Fake currency network intact

What is Important?
From UPSC Perspectives
Prelims:Not Much
Mains:Rationale behind and outcomes of demonetization, significance, need and challenges

Why in News?

Two years after demonetisation, the fake currency notes seized so far are not of a high quality, a probe by the National Investigation Agency (NIA) has found.

Key facts:

*The network of same fake currency operators was still intact as two years ago, that pushed fake notes from the Bangladesh border. But there was not much evidence to link it to Pakistan yet.
*A reason cited by the government for scrapping ₹500 and ₹1,000 notes in 2016 was to wipe out fake notes.
*The fake notes seized recently are of poor quality, and look like photocopies in most cases. It seems Pakistan has not been able to copy the security features yet. 
*Though there was no definite account of the number of fake notes in circulation with the government when demonetisation was announced, a study done by the Indian Statistical Institute (ISI), Kolkata, in 2015, had said that at any given point of time, fake notes of ₹400 crore face value were in circulation.
*The impact of fake notes on the economy could only be computed if it entered the banking system.
*In the two years before demonetisation was announced, the NIA registered 25 cases of fake currency notes and 26 persons were convicted in three cases.

Outcomes of demonetization:

Over the last two years, at least three of major claims of demonetization have collapsed.
  • First, it was supposed to flush out black money and end corruption. The government predicted that Rs 3 lakh crore in currency would not return to the banks. This has proved to be false, as most of the cash has returned.
  • Second, demonetisation was to help detect fake currency, which apparently funded terror and distorted the economy. The government claimed that at any point of time, there was Rs 400 crore in fake currency notes floating in the economy. Nine months after demonetisation, it was claimed that Rs 11.23 crore in fake currency had been detected. Now, the Reserve Bank reports a huge jump in fake Rs 2,000 notes, which were introduced after demonetisation.
  • Third, demonetisation was to pave the way to a cashless economy and the gleaming new world of digital India. Two years later, the amount of cash with the public has reached a record high, the bank has claimed.

Fake currency network intact Fake currency network intact Reviewed by The Hindu Current Affairs on November 11, 2018 Rating: 5

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