One of the stated aims for demonetisation of Rs 500 and Rs 1,000 notes was to curb the circulation of fake currency in the Indian economy. Earlier this year, the Union Home Ministry had informed the Parliament about the increasing accuracy of fake notes, which had led to a significant dip in their recovery over the past three years. The report pointed out nearly 30 per cent dip in the recovery, from Rs 42.90 crore in 2013 to Rs 30.43 crore in 2015.
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In Maharashtra, one of the most industrialised states which is also on the target of terror groups, the dip in the recovery was recorded by nearly 76 per cent from Rs 6.07 crore in 2013 to Rs 1.44 crore in 2015.
In India, currency worth Rs 14.3 lakh crore is estimated to be in circulation.
Though the government had not made public the estimated total value of fake currency in circulation, the Reserve Bank of India’s annual report last year had detected 5.9 lakh counterfeit notes which made up 0.0007 per cent of the total 8,357.9 crore currency notes in circulation.
There are two ways that fake currency is weeded out of the system. One is recovering the notes from the banks when deposits are made. The other is through police-led seizures.
Maharashtra has had the second-highest recovery of fake currency after Delhi in 2012 and 2013. In 2015, it lost its place to Uttar Pradesh.
In 2013, a total of Rs 6.07 crore fake money was recovered in Maharashtra of which Rs 4.51 crore was recovered through banking system and Rs 1.55 crore was recovered by the police.
In 2014, the number dipped to Rs 5.98 crore of which Rs 4.18 crore was recovered by banks and Rs 1.75 crore by the police.
By 2015, the number dipped to Rs 1.44 crore with banks recovering only Rs 49 lakh and the police recovering Rs 95.77 lakh.
As many as 250 out of every 10 lakh notes in circulation are fake, according to a study conducted by the Indian Statistical Institute. The study revealed that fake notes with a face value of Rs 70 crore are infused into the system every year, and law enforcement agencies are able to intercept only a third of them — a fact acknowledged by the agencies.