From Barter to Money

Barter and its problems, the functions of money, coins from panas to annas, paper money, the ₹ symbol and digital payments.

Key ideas

Barter is exchanging goods or services directly, without money.
Barter needs a double coincidence of wants: each person must have exactly what the other wants.
Barter also fails because some goods cannot be divided (an ox) or stored for long (wheat).
Before coins, people used cowrie shells, salt, cattle, tea and cloth as money.
Ancient Indian coins (karshapanas or panas) were of gold, silver or copper, with punched symbols called rupas.
Roman gold coins found in Tamil Nadu and Kerala show strong trade with the Roman world.
Digital money is paid by card, net banking or UPI; a QR code holds the receiver’s account details.

Remember

Functions of money	medium of exchange, store of value, measure of value, standard of deferred payment
Old rupee	1 rupee = 16 annas
Official paper money in India	from 1861
₹ symbol	adopted 2010; designed by Udaya Kumar
UPI	in use from 2016
Issues currency	the Reserve Bank of India
Barter today	the Junbeel Mela in Assam

Watch out

Thinking barter has no problems: wants must match, and goods may not divide or keep.
Using 100 annas to the rupee: there were 16.
Saying any bank can print money: only the Reserve Bank of India issues currency.

Worked example

The Arthashastra says a yearly salary of 60 panas could be replaced by about 3 kg of grain a day. (a) How many panas would 16 years of salary be? (b) How much grain is that, at 1,095 kg a year? (c) The fine for not helping a neighbour was 100 panas. What does that show?

Working: 60 × 16; 1,095 × 16

Answer: (a) 960 panas (b) 17,520 kg (c) Helping others was valued so highly that refusing cost more than a year’s salary.