A MYSORE company, the only recognised producer of indelible ink or voter’s ink in India, is scrambling to ramp up production “on a war footing” after the Centre Tuesday asked banks to start tagging those exchanging old Rs 500 and Rs 1,000 notes to prevent “unscrupulous elements” from sending people to exchange money multiple times at different branches.
Announcing the use of indelible ink, Economic Affairs Secretary Shaktikanta Das said: “We have received reports that certain unscrupulous elements, who are trying to convert black money into white, have organised groups of innocent people and are sending them from one branch to another to exchange notes and get Rs 4,500 each. As a result, what is happening is that the benefit of withdrawal of cash is getting restricted to a smaller number of people…to prevent such kind of misuse, the branches of banks will take recourse to the use of indelible ink marks for disbursement of cash.”
WATCH VIDEO: Demonetisation: Banks Provide New Rs 500 Notes
Tuesday’s announcement was described as a “sudden development” by C Harakumar, general manager, Mysore Paints and Varnish Ltd (MPVL), which is run by the Karnataka government and has been producing the indelible ink since 1962.
“Since this afternoon, several banks have approached us with queries about the ink, and about how many people can be marked with ink from one 5-ml bottle. It is a sudden development and we will have to stretch ourselves and work on a war-footing over the next few days,’’ Harakumar said.
However, the latest move in the government’s demonetisation drive — the daily cash limit per account holder for exchanging the old notes at banks is Rs 4,500 — was described by a top bank officers’ representative as equivalent to “burning the house to catch a rat”.
“The demonetisation drive has been proved as something that violates the fundamental right to life. Poor planning in rolling out this programme has ended up preventing lakhs of people from withdrawing money from their own accounts. The decision to mark fingers of all customers with indelible ink to prevent repeated money exchange is like burning the house to catch a rat. This is going to put the public in more difficulty now,” D Thomas Franco, vice president, All India Bank Officers Confederation, told The Indian Express in Chennai.
A government official in Delhi said the plan was to disburse the ink to banks from Tuesday night. He said that it would be applied on fingers of the right hand of customers to “ensure there was no confusion during the elections coming up in many parts”, when indelible ink would be applied on the forefinger of the left hand of voters.
“It is the same ink used by the Election Commission of India,” said the official. Finance Ministry officials, however, did not provide a clear answer on specific queries regarding how a person having the ink mark would be able to exchange currency notes on other days.
The indelible ink is manufactured and supplied by MPVL in association with the Election Commission, the National Physical Laboratory, which devised the chemical formula, and the National Research Development Corporation. The ink contains silver nitrate, which stains when exposed to ultraviolet light.
“We are expecting orders for 5-ml bottles of the ink from the banks. There will be a strain on our manufacturing capacity because we were not prepared. During elections, we have a lot of time and are well-prepared. Now we have to procure the raw material and start production immediately. We have to take stock as production progresses,’’ said Harakumar.
According to the MPVL official, banks approached the company under the assumption that there would be stocks readily available. “We are looking at starting production at 6 am on Wednesday. We have sought additional manpower. We will start dispatching the ink by tomorrow evening to the banks,’’ said Harakumar.
At least 77 per cent of the production at MPVL is of indelible ink but the company also earns revenues from coatings and primers. For the general elections in 2009, MPVL produced 20 lakh 10-ml bottles of the ink. In 2014, when the last general elections were held, MPVL produced 2.3 crore kg of indelible ink and reported an annual revenue of Rs 47 crore. Last year, the company sold 1.21 crore kg of ink to post a revenue of Rs 25 crore.
The ink has also been used in pulse polio programmes in India and other countries and is sometimes used in hospitals to mark cancer-affected parts of the body.
In Delhi, Economic Affairs Secretary Das also said that the government was keeping a “close watch” on deposits in Jan Dhan accounts as, in many cases, such accounts are being misused for deposit of black money. Many Jan Dhan accounts are reportedly getting deposits of Rs 49,000, against the limit of Rs 50,000.
In Chennai, bank officers’ representative Franco said that the Economic Affairs Secretary had no authority to take the decision on using indelible ink. “Such decisions should come either from the Reserve Bank of India or the finance secretary… How many marks would bank staff put on customers who exchange the limited amount in two or three stages?” said Franco.
A government official said that the department of financial services and a team of experts were preparing a draft standard operating procedure on usage of the ink. “This will be circulated hopefully by tonight. This should clarify how a person can exchange old currency multiple times,” he said.
According to the finance ministry, the government has also set up a high-powered group under the Cabinet Secretary to monitor the supply of essential goods on the lines of the task force to monitor circulation of fake currency notes in vulnerable areas.