Prime Minister Narendra Modi on Thursday asked the Reserve Bank of India (RBI) to start manufacturing paper and ink used for currency notes. Speaking at the financial conclave organised by the central bank to commemorate 80 years of its existence, Modi said, "Gandhi fought for Swadeshi and we are printing his picture on the currency notes with imported paper and imported ink."
Prime Minister Narendra Modi on Thursday asked the Reserve Bank of India (RBI) to start manufacturing paper and ink used for currency notes. Speaking at the financial conclave organised by the central bank to commemorate 80 years of its existence, Modi said, "Gandhi fought for Swadeshi and we are printing his picture on the currency notes with imported paper and imported ink."
Modi said, "Can we not fix a date... that on any specific date, whatever currency is being printed, the paper will be Indian and the ink will also be Indian," he said. "Make in India should start from here. I believe we can do this."
India prints 15 billion pieces of currency annually, of which up to 12 billion are printed on foreign-made paper. The paper used for the currency is cotton-based, and has the advantage that it cannot be easily replicated, yet has the touch and feel of paper.
The ink, on the other hand, is imported from a Swiss company SICPA. An RBI official told dna that SICPA supplies most countries with ink for printing currency.
RBI deputy governor SS Mundra said work on a currency paper manufacturing factory (in Mysore) was in advanced stages; soon, the country would have notes printed on Indian paper. "The factory construction is in advance stages and we are confident that in the next few months, RBI will start producing bank notes," Mundra said.
At present, besides the paper and the ink, even the printing machines are imported. While the paper is imported after floating global tenders from countries such as Germany and England, the printing machines are imported from Japan and Switzerland.
Import costs of paper, ink and printing machines account for about 80% of the cost of printing the notes in India.
Despite the security measures being embedded in Indian notes, counterfeiting of notes continues. According to RBI data, 4.88 lakh pieces of counterfeit notes were detected in 2013-14, of which 4.68 lakh pieces (95.9%) were detected by commercial bank branches, while the remaining pieces (4.1%) were detected at RBI offices across the country. During 2013-14, the detection of counterfeit notes of Rs1,000 and Rs100 increased by 11.8% and 9.8% respectively whereas that of Rs500 denomination decreased by 10.3%, as compared to the previous year. This data, however, does not include the counterfeit notes seized by the police and other enforcement agencies.
Demand for banknotes and coins continued to rise in 2013-14 despite the increased use of technology driven non-cash modes of payment currently. At the close of March 2014, the value of the banknotes in circulation stood at Rs 12,82,900 crore, registering an increase of 10.1% over end-March 2013. The volume of banknotes in circulation during the same period increased to 77 billion pieces, an increase of 5.2%.
The central bank is moving to mitigate the risk arising out of multiple series of banknotes in circulation. At the request of the government, the Reserve bank is gradually withdrawing from circulation all banknotes issued prior to 2005, because they have fewer security features as compared to banknotes printed after 2005.
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