Experts blame official machinery for currency mismanagement

25 Nov 2016


The implementation of the decision to demonetise high-value notes caused not only avoidable hardships to the common people but its mismanagement made the government look a villain as well, as pointed out by former prime minister Manmohan Singh, reports quoting experts say.

Since people taking decisions and people implementing these at the ground level are two different entities, the  success of an operation depends not only on the decision, but also on the implementation.

Commenators say the implementation of the decision to demonetise high-value notes too lacked the firmness that Prime Minister Narendra Modi showed while announcing the decision, which explains the appearance of two variants of Rs500 notes.

Though the prime minister has shown the will to take a strong, if an unpopular decision,  it may not help if the implementation is poor. This applies to all operations against illegal money.

Between January 2013 and September 2016, India seized Rs155.11 crore worth of counterfeit currency notes, Rs27.79 crore of which was seized in the first nine months of this year. However, the number of such seized fake currency notes was only about 3.1 million, indicating that majority of the fake money in circulation is in high denomination notes.

Security agencies say that the fake currency seized forms only a tip of a much deeper malaise and that the actual amount of counterfeit currency could be several times higher. They also say that demonitisation would not wipe out counterfeiting, and at best may temporarily halt fake money in circulation.

RBI's currency managers seem to have added to the confusion by putting wrong notes also in circulation, which could only aid counterfeiting. Modi and his government must have intended to wipe out fake money and black money but the printing of bad notes may have complicated the task.

A report in The Times of India quoted former home secretary GK Pillai as saying that counterfeiting will go on till currencies are in circulation and are used in transactions.

"Prevention of counterfeiting is almost impossible, with official mechanisms in Pakistan printing notes with access to as much sophistication as we do. So, it is only a matter of delay and temporary suspension of such notes in the country that one could have hoped for. I cannot yet comment on the Rs 500 notes as I am yet to see them, the Rs 2,000 notes are of good sophistication. That said, if the RBI says there is only one new 500-note it is printing, there should exist only one," the newspaper quoted the former bureaucrat as saying.

"Local printing of such notes has almost stopped. The notorious gangs from Coimbatore are more or less dead and all notes come in from outside through Nepal, Bangladesh and other countries. Different variants of official currency will certainly aid counterfeiting and it must be curbed immediately, unless of course, the RBI has strategically released this,"  the report quoted former DG&IG of Karnataka ST Ramesh as saying.

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