Is Modi winning fake currency war? A data you shouldn't miss

A discussion on fake Indian currency notes (FICN) has been doing the rounds, especially since demonetisation. While the quantum of fake notes in circulation remains difficult to ascertain, data on the detection of fake notes by the Reserve Bank of India (RBI) throws some light on the possible range. The RBI put the figures of fake notes in FY17 at Rs 43.47 crore in its annual report released on August 30. This amount includes all denominations.

On the other hand, an analysis of the data released by the RBI on the detection rate of fake notes of Rs 500 and Rs 1,000 denomination scrapped notes in a nationwide sample survey, also published in the annual report, suggests it was Rs 18.97 crore between November 8, 2016 and March 31, 2017. The third data point comes from a query answered in the Lok Sabha by the Minister of State for Finance on February 3, 2017, which put the value of fake notes detected after demonetisation at Rs 19.53 crore. This data point is for banned Rs 500 and Rs 1,000 notes.

Apart from these, the National Crime Records Bureau detected Rs 11.23 crore worth of fake currency notes across all denominations after demonetisation till July 14, 2017, according to a Parliament query.

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Counterfeit Currency: Detection and Estimates

FICN estimates from RBI sample survey

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Demonetisation hit RBI's seigniorage, increased printing cost: SBI Research

Demonetisation has caused a net loss to the Reserve Bank of India's (RBI's) seigniorage -- the profit accruing from currency issuances and liquidity operations -- besides increasing the cost of printing notes, says an SBI Research report.

On November 8 last year, the government had banned old Rs 500 and Rs 1,000 notes in an attempt to weed out black money in the country. The old notes were allowed to be deposited in banks, with unusual deposits coming under income tax scrutiny.

"The demonetisation exercise has resulted in net loss of seigniorage to the RBI," SBI's research report Ecowrap said.

"In the current case, there is a seigniorage loss, as the face value of Rs 15.28 lakh crore (15.28 trillion) of Rs 17.10 lakh crore (17.1 trillion) has been printed," it said.

The report further said that "the cost of printing notes and coins has increased during this year".

In its Annual Report for 2016-17, RBI has said that post demonetisation, it has spent Rs 7,965 crore on printing new Rs 500 and Rs 2,000 and other denomination notes, more than double the Rs 3,421 crore spent in the previous year.