The Reserve Bank of India will introduce polymer currencies and one billion units of Rs.10 denomination will be circulated for field trial.
This was disclosed by RBI Governor D. Subbarao here on Monday during the foundation stone-laying ceremony for a new bank note paper mill.
Dr. Subbarao said the currencies would be introduced in five cities and cost and longevity were the important considerations in experimenting with it apart from the hygiene factor. The polymer currencies are also amenable for recycling to produce industrial and household products which makes it an attractive proposition, said Dr. Subbarao.
However, the carbon footprint that the production of polymer currency as also their disposal would leave was an important issue and the study on the field trials would take this into account. “The RBI will embark on the polymer notes in the long run if and only if the field studies and the results are decisively in its favour and satisfied all norms,” said Dr. Subbarao.
He underlined the importance of moving towards indigenisation of producing currency notes as the demand was bound to increase with the expanding economy and rapid growth.
However, the main raw material in the making of the note papers was almost entirely dependent on imports and the supply of the papers rested with a strong oligarchy which did not augur well for the country as it exposed the nation to the vulnerabilities of a suppliers market. “Hence the country needs to move towards self-sufficiency in production for operational, economic and strategic reasons,” he added.
Dr. Subbarao said the ratio of the currency to the GDP, which was 12 per cent in 1951, was currently 13 per cent and for a vast and growing country like India, indigenisation of the process of manufacturing of currency notes was of strategic importance. It would also give the benefits of backward integration in the form of assured, smooth and timely supplies of raw materials, ensure cost savings and help generate employment.
Dr. Subbarao pointed out that in 2008-09 the RBI got 15 billion notes printed while the indent for the current financial year was 17 billion notes. “We are the second largest country in the world in terms of the number of notes printed and the entire quantity is printed within the country in the four presses at Mysore [in Karnataka], Salboni in West Bengal, Nashik in Maharasthra and Dewas in Madhya Pradesh. But as far as paper requirement was concerned, India imported 95 per cent of the raw material while Hoshangabad mill in Madhya Pradesh accounted for 5 per cent of the country's requirement. We need to alter this position and hence the Mysore plant, which will be a state-of-the-art production unit, will showcase to the world India's capacity to produce bank note papers confirming to the best international quality and security standards,” he added.
On clean note policy
Commenting on the impact of the RBI's clean note policy by withdrawing soiled notes and introducing fresh notes, Dr. Subbarao said that between September 2007 and September 2009, the accumulation of soiled notes in its various units for destruction was reduced from 198 days of processing to 68 days.
On the menace of counterfeit notes, he pointed out that in Australia the fake notes detected was in the range of 7 units per every million pieces while it was 10 pieces for every million currency notes circulated in Switzerland. In India, it was 8 per million units but this did not include the fake notes seized by the police. The situation was not very alarming but the issue was of serious concern to the government and the RBI, he said.