Economic terror forced Modi to abolish Rs 1,000 notes

RBI has estimated there were around 6.5 lakh fake currency notes, mostly in the Rs 500 and Rs 1000 denomination that were in circulation in 2015-16

It started with the interception of Ekramul Ansari, an Indian national, when he landed at the Indira Gandhi International Airport in Delhi from Dubai aboard Indigo Airlines flight 6E22 in April 18, 2014.

Acting on prior information, sleuths of the Directorate of Revenue Intelligence (DRI) searched Ansari’s baggage which consisted of a trolley and a cardboard box containing detergent powder. Hidden in the box and cavities in the trolley were bundles of Rs 1000 currency whose value was almost Rs 50 lakh. A few days later when the Modi government came to power, the home ministry transferred this case to the National Investigating Agency (NIA). The NIA probed and filed a chargesheet in January 2015, charging six people – two Indians, a Pakistani and three Nepalis – of trying to damage India’s monetary stability. Ansari during his interrogation revealed that the Fake Indian Currency Notes (FICNs) were to be transported to Champaran district of Bihar for circulation throughout India. 
 

 

Ever since this case, the Modi government has handed over eight other cases of FICN smuggling to the NIA. The UPA government had handed over a similar number of cases to NIA since 2009, when the investigating agency was set up in the wake of the 2008 Mumbai terror attacks. The unprecedented involvement of India’s premier terror investigating agency shows the Modi government’s seriousness ever since it came to power in tackling the scourge of fake currency that threatened to destabilise the Indian economy.  
 

There were a couple of things about the fake currency busts that were startling investigators. First was the sheer number of fake Rs 500 and Rs 1000 denominations that were making their way into the country. Secondly, all of these fake notes were of extremely high quality which wouldn’t have been detected by an untrained eye. The Central Forensic Science Laboratory (CFSL) which had examined some of these notes found them to be of exceptional quality replicating many of its security features – like the printing of the rupee symbol in reverse and obverse of the note, the windowed magnetised security strip and even the colour changing threads.
 

The problem with the Rs 500 fake currency became even more apparent as the NIA was handed over more cases by the Modi government. In a case of FICN seizure at Malda in West Bengal bordering Bangladesh– considered India’s fake currency hotspot, the NIA found Rs 4.5 lakh in fake Rs 500 currency notes. The police which arrested these men in Malda also found opium on them which hinted at the use of fake currency in the drug trade in India. 
 

Since 2014, the NIA has also been handed over cases in Mumbai, Kashmir and Howrah. The case in Mumbai handed over to NIA also involved the seizure of high quality fake Rs 100 denomination notes. 
 

The Reserve Bank of India (RBI) has estimated that there were around 6.5 lakh fake currency notes, mostly in the Rs 500 and Rs 1000 denomination that were in circulation in 2015-16. In 2014, the number of fake Rs 100 notes in circulation was also close to 1.8 lakh. These could have been just the tip of the iceberg because the maximum number of fake notes were detected at commercial banks.

These figures did not include the currency seized every year by police and other security agencies. India’s land border with Pakistan, Bangladesh and Nepal is 9170 kilometers long and the amount of high quality fake currency that seeps through every year into the economy without detection is not known.
 

After the Modi government came to power, the RBI initiated the withdrawal of pre-2005 notes in a bid to soften the inflationary impact of fake currency on the Indian economy. But the number of counterfeit notes seized only kept increasing. 
 

With NIA investigations pointing to a burgeoning cross border problem and the RBI’s limited currency tweaking exposing India’s vulnerability, the Modi government seemed to have been left with little option. Time will tell whether cross border counterfeiters catch up or  whether the Modi government succeeds in fortifying India against the devastating impact of cross border economic terror.