punch mark coin of the
Maurya Empire, known as
Rūpyarūpa, 3rd century BCE of
Gupta Empire known as
Rūpaka (रूपक) in Sanskrit, in the style of the
Western Satraps, with
peacock on reverse, 455—467 '' issued by
Sher Shah Suri, 1540–1545|alt=Silver coins with raised writing The history of the Indian
rupee traces back to
ancient India around the 6th century BCE; ancient India was one of the earliest issuers of
coins in the world, alongside the
Chinese wen and
Lydian
staters.
Arthashastra, written by
Chanakya, the prime minister to the first
Mauryan emperor Chandragupta Maurya (c. 340–290 BCE), mentions silver coins as
rūpyarūpa, gold coins as
suvarṇarūpa, copper coins as
tamrarūpa, and lead coins as
sīsarūpa. means 'shape' or 'form'. The
Gupta Empire under
Chandragupta II produced large numbers of silver coins clearly influenced by those of the earlier
Western Satraps. The silver
Rūpaka () coins weighed approximately 20
rattis (2.2678 g). In the intermediate times following the Guptas, there appears to have been no fixed monetary system of coinage as reported in the travelogue
Da Tang Xi Yu Ji. During his five-year rule from 1540 to 1545,
Sultan Sher Shah Suri issued a coin of silver, weighing 178
grains (or 11.53 grams), which was also termed the
rupiya. During
Babur's time, the brass to silver exchange ratio was roughly 50:2. The silver coin remained in use during the
Mughal period, the
Maratha era as well as in
British India. Some of the earliest issuers of
paper rupees include the
Bank of Hindustan (1770–1832), the General Bank of Bengal and Bihar (1773–1775, established by
Warren Hastings), and the Bengal Bank (1784–91).
1800s (blue) and the actual value of its silver content (red), against
British pence (from 1850 to 1900) Historically, the
rupee was a
silver coin. This had severe consequences in the nineteenth century when the strongest economies in the world were on the
gold standard (that is, paper linked to gold). The discovery of large quantities of silver in the United States and several European colonies caused the
panic of 1873 which resulted in a decline in the
value of
silver relative to gold, devaluing India's standard currency, an event known as "the fall of the rupee". Following the panic, the world descended into a '
Long Depression', which resulted in bankruptcies, escalating unemployment, a halt in public works, and a major trade slump that lasted until 1897. India was unaffected by the imperial
order-in-council of 1825, which attempted to introduce British
sterling coinage to the British colonies. India, at that time, was
controlled by the British
East India Company. The
silver rupee coin continued as the currency of India through the
British Raj and beyond. In 1835, British India adopted a
mono-metallic silver standard based on the rupee coin; this decision was influenced by a letter written by
Lord Liverpool in 1805 extolling the virtues of mono-metallism. Following the
Sepoy Rebellion in 1857, the British government took direct
control of India. From 1851, gold sovereigns were produced
en masse at the
Royal Mint in
Sydney. In an 1864 attempt to make the British
gold sovereign the "imperial coin", the treasuries in
Bombay and
Calcutta were instructed to receive (but not to issue) gold sovereigns; therefore, these gold sovereigns never left the vaults. As the British government gave up hope of replacing the rupee in India with the pound
sterling, a conclusion was reached that it could not replace the
silver dollar in the
Straits Settlements with the Indian rupee (as the British East India Company had desired). Since the
silver crisis of 1873, several nations switched over to a
gold exchange standard (wherein silver or banknotes circulate locally but with a fixed gold value for export purposes), including India in the 1890s.
India Council Bill In 1870, India was connected to Britain by a submarine
telegraph cable. Around 1875, Britain started paying India for exported goods in India Council (paper) Bills (instead of silver). If, therefore, the India Council in London should not step in to sell bills on India, the merchants and bankers would have to send silver to make good the (trade) balances. Thus a channel for the outflow of silver was stopped, in 1875, by the India Council in London. The great importance of these (Council) Bills, however, is the effect they have on the Market Price of Silver: and they have in fact been one of the most potent factors in recent years in causing the diminution in the Value of Silver as compared to Gold. The Indian and Chinese products for which silver is paid were and are, since 1873–74, very low in price, and it therefore takes less silver to purchase a larger quantity of Eastern commodities. Now, on taking the several agents into united consideration, it will certainly not seem very mysterious why silver should not only have fallen in price They collected a wide range of testimony, examined as many as 49 witnesses, and only reported their conclusions in July 1899, after more than a year's deliberation. The committee concurred in the opinion of the Indian government that the mints should remain closed to the unrestricted coinage of silver and that a gold standard should be adopted without delay...they recommended (1) that the British sovereign be given full legal tender power in India, and (2) that the Indian mints be thrown open to its unrestricted coinage (for gold coins only). These recommendations were acceptable to both governments and were shortly afterwards translated into laws. The act making gold a legal tender was promulgated on 15 September 1899, and preparations were soon thereafter undertaken for the coinage of gold sovereigns in the mint at Bombay. During
World War II, Colonial British control over parts of Nagaland was
lost to Japanese forces, the
British Indian rupee was banned and the
Japanese rupee (1942–44) was introduced. In the autumn of 1917 (when the silver price rose to 55
pence), there was danger of uprisings in India (against paper currency) which would handicap seriously British participation in the war. Inconvertibility (of paper currency into silver coin) would lead to a run on
Post Office Savings Banks. It would prevent the further expansion of (paper currency) note issues and cause a rise of prices, in paper currency, that would greatly increase the cost of obtaining war supplies for export; to have reduced the silver content of this historic [rupee] coin might well have caused such popular distrust of the Government as to have precipitated an internal crisis, which would have been fatal to British success in the war... and the Government could not afford to buy silver at 55 pence per ounce to coin into rupees with a bullion parity of 43.1 pence per ounce. To let silver be replaced by gold, as Mexico had done in 1906, was also impossible, for the world had no gold to spare. The Government, therefore, did the only possible thing, and raised the value of the (silver) rupee in terms of gold...
Problems caused by the gold standard At the onset of the
First World War, the cost of gold was very low and therefore the pound sterling (silver) had high value. But during the war, the value of the pound fell alarmingly due to rising war expenses. At the end of the war, the value of the pound was only a fraction of what it had been before the war. It remained low until 1925, when the then
Chancellor of the Exchequer (finance minister) of the United Kingdom,
Winston Churchill, restored it to pre-war levels. As a result, the price of gold fell rapidly. While the rest of Europe purchased large quantities of gold from the United Kingdom, there was little increase in her gold reserves (in United Kingdom). This dealt a blow to an already deteriorating British economy. The United Kingdom began to look to its possessions as India to compensate for the gold that was sold. However, the price of gold in India,
on the basis of the official exchange rate of the (silver) rupee around 1
s. 6
d., was lower than the price prevailing abroad practically throughout; the disparity in prices made the export of the (gold) metal profitable; and this continued for almost a decade. Thus, in 1931–32, there were net exports of 7.7 million
ounces, valued at INR 57.98
crore. In the following year, both the quantity and the price rose further: net exports totalled 8.4 million ounces, valued at INR 65.52 crore. In the ten years ended March 1941, total net exports were of the order of 43 million ounces (1337.3 tons (of gold)) valued at about INR 375 crore, or an average price of INR 32-12-4 per
tola. From 1931 to 1941, the United Kingdom purchased large amounts of gold from India and its many other colonies just by increasing price of gold, as Britain was able to pay in printable paper currency. Similarly, on 19 June 1934,
Roosevelt made
Silver Purchase Act (which increased the price of silver) and purchased about 44,000 tons of silver, paying with paper
silver certificates. In 1939, Dickson H. Leavens wrote in his book
Silver Money: "In recent years the increased price of gold, measured in depreciated paper currencies, has attracted to the market (of London) large quantities (of gold) formerly hoarded or held in the form of ornaments in India and China". Some of the states had issued rupees equal to those issued by the British (such as the
Travancore rupee). Other currencies (including the Hyderabadi rupee and the
Kutch kori) had different values. The values of the subdivisions of the rupee during
British rule (and in the first decade of independence) were: • In 1957, the rupee was
decimalised and divided into 100
naye paise (Hindi for "new paise"); in 1964, the initial
naye was dropped. • Many still refer to
25-,
50- and 75-paise coins as 4, 8, and 12
annas, respectively; compare the expression "two
bits" in colloquial
American English for a quarter-dollar coin.
New currency sign for the Indian rupee In 2010, a
new rupee sign () was officially adopted. As
its designer explained, it was derived from the combination of the
Devanagari consonant "
र" (
ra) and the
Latin capital letter "R" without its vertical bar. The parallel lines at the top (with white space between them) are said to make an allusion to the
flag of India, and also depict an equality sign that symbolises the nation's desire to reduce
economic disparity. The first series of coins with the new rupee sign started in circulation on 8 July 2011. Before this, India used "
₨" and "Re" as the symbols for multiple rupees and one rupee, respectively, and these symbols are still used in situations where the official symbol is unavailable. At an international level, like India, some nations' currencies are also Rupees. When the () symbol is unavailable, then INR is used to represent the Indian currency.
Digitization of Indian rupee ==Legal framework==