Etymology

Etymology

The word "rupee" was derived from the Sanskrit word रूप्यकम् (rūpyakam) or rupaya (meaning "wrought silver, a coin of silver").[citation needed] The modern Indian rupee has a direct lineage from the rupiya, the silver coin, issued by Sher Shah Suri (1540—1545), continued by the Mughal rulers.Arthashastra, written by Chanakya, prime minister to the first Maurya emperor Chandragupta Maurya (c 340–290 BCE), mentions silver coins as rūpyarupa, other types of coins including gold coins (Suvarṇarūpa), copper coins (Tāmrarūpa) and lead coins (Sīsarūpa) are also mentioned. Rūpa means to form or shape, example, Rūpyarūpa, rūpya — wrought silver, rūpa — form.

However, in the region of Bengal, the term taka has always been used to refer to currency.In the 14th century, Ibn Battuta noticed that people in the Bengal Sultanate referred to gold and silver coins as taka instead of the dinar. Today, the currency of Bangladesh is officially known as taka. The word taka in Bengali is also commonly used generically to mean any money, currency, or notes. Thus, colloquially, a person speaking in Bengali may use "taka" to refer to money regardless of what currency it is denominated in. Thus, in the states of West Bengal and Tripura the Indian rupee is officially known টাকা (ṭaka). Whereas, in the states of Assam and Odisha, the Indian rupee is similarly known by names derived from the Sanskrit word ṭaṅka (meaning "money"),টকা (ṭôka) in Assamese and ଟଙ୍କା (taṅkā) in Odia.

The history of the Indian rupee traces back to Ancient India in circa 6th century BCE, ancient India was one of the earliest issuers of coins in the world, along with the Chinese wen and Lydian staters.

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 termed the Rupiya. The silver coin remained in use during the Mughal period, Maratha era as well as in British India.[18] Among the earliest issues of paper rupees include; the Bank of Hindustan (1770–1832), the General Bank of Bengal and Bihar (1773–75, established by Warren Hastings), and the Bengal Bank (1784–91).

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. The discovery of large quantities of silver in the United States and several European colonies resulted in a decline in the value of silver relative to gold, devaluing India's standard currency. This event was known as "the fall of the rupee."

India was unaffected by the imperial order-in-council of 1825, which attempted to introduce British sterling coinage to the British colonies. British India, at that time, was controlled by the British East India Company. The silver rupee 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; this decision was influenced by a letter written by Lord Liverpool in 1805 extolling the virtues of mono-metallism.

Chart showing exchange rate of Indian silver rupee coin (blue) and the actual value of its silver content (red), against British pence. (From 1850 to 1900)

Following the Indian Mutiny in 1857, the British government took direct control of British India. Since 1851, gold sovereigns were produced en masse at the Royal Mint in Sydney, New South Wales. In an 1864 attempt to make the British gold sovereign the "imperial coin", the treasuries in Bombay and Calcutta were instructed to receive gold sovereigns; however, these gold sovereigns never left the vaults. As the British government gave up hope of replacing the rupee in India with the pound sterling, it realised for the same reason 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, a number of nations adopted the gold standard; however, India remained on the silver standard until it was replaced by a basket of commodities and currencies in the late 20th century.[citation needed]