Counterfeit wars

India’s fight against the fake currency racket isn’t getting any easier. Counterfeiters hitherto had limited printing facilities which made it easier to detect fakes. But lately, they have been attaining a level of printing sophistication that can almost easily pass off as genuine. In 2007, over Rs 10 crore were seized by the authorities, up from Rs 8.4 crore the previous year. But the malaise runs deeper as many fakes go undetected. Says Dr Soumendra K Dash, chief economist, Care Ratings: “The fake currency in circulation affects the economy.”

One of the ways in which the government can tackle the crisis is to encourage the use of plastic money. Says Dash: “A long-term solution is to give people some incentive to use plastic cards and make cashless transactions.”

Another problem is the denomination of its currency. In the United Kingdom, the maximum denominated currency is £50, while in the United States it is $100. A higher denominated currency makes it easier for counterfeiters to move currency and affect the economy more. Should the government do away with higher denomination notes? Says Dash: “It can help decrease the intensity of the problem.”

—Clifford Alvares