In the long-run, polymer currency notes can help the government to make counterfeiting practically impossible and reduce black money in circulation
The question of introducing polymer currency notes, in lieu of paper currency now in circulation, has been debated for more than two years now in India. In fact, last year, there were repeated announcements that the government was already doing the market testing of Rs10 polymer currency notes, in some selected cities. However, nothing was heard further on the subject, and the elections pushed the matter into the back burner.
Since the Narendra Modi government took over in May 2014, there have been talks of getting the black money from overseas and nothing tangible has happened there too, so far.
Now, there is news of grave security breach in the Government owned and operated Security Printing & Minting Corporation of India Ltd (SPMCIL) unit located in Hoshangabad in Madhya Pradesh (MP).
It appears, in 2012, that this printing press has used imported security thread with Arabic inscriptions. It may be remembered that this security thread is the most distinguishing feature in our currency notes, that is prominently visible to the naked eye, and this helps to prevent counterfeiting. This helps the citizen to be alert when receiving "fake" notes that would not carry this security thread.
It is to be presumed that a detailed investigation as to how this security thread with Arabic inscription was imported is probably under way. Surely, this should not be such a herculean task to find out, who ordered, how the sample was approved, how much was ordered and how much was actually received, source of supply and finally what kind of inspection took place upon receipt of the consignment in the country? How much of this is still in stock, if any?
From the media reports, it appears that an internal inquiry by a former director of Central Bureau of Investigation (CBI), was only ordered by the former UPA government, in August last year, and he has recently indicted top officials of the Security Press (SPMCIL) for this lapse. In the meantime, the Delhi High Court has admitted a public interest litigation (PIL) in which even the appointment of MS Rana as CMD of this unit has been questioned and that includes the charge that he was appointed to that post even without the requisite clearance from Central Vigilance Committee (CVC). This matter is expected to be heard in the High Court, next month.
Further reports indicate that Rana had suppressed the incident in Hoshangabad and only when the news appeared in a local newspaper in Madhya Pradesh, did the UPA government order the enquiry as reported above.
In the meantime, these currency notes are still in circulation and no data is immediately available as to how much was imported and in what denominations these security threads have been used. In fact, further serious investigations are needed to find more about this (Arabic) security thread. India needs to know as to what happened to its order?
Could the Indian security thread have been shipped "inadvertently" to somebody else, who may use it with ulterior motives? Was the thread designed to be used say, in Rs500 currency notes, could be switched for use in Rs1,000 notes?
Reserve Bank of India (RBI), perhaps, can throw some light on this unfortunate episode.
In the meantime, it must expedite the issue of replacing the paper currency notes with polymer currency, for which they had done market testing with Rs10 notes last year?
In the long run, polymer currency notes can help the government to make counterfeiting practically impossible and reduce black money in circulation.
This matter needs the urgent attention of both Finance Ministry and RBI.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US