Historical Sketch
Local states and chiefdoms have always existed in India beside the big "empires", which were never capable or willing to conquer the entire territory. They kept degrees of independence by accepting different forms of vassalage. The local rulers employed a variety of titles, the most prominent being Raja, Nawab, Nizam or Sultan. During the British colonial rule all rulers were referred to as "Princes" to emphasize their statuses being subordinate to kings and emperors.
The number of "Princely" States cannot be determined exactly, at the time of Indian independence 565 states were officially recognized, not counting small and localized entities, and all of them made up some 40% of the Indian territory. The British established a hierarchy among the states expressed by the number of salutes the ruler deserved. Five states were "21-salutes" states: Baroda, Gwalior, Hyderabad, Kashmir, Mysore, six more were "19-salutes": Bhopal, Indore, Kalat, Kolhapur, Travancore, Udaipur (Mewar), and so on, with the vast majority being attributed no salute at all. For comparison of status, the British monarch had 101 salutes.
The withdrawal of the British colonial power in 1947 and the partition of its territory into independent India and Pakistan did not include the nominally sovereign "Princely States", but they were quickly absorbed by the respective states until 1950. The local rulers abdicated or at least gave up the political power connected with their status. Two states, Jammu & Kashmir and Kalat, tried to obtain separate statehood, but eventually failed.
Monetary History Overview
The traditional monetary system of Northern and Central India based on the silver Rupee which was standardized in the 16th century under the Mughal emperor Akbar. Silver coinage was complemented by the golden Mohur which was nominally pegged at ten Rupees, but whose rate in fact varied regionally and over time. In Southern India, the Mughal currency system competed with the golden Pagoda, that dated back to pre-Moghul times, which fluctuated around a quarter Mohur. In North West Indian Gujarat, the local standard was based on the silver Kori at about a quarter Rupee.
Many of the "Princely States" were operating mints and issued silver and gold coins in the prevailing standard and base metal subsidiary coins. Most states issued at most a few denominations of silver and gold, even presentation pieces only, and otherwise used standard Mughal coinage from the large central mints. In 1876, the British colonial government enacted the "Native Coinage Act", which called on local rulers to join the British Indian currency area. They were allowed to produce their own subsidiary coinage to the Indian Rupee. However, only the states of Alwar, Bikaner, Dewas (Senior and Junior Branches), Dhar and Sailana made use of this, the other signatory states just adopted the standard British Indian coinage.
The states of Kutch (Kachchh in today's Gujarat) and Travancore (Thiruvithamkur in today's Kerala) issued a larger set of local coins. The central Indian Hyderabad state (subdivided into today's states of Madhya Pradesh, Maharashtra and Telangana) had a distinct currency and issued both paper money and a variety of coins. In the states of Dhrangadhra, Kashmir and Kutch, there were unsuccessful attempts to issue paper, a few states issued emergency paper money for a short time. The currencies of Kutch, Hyderabad and Travancore were demonetized until the early 1950s after the states had been absorbed into independent India.
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