In light of Prime Minister Narendra Modi’s exhortation that the paper and ink used to print currency be made in India, it is worth looking at what it actually costs to print the notes in circulation.

With several years of sustained inflation and economic growth, the money in circulation was sure to rise. According to the Reserve Bank of India (RBI), 14.265 trillion in currency notes was in circulation on 20 March, accounting for 12.3% of India’s gross domestic product (GDP). This is up from 12.835 trillion a year ago.

In reply to a right to information request, the RBI in 2012 released data on what it costs to print notes of each denomination. In absolute terms, the trend is one of increasing costs as the denominations become larger. This can be explained by the fact that higher denomination notes require more complex security features embedded in the note.

However, the cost of printing a note as a percentage of its value is higher for notes of lower denominations. For example, the cost of printing a 10 note is almost 10% of the value of the note whereas the cost of printing a 100 note is less than 2% of its value.

However, some denominations are more popular and are used much more often than others. RBI issued the most 10 notes in 2013-14, a trend since 2009, followed by 100, 500 and 5 notes. The rate at which the RBI issues notes of different denominations is a rough indication of the demand for those denominations in the market.

The two highest denominations ( 500 and 1,000) have seen the highest growth rates by far, followed by the 20 note. The 50 note has seen a sharp decline in production.

The RBI gets the most value for every note printed of these denominations (in terms of cost as a percentage of value of the note). Add to that the fact that the higher denominations see far less wear and tear and so have to be replaced less frequently, and it looks like printing money will gradually become cheaper for the RBI.