DEMONETIZATION : Impact on fake currency INTRODUCTION:-Demonetization is a step taken bythe Central Government of a country to discontinue a particular currencycirculating in the economy.The history of Demonetization isvery diverse. Many countries such as Ghana (in 1982), Nigeria (in 1984),Myanmar (in 1987), North Korea (in 2010) have tried Demonetization in the past.Some succeeded in their objective and some failed disastrously.
Mainly Demonetization is carriedout with the objective of removing black money and counterfeit currency fromthe economic circulation. This will further break down the growth of terroristsand naxalists in the country who are totally depended on counterfeit or fakecurrency for their livelihood as well as operational purpose.As this paper mainly focuses onthe Demonetization that took place in India last year and its practical impacton fake currency, I will firstly like to give a brief summary on what happenedin the country on 8th November 2016 and its following 50 days. OBJECTIVEOF THE STUDY :-Fake currency were always beenused by the non-social parties to exploit the backward and economical people ofthe country. Hence, one of the major aim of Demonetization was elimination ofcounterfeit currency from the country.
In this paper it will be analysed to seewhether this objective got accomplished or not after the decision ofdemonetization.The purpose of writing this paperis to study about the fake currency circulating in the country, their sourcesboth in and outside the country and what deathblow demonetization really gaveto it. Moreover, this paper helps me to analyse the reality on what media andexperts says on this issue. INDIA’sDEMONITISATION : A step forward or A step backward8th November 2016 is the date that every citizen of Indiawill not forget for decades. Specially the black money holders, terrorists andcorrupted people of India. On the very same day at 8.
00 p.m, our Honourable PrimeMinister Sri Narendra Damodar Das Modi gave a huge surprise to the country withhis one liner while addressing the countrymen. His one liner was :” Aaj raatri 12 bje se vartmaan mezaari 500 aur 1000 rupaye ke note legal tender nahi rahenge.”This initiated Demonetization inIndia which proved to be a historic as well as drastic event for the people.The citizen of India were under huge pressure to exchange and deposit thecurrency which were banned. And why not, afterall the banned denominations of500 and 1000 consists nearly 87% of the total currency circulating in thecountry.Look at the below presentation :- It is clear from the abovepresentation that the Demonetization in 2016 was really a bold decision thatour government has taken.
But what are the various issues that forced our leaders to implement such an action?Turning India into a digital and cashless nation were the secondary causes,while primary causes being against black money and elimination of fake currencyfrom our system.People were aware of the fact thatafter this Demonetization drive, their wallets will have all the genuinedenominations. But the immediate consequences of this so called surgical strikewas miserable. No legal cash in the pocket, ATM’s devoid of money, banksproviding only limited cash, all these have effected millions of ordinarycitizens, ruined thousands marriages and even causing death of few. FAKECURRENCY : The biggest reason behind PM’s masterplanFirstly, look at this data of howmuch FICN (Fake Indian Currency Notes) was seized by RBI and law enforcementagencies from year 2011 to 2015 which results in Demonetization in the year2016.FICN notes seized between 2011 and 2015 500 1000 S.
No. Notes Value in crore (Rs) Notes Value in crore (Rs) 2011 3.8 lakh 15.41 99,050 9.9 2012 5.3 lakh 26.51 1.
65 lakh 16.54 2013 4.29 lakh 21.49 1.94 lakh 19.48 2014 2.
9 lakh 14.52 1.46 lakh 14.69 2015 2.61 lakh 13.05 1.58 lakh 15.
84 Total 18.9 lakh 90.98 7.64 lakh 76.47 The above data clearly revealsthat 99,050 notes of 1000 and 3.8 lakh notes of 500 were seized in 2011 alone.And the number somehow keeps on increasing or decreasing over the years.Also more than 26.
5 lakh fakenotes of the denominations of Rs. 500 and Rs. 1000 with a face value of nearlyRs.
168 crore have been either seized or recovered by Reserve Bank of India(RBI) and other agencies in India from 2011 to 2015. There is no doubt thatRs.100 and Rs. 50 fake notes are also in circulation.
But its just nearly 3% ascompared to the FICN in Rs. 500 and Rs. 1000 denominations.These fake currency notes aremostly used for terror related activities which disturbs a country’s peace andeconomy on a large scale.
In short, fake currency is really a threat to anycountry in various aspects. According to various reports, it is found that thesmuggling of FICN to India occurs from its neighbouring countries whichincludes Pakistan, Bangladesh and Nepal. The evidence behind this fact is thequality of FICN which clearly indicates that they can only be made in currencymaking machines, which are available only with sovereign states.Various previous reports alsoconfirms that in more than 90% cases, fake notes of Rs. 500 were traced toPakistan. There are various sophisticated presses located in Pakistan wherehigh quality currency notes are being printed. Moreover, high quality fakenotes that were seized in India and abroad during 2011 to 2015 have came onlyfrom Pakistan which resulted in creation of a self sustainable criminal networkin the South and South-Eastern region for smuggling FICN into India.
There are various agencies inIndia which have been formed to stop the circulation of fake currency notes,such as(i) FICN Coordination(FCORD) group(ii) Terror Funding andFake Currency Cell (TFFC)(iii) Combating Financing ofTerrorism Cell (CFT Cell)(iv) Financial Action TaskForce (FATF)The seriousness of FICN issue andthe failure of all the above mentioned agencies were the utmost reason of the2016’s Demonetization. DEMONETIZATION: Every Indian fought the battleLets read this tweet posted by Mr.Narendra Modi on the occasion of one year Anniversary of the Demonetization.
“I bow to the people of India for steadfastly supportingthe several measures taken by the Government to eradicate corruption and blackmoney.”This really shows that everycitizen of India had contributed more or less in this movement. And its reallytrue. Beside the fact that the PM’s decision on Demonetization of high currencydenominations to eliminate fake currency that was circulating in the Indianeconomy was very much worthy, it will remain a bitter reality that theimplementation of the plan was not planned and expeditious, which has led to acash crisis all over the country. And the common man getting affectednegatively. Although it is still not known that the targeted results ofDemonetization were achieved or not, the non-planned act frequently caused ahuge inconvenience and several issues for common and ordinary people directlyor indirectly to their daily life and their livelihoods.
There are many reasonsfor this. Most of the common man in India is dependent on cash or currencytransactions for their daily and basic needs and for ecomomic activities. Thenon cash transactions like Internet banking and credit or debit cardtransactions are limited as because such facilities and availabilities aremostly in the urban or semi-urban areas only to middle class and rich people.