The government has said one of the reasons to demonetise currency notes of Rs. 500 and Rs. 1,000 was to curb the circulation of fake currency notes, but there seems to be no definite account of the amount of such notes in circulation.
As per a study done by the Indian Statistical Institute, Kolkata in 2015, the only concrete work done on the subject, at any given point of time Rs. 400 crore worth of fake currency notes were in circulation in the economy. This is merely 0.025 percent of the total budget outlay of Rs. 19.7 lakh crore as announced this fiscal.
Different agencies have their own estimates based on the recoveries made by them.
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According to the National Crime Records Bureau (NCRB), in 2015, various law enforcement agencies seized 1,78,022 pieces of fake Rs 1,000 currency notes. This means Rs 17 crore fake notes which were in circulation could be calculated as they could be seized. Similarly in 2015, as many as 2,99,524 pieces of Rs. 500 fake notes were seized by the agencies.
Spread of counterfeits
The Indian Statistical Institute, Kolkata study was done on the behalf of the National Investigation Agency (NIA) and it also said that Rs. 70 crore fake notes were pumped into the economy every year.
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Officials in the security establishment were upbeat about the demonetisation scheme as they expected that crimes like terror financing would be severely hit by the move.
Cases registered
“The fake currency notes can only be detected when they have entered the banking system. If it is in circulation in the open market, then it’s hard to calculate the number. In the past two years, we registered 25 cases of fake currency notes and 26 accused persons were convicted in three cases, the remaining cases are still on trial,” said Alok Mittal, Inspector General, NIA.
Another official said that in 90 per cent cases, the fake currency had been pumped in through the land route from Bangladesh. “The fake notes are manufactured in Pakistan and they reach Bangladesh through air and sea route. An organised group then pushes the money into India through the porous border areas,” said the official.
Security features
On being asked on how the yet to be launched Rs. 2,000 notes would be deterrent to the resurgence of the fake currency notes, an official said, “It is difficult to say and we can only assume that Pakistan or the elements involved in it would not be able to compromise the security features. It is true that certain security features of Rs. 500 and Rs. 1,000 notes had been compromised. The supplier of raw currency notes, the ink and the silver thread is same for India and Pakistan and we have been asking the the countries like the U.K, the U.S. and Germany, where these are manufactured to stop the sale to Pakistan.”
D.C Pathak, former IB chief said, “While removing black money, in the process it [demonetisation] will definitely address the problem areas of terror financing and fake currency. There is illegal money behind terrorist funding. The channel through which the adversary sends in militants and arms is also used to send fake currency.”
An official said the demonetisation would impact the terror financing, particularly in Jammu and Kashmir. He said terrorist outfits like Hizbul Mujahideen collect donations in Pakistan and then route the money into the State through hawala operators. “The terror funding module in place right now, will be affected as the terrorist operatives always store money in the form of big currency notes. That money has become a piece of paper now,” said the official.
Jayadeva Ranade, distinguished fellow, Centre for Air Power Studies said, “t will be a blow to the main sponsors of fake currency, Pakistan and Wahabi groups. I don’t expect them to stop but it will take some time. It is a good move, hits them on many prongs. Many of their operators and sleeper cells here have fake currency. It will be a severe blow and for a few years we will get relief from this.”