD even before travel also ensures the USD is the first to be converted to the local currency as it is the natural tendency to use the currency which was acquired for the purpose. Therefore, it is probably safe to say the INR is not spread as far and wide as the other major currencies in the world. Therefore, if a traveller wishes to convert unused currency back, the double conversion route may play out once again and more money likely lost to commission. Let us look at this a little further.

According to the Ministry of Tourism [2], in the year 2014, the number of departures of Indian nationals from India stood at 18.33 million and the corresponding expenditure according to the World Bank [3] amounted to approximately 17.5 billion dollars (US). Since the money spent by travellers includes payments to foreign carriers, hotels etc. the amount spent through the double conversion route is likely to be only a fraction, say around 5-10 percent (this number is the writer’s own experience when travelling abroad). The fraction probably translates to around a billion dollars (US) give or take. Additionally, according to estimates, by 2018, the number of outbound visitors will swell to close to 50 million [4]. If the numbers hold, the expenditure would also rise to 50 billion dollars (US) by that time. If the 5-10 percent ratio for expenditure through double conversion also holds, in 2018, somewhere in the range of 16250-32500 crore rupees (at 65 per dollar) would have been spent in converting from INR to USD even before travel. The writer is unable to say how much this affects the strength of the INR, but that is one for the economists to answer. If it does affect the INR significantly, then the follow up questions present itself. Is it possible to push other countries to display the INR on their money changer boards? Additionally, shouldn’t the authorities appeal to outbound tourists to exchange currency as much as possible in INR while abroad? Again, these are for people who are better than the writer in the subject to answer and hopefully, there are answers.

2. What is happening to our coins?  

There appears to be a problem with our coins. Recently, the writer got hold four different 2 rupee coins and a picture of the four of them side by side (picture below) told the story. It appears that in our country, the more recently minted coins are also the more illegible.

In order to substantiate this a little more, a couple of current 2 rupee coins was placed alongside the older 1 rupee coin (the size of these coins are exactly the same) and lo and behold, the pattern holds (picture below). The 1 rupee coins seem to be in far better shape in comparison.

Naturally, the story is the same with the current batch of 1 rupee coins, which are the same size as the 50 paise coins of the previous generation. The rather well used 50 paise coin is way more legible than the 1 rupee coin minted barely 2 years ago (picture below). The other 1 rupee coins have also retained their form much better.

So, it seems like the current set of coins minted in India have decreased both in size and quality. That being said, the writer’s primary complaint is not about the size; although it is bound to have been difficult for the visually challenged to adjust to different denominations having the same size, as is the case currently. Even assuming they did adjust via the embossing in each coin, what will happen if the coins deteriorate even further and embossing disappears? And the larger question remains - should we not mint coins which last not years but decades? Is that not the mark of a stable currency? Hopefully, people in decision making positions realise the problem and take the necessary corrective measures. It is not as though the capability is lacking, the paise coins from back in the day (picture below) have held up quite well, in fact these particular coins are so good that the writer does not even feel the need to mark the years they were minted like the previous pictures!

REFERENCES

1.Prof R Vaidyanathan on what should be the correct exchange rate for the Rupee https://www.youtube.com/watch?v=Edt939J4NFM , August 13 2015, Performance Gurus

2.India Tourism Statistics at a Glance 2014 http://tourism.nic.in/writereaddata/CMSPagePicture/file/marketresearch/statisticalsurveys/India%20Tourism%20Statistics%20at%20a%20Glance%202014New.pdf , Ministry of tourism, Accessed 18 June 2016, Government of India

3.International tourism, expenditures - http://data.worldbank.org/indicator/ST.INT.XPND.CD , Accessed 19 June 2016, The World Bank group

4.Outbound travel industry grows, but challenges remain - http://articles.economictimes.indiatimes.com/2016-02-10/news/70509649_1_travel-and-tourism-industry-outbound-travel-indian-tourists , Anjali Gupta, 10 Feb 2016, EconomicTimes.com