The government is considering various options, including introduction of polymer-based plastic currency notes, to make counterfeiting of Indian currency difficult.
A committee, constituted to review security features of currency notes, has recommended creation of a directorate of currency in the finance ministry. The committee submitted its report to finance minister Pranab Mukherjee on Wednesday, and made a presentation on key recommendations. It also suggested ways to tackle the menace of fake
currency notes, including indigenisation of technology and other security features.
The proposed directorate, to be headed by a special secretary-rank officer, will oversee acquisition and R&D efforts relating to security features of the currency notes and other security products. The committee suggested the government to encourage local manufacturing of currency paper and exempt its production from excise duty, the finance ministry said in a statement on Thursday.
It has called for a National R&D centre under the proposed directorate for conducting research in areas like raw material, security features and machinery required for the production of Indian bank notes and other security sensitive items. The government felt the need to streamline the procedure of acquisition of security features as well as procurement of machinery and raw materials to combat the menace fake currency notes.
The government, in consultations with the Reserve Bank of India (RBI), is planning a number of other initiatives too. ??One way to curb the menace of fake currency notes is to increase their cost of production. The RBI is planning to launch polymer-based plastic currency notes. These are costlier to produce but are more durable,?? a government official said.
The Reserve Bank of India spent about Rs 2,000 crore during 2007-08 to produce 15 billion currency notes. In the same year, it withdrew 14 billion currency notes from the market. There are a total of $45 billion currency notes in the market valued at Rs 7 lakh crore, the official said.
The nine-member committee, headed by former bureaucrat Shilabhadra Banerjee, also suggested setting up of a national-level coordinating agency for investigating the menace of fake currency notes. The committee has suggested that emphasis be laid on indigenisation of bank note paper production, security inks and coin plating.
??Indigenisation of items required for production of bank notes also needs to be encouraged to ensure uninterrupted supply of raw materials with cost efficiency as another important measure to contain the problem (of counterfeit currency),?? the statement said.
The committee has recommended exempting currency paper manufactured in India from excise duty and suggested waiving of customs duty on imported machinery for producing bank note paper and printing.
It has also called for launching a multimedia awareness campaign by the RBI to educate and help people distinguish between genuine and fake notes. ??The finance minister emphasised early implementation of the committee’s recommendations by the ministry,?? it said.
