While demonetising Rs 1,000 and Rs 500 notes and introducing Rs 2,000 Prime Minister Narendra Modi had said it would help in fighting fake currency in India. (Photo: Reuters) "In a country's history, there come moments when every person feels he too should be part of that moment, that he too should make his contribution to the country's progress. Such moments come but rarely," said Prime Minister Narendra Modi on November 8, 2016.
While demonetising Rs 1,000 and Rs 500 notes and introducing Rs 2,000 Prime Minister Narendra Modi had said it would help in fighting fake currency in India. (Photo: Reuters)
"In a country's history, there come moments when every person feels he too should be part of that moment, that he too should make his contribution to the country's progress. Such moments come but rarely," said Prime Minister Narendra Modi on November 8, 2016.
He said this soon after making the historic announcement to demonetise high-value banknotes of Rs 1,000 and Rs 500. In his televised address to the nation, PM Modi said this was being done to fight fake currency rackets, black money and corruption.
"We have an opportunity where every citizen can join this mahayajna (grand sacrifice) against the ills of corruption, black money and fake notes," PM Modi had said to canvas people's support.
While Rs 1,000 and Rs 500 banknotes were banned overnight, the government introduced new banknotes with denominations of Rs 2,000 and Rs 500. It said these banknotes have additional security features which would make them difficult to be copied by counterfeiters, hence check the menace of fake currency.
But three years on, government's own data show that overcoming these security barriers was not that difficult for rackets operating in counterfeit currency. In fact, they seem to have had a field's day printing them.
Latest reports of the National Crime Records Bureau (NCRB) reveal that in terms of value, Rs 2,000 banknotes comprised 56 per cent of all fake currency seized in India after demonetisation (i.e. in 2017 and 2018).
Three years ago, to buttress his decision of banning Rs 1,000 and Rs 500 notes and introducing Rs 2,000 ones, PM Modi had said the measure would also cripple terror networks. "Have you ever thought about how these terrorists get their money? Enemies from across the border run their operations using fake currency notes. This has been going on for years," he said.ALSO READ | Cash and terror: No PM Modi, demonetisation didn't curb terrorism
Terming the decision as a "movement for purifying our country", PM Modi said he was confident that every citizen will stand up and participate in the 'mahayajna'.
So, three years after introducing Rs 2,000 notes to fight fake currency, let's see how "purified" the Indian economy has become.
INCREASING SHARE OF Rs 2,000 IN SEIZED FAKE CURRENCY
NCRB's latest annual report titled 'Crime in India' reveals that in 2017 and 2018, law enforcing agencies seized Fake India Currency Note (FICN) worth Rs 46.06 crore.
Of this, 56.31 per cent was in the form of fake Rs 2,000 notes.
Analysis of the two NCRB reports further reveals that not only do Rs 2,000 notes contribute maximum to the value of seized fake currency, their share in the overall value has also increased considerably during this period.
In 2017, law enforcing agencies seized fake currency worth Rs 28.10 crore, with fake Rs 2,000 notes comprising 53.30 per cent of this value. A year later, share of Rs 2,000 notes in seized fake currency increased to 61.01 per cent, clearly suggesting that counterfeiters were becoming more successful in printing and circulating copies of these notes.
GUJARAT HUB FOR FAKE Rs 2,000 NOTES
Another trend that we find in the NCRB data is that seizure of fake Rs 2,000 notes is concentrated in a handful states.
Since the introduction of Rs 2,000 notes in November 2016, Gujarat has emerged as the hub for its fake variant. By the end of 2018, law enforcing agencies had seized 34,680 fake Rs 2,000 notes from Gujarat and their collective worth was Rs 6.93 crore.
In the national context, Gujarat had a 26.28 per cent share in all fake Rs 2,000 notes seized post demonetisation.
It was followed by West Bengal, Tamil Nadu and Uttar Pradesh where fake Rs 2,000 notes worth Rs 3.5 crore, Rs 2.8 crore and Rs 2.6 crore, respectively, were seized.
Overall, NCRB data show that fake Rs 2,000 notes have proliferated in at least 27 states and Union Territories so far. Jharkhand, Meghalaya and Sikkim are the three states where not a single fake Rs 2,000 note was seized as on December 2018, along with Union Territories of Andaman and Nicobar Islands, Chandigarh, Dadar and Nagar Haveli, Daman and Diu, Lakshadweep and Puducherry.
FAKE Rs 2,000 NOTES WERE IN MARKET SOON AFTER DeMo
In his November 8, 2016 speech, while announcing demonetisation and introducing new banknotes, Prime Minister Narendra Modi had expressed high hopes that his bold and historic decision would mark death knell for counterfeit currency.
But in contrast to these high hopes, NCRB record shows that fake variants of the newly introduced Rs 2,000 notes were available in the market days after the announcement.
NCRB's Crime in India report for 2016 reveals that in the remaining 53 days of 2016 (after the November 8 announcement), law enforcing agencies seized 2,272 fake Rs 2,000 notes worth Rs 45.44 lakh across India.
About 57 per cent of these fake Rs 2,000 notes were seized in Gujarat, the prime minister's home state.
Media reports from 2016 show that police started seizing fake Rs 2,000 notes as soon as on November 18just 10 days after the Prime Minister's announcement. On November 18, 2016, The Hindu newspaper reported that cops in Mysuru, Karnataka, had seized 44 fake Rs 2,000 notes.Bengaluru: 24 days after demonetisation, fake Rs 2,000 notes worth Rs 5.7 crore seized
In India, there are two official sources through which we can find information about counterfeit currency.
The first source is NCRB's Crime in India report and the second source is the Reserve Bank of India's annual report where it mentions the number of counterfeit currency that were traced through the banking system. The RBI figures are lower than those recorded in NCRB reports. NCRB record is based on seizure of fake currency by law enforcing agencies while RBI data are based on fake currency that entered the official banking system and was detected.
RBI's annual report for 2018-19 too indicates a similar trend of fake Rs 2,000 notes being circulated in the market. The report shows (on page 147) that a total of 17,929 fake Rs 2,000 banknotes were detected in the banking system in financial year 2017-18.
Next year, this figure increased to 21,847 fake Rs 2,000 notes, an increase of 21.9 per cent.
Another alarming data in the RBI report was a 121 per cent increase in detection of counterfeit notes of Rs 500 (new series). The new Rs 500 notes were released along with the Rs 2,000 notes by the Modi government to "fight fake currency".
The fact that counterfeit Rs 2,000 notes were available in the market soon after PM Modi's November 8 announcement is also reflected in the RBI report, which says that banks detected 638 fake Rs 2,000 notes between November 9, 2016 and March 31, 2017.
This shows that the proliferation of these fake notes was so profound that they started entering the banking system within months after the new notes were introduced.
In the past one year, media reports have routinely indicated that the Reserve Bank of India (RBI) has either completely stopped printing Rs 2,000 notes or has reduced their numbers drastically. The RBI on its part has however maintained that these notes have not been pulled out from the market.
On October 14 last year, The New Indian Express reported that RBI has not printed a single Rs 2,000 note in this financial year. The information was based on a Right to Information (RTI) application filed by the newspaper.
According to the RTI reply, RBI printed 3,542.991 million Rs 2,000 banknotes in 2016-17. This was reduced to 111.507 million notes in 2017-18, and in 2018-19, the RBI printed just 46.690 million such notes.
There is no official word on if the RBI was compelled to initiate this gradual curtailment of Rs 2,000 notes due to the high number of fake notes of this denomination in the market, just a couple of years after they were introduced, ironically to check fake currency.
But irrespective of whether these notes, which have already become less common in everyday transactions, are gradually withdrawn from the market or not, what data definitely show is that they have failed to check fake currency in India.
Some may argue: they actually perpetuated it.ALSO READ | RBI scales down printing of Rs 2000 note to minimum: Govt source ALSO READ | New Rs 2,000 notes to be phased out within 5 years, says RSS ideologue Gurumurthy