Demonetisation of 500 and 1,000 rupee notes may turn out to be a “futile exercise” to target black money and counterfeit currency, says Bank Employees Federation of India (BEFI) General Secretary Pradip Biswas.
“The proportion of counterfeit notes is only 0.028 per cent of the total currency in circulation according to Indian Statistical Institute. And the proportion of black money in liquid cash is less than 10 per cent,” Biswas told IANS in a telephone conversation.
“This (demonetisation) is not the way to target black money and counterfeit currency,” he added.
Biswas said since over 86 per cent of the total physical currency in the country is covered by Rs 500 and Rs 1,000 notes, taking them out of circulation without sufficient measures to quickly replace them will severely affect the economy.
“How can we manage with just 13 per cent of cash, which is in 10, 20, 50 and 100 rupee notes, to replace 86 per cent of the currency which has been demonetised?”
Biswas had earlier said that it would take at least four to five months to print sufficient currency to replace around 22 billion demonetised notes even if all currency printing presses operate at their maximum capacity.
He added that things may get worse in the first week of December when people in formal as well as informal sectors have to draw their salaries.
“Even now, they cannot withdraw more than Rs 24,000 in a week. And banks are not able to satisfy you even with that limitation. They tell you to take Rs 4,000-5,000 because the supply of currency is not there.
“This will be a tremendous factor in the coming weeks,” he said.
Offering a word of caution against the temptation of going abroad for printing of notes to beat the crisis, Biswas said it will open avenues for pilferage of currency printing technology.
“There are opinions coming up in public debate that we should get the currency printed abroad. Given the circumstances one may think this is the need of the hour. But it will open up avenues for further printing of counterfeit notes,” he said.
“To print it somewhere else, you will have to pass on ink, dice and currency paper. What is the guarantee that the technology to print notes will not be transferred and compromised?”
“It will be time consuming as well. So I doubt it will have significant effect on the timeline anyway,” he added.