Isn’t it more sensible and imperative that instead of Rs10 notes, currency notes of Rs500 and Rs1,000 be issued in polymer, particularly when we know that the elections are around the corner?

In the early part of this month, just a couple of weeks ago, in the Lok Sabha, Minister of State for Finance, Namo Narain Meena, stated that "plastic" notes in the denomination of Rs10 will be introduced on a pilot basis, in the second half of 2014.

Moneylife has, in the past, carried several stories on this subject, right from the introduction of polymer currency notes in Australia, more than 25 years ago, and how, some 23 more countries have since followed this concept, not only to bring a long shelf life to notes but protecting themselves from counterfeiting that is rampant in many parts of the world.

Earlier articles include:

RBI’s experiment with Rs10 polymer notes goes on and on

New polymer rupee notes should replace those printed before 2005!

India is no exception, as the flood of Rs500 and Rs1,000 fake Indian currency notes have been minted and pushed into the Indian market by Pakistan. Irrefutable forensic evidence was also detailed by the Government, and these were published in the Moneylife.

Earlier articles include:

Polymer notes can curb fake currency racket|

Introduction of polymer currency notes has been talked about for quite sometimes, almost one year.  Dr KC Chakrabarty, deputy governor of Reserve Bank of India (RBI), while on a visit to Karnataka, in May last year, mentioned that trials were taking place in selected cities such as Kochi, Mysore, Jaipur, Shimla and Bhubaneshwar. This was widely reported in the press. So, to hear about such a trial measure again, being stated in the Lok Sabha, in an answer to a written question, the matter is confusing, to say the least.

Simply put, we need to get a clear cut answer, from someone in authority like Dr Chakraborty, whether or not such a move has already taken place? And if so, what was the need for making a trial to print Rs10 plastic (polymer) currency notes? These are NOT the ones that are being counterfeited! Does not the government have enough forensic proof to nail Pakistan down and take up the issue with them? Is it not more sensible and imperative that instead of Rs10 notes, currency notes of Rs500 and Rs1,000 be issued in polymer, particularly when we know that the elections are around the corner?

More details of seized fake currencies in circulation have come to be confirmed, and this time, by finance minister, P Chidambaram, while giving a written reply to a question raised in Rajya Sabha! He stated that fake Indian currencies with face value of Rs23.66 crore were seized in 2010; it rose to Rs31.46 crore in 2011, and Rs34.57 crore in 2012. For the first half of 2013, till about June, Rs17.74 crore worth of these fake notes were seized!

In the meantime, in the IT city of Bangalore, the aam aadmi is noticing a strange phenomenon, and that of sudden appearance of crisp, freshly minted (pun not intended, but factual) notes of Rs5 and Rs10 denomination being pushed into circulation! All these are pre-2005 mintage! Where were they before being brought out, strangely, for distribution now? Someone is unloading tonnes of this currency into the market, and how they mysteriously appear, no body knows! But, these are in circulation and aam aadmi has no choice but to accept and pass on!

The other factor is the non-availability of coins. In the past, the metal content of a coin, has been found to be more than the face value of the coin, resulting in collection to melt! Only recently the one rupee coin has started appearing in the market, in reasonable quantities, while, those of 50 paise simply vanished and petty shop keepers were, and still are, happy to push a candy in lieu, when selling items, which are valued fractionally, such as some newspapers that are priced at Rs3.50!

All said and done, one hopes that RBI will review the matter of polymer currency notes, and bring forward the introduction date by brining in these in the denomination of Rs500 and Rs1,000. This will be a great relief to the market, and, in the meantime, it is hoped that the security and customs inspectors take vigilant care from counterfeit notes coming into India, through "friendly" neighbourhood countries!

(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.)