By Rameesh Kailasam & Madhabi Sarkar
The paper currently used for printing banknotes in India is made using cotton. Cotton banknotes are usually a mix of 75% cotton and 25% linen mixed with a gelatin adhesive solution to give some longevity. India prints around 2,000 crore currency notes every year. The notes that got misprinted or became soiled were burnt earlier, which was environmentally-damaging. They are now shredded and converted into bricks used for industrial use.
The world has been experimenting with currency. One such has been centred on polymer banknotes made from bi-axially oriented polypropylene (BOPP) films, which allow the incorporation of far more secure features like metameric ink. Central banks of economies like Singapore print polymer banknotes on a specialised polypropylene plastic, which helps it utilise advanced security features such as the “Complex Clear Window” for the Singaporean dollar 2, 5, and 10 notes. This enables building high-security features into the notes, making them difficult to counterfeit. These also last significantly longer than paper and enjoy various other environmentally-friendly benefits due to their durability. Paper banknotes use cotton as a raw material leading to increased use of water, pesticides, and chemicals, which negatively impacts the environment. Comparatively, polymer banknotes have a low carbon footprint. The Bank of England stated that Carbon Trust has certified that the carbon footprint of its five-pound polymer is 16% lower than its paper predecessor. These notes are apt for all climatic conditions and are expected to be resilient to diverse temperatures, which is beneficial for general Indian weather conditions.
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In 1988, Australia became the first country to introduce polymer notes and then completely switched to these banknotes. There are more than 75 countries that have switched to polymer notes, including Canada, the UK, Scotland, Israel, UAE, Brazil, Singapore, and New Zealand. In 2019 alone, more than 20 countries had partially switched to polymer notes. They are said to work better in ATMs and automated sorting operations. Although they may be comparatively expensive to produce, they last 2.5-4 times longer and are difficult to counterfeit, thereby making up significantly on the long-term benefits front.
In October 2009, RBI did dabble in the idea of a Rs 10 polymer note by calling for expressions of interest from global manufacturers for one billion pieces. The annual reports of RBI for FY10 and FY11 talked about field trials in select locations, and the same was stated in a written reply in Rajya Sabha in March 2013. The FY13 report mentioned being cost effective, secure, and difficult to counterfeit as the benefits of polymer notes. The FY15 annual report mentioned about an RFP for Rs 10 and a technical evaluation, and in FY16, RBI elaborated on a “field trial” for Rs 10 notes.
The switch from paper to polymer currency seems possible in phases since cash processing machines can simultaneously handle paper banknotes and polymer banknotes. There are several countries that circulate polymer and paper notes of different denominations through the same machines at the same time. Polymer notes enable embedding enhanced security features that include see-through window and holograms, making them harder to counterfeit. They are more durable, although not indestructible. The opponents of polymer notes have been of the view that these come with disadvantages, such as they are hard to fold easily and may be slippery and sticky, which will certainly require some caution for users when introduced, but it will be a matter of time people get used to these, and the benefits are far higher.
India is the second-largest producer of BOPP films, which forms the substrate for polymer film. Given that the Indian polymer industry has already developed capabilities to offer high-tech films, the government should explore and leverage the potential that can potentially meet the requirements indigenously and give an impetus to the Make-in-India vision. The Indian BOPP market is witnessing rapid growth and is gaining traction in the packaging, labelling space, including food packing. This space is rapidly innovating and can be a great backbone for currency raw material in India. BOPP films are widely accepted in the recycling waste stream as well.
India has made substantial investments in reducing its dependency on imports, and polymer represents the next phase of banknote technology innovation, increasingly being adopted throughout the world. The successful experience of countries with diverse socioeconomic conditions demonstrates the relative success of polymer banknotes. India being a developing country that aims to become a $5 trillion economy, its adoption of polymer banknotes will provide numerous advantages resulting in cost savings, reduced environmental costs, durability in cash circulation, and development of swadeshi technology, encouraging innovation. By introducing polymer banknotes as a counterfeit-proof alternative and adapting it to suit domestic conditions, there is a potential for making India a global leader in this area.
The author is Respectively, CEO, and senior manager (public policy), Indiatech.org