A new study has pegged the quantum of counterfeit currency in circulation nationwide at Rs 400 crore at any given time, with Rs 70 crore entering the system every year, indicating the scale of the economic security issue could be substantially lower than intelligence estimates.
The findings of the Indian Statistical Institute (ISI) study commissioned by the National Investigation Agency are at variance with estimates by the Intelligence Bureau pegging fake currency infusion per annum at Rs 2,500 crore.
The latest estimation could give policymakers the first scientific tool for dealing with the problem that officials attribute to Pakistani involvement, going by material evidence.
“The ink, paper and other features used in fake notes in circulation here can be available only to sovereign nations for publishing their legal tender,” a home ministry official said requesting anonymity. “When the National Investigation Agency sent the fake notes seized here for forensic analysis, it was found their paper, ink and other features matched with Pakistani legal tender.”
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The study estimated the overall incidence of fake notes to be around 250 per million pieces. The government told Parliament in December last year no reliable estimate of fake currency was available. Internal government estimates not released publicly indicated earlier that Rs 5,000 crore to Rs 10,000 crore in counterfeit currency was in circulation in the country at any given time.
“We have reasons to believe that Pakistan is behind most of the fake currency notes being pushed here. We needed a scientific estimate of fake notes in circulation. That’s why the ISI was asked by the National Investigation Agency, the nodal agency in the matter, to carry out a study,” the home ministry official said.
The study compiled data from all stakeholders: the Reserve Bank of India (RBI), National Crime Records Bureau (NCRB), Intelligence Bureau, Research and Analysis Wing, Central Economic Intelligence Bureau (CEIB), Central Bureau of Investigation and others.
All central agencies involved in seizure of counterfeit currency send data to the CEIB but not to the NCRB. Commercial banks send reports on detection of fake notes to regional offices of the RBI but other non-banking financial institutions handling large amounts of cash do not fall under the purview of the existing system of reporting counterfeit currency.
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The study found state police units are irregular in sending reports of seizures and detection of fake currency to the NCRB.
For its estimation, the study obtained the number of notes in circulation at a given time, the total volume of cash transactions at banks, the average number of times a note enters the banking system and the actual number of fake notes detected from banks.
The ISI developed a statistical method to combine all factors to arrive at a composite figure.
“The ISI arrived at a multiplication factor of 15 to the fake notes detected by banks for arriving at the quantum of total counterfeit currency in circulation,” another home ministry official associated with the exercise told HT.
Data for the total value of counterfeit notes detected and seized in the country and abroad over the last five years varied between Rs 24 crore and Rs 46 crore.The ISI has suggested a new system of reporting seized and detected fake notes as the existing one has a few lacunae that lead to duplication of reporting data.
Read: Fake notes smuggled in by ISI now harder to detect: Delhi Police