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DEMONITISATION : Impact on fake


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Demonitisation is a step taken by
the Central Government of a country to discontinue a particular currency
circulating in the economy.

The history of Demonitisation is
very diverse. Many countries such as Ghana (in 1982), Nigeria (in 1984),
Myanmar (in 1987), North Korea (in 2010) have tried Demonitisation in the past.
Some succeeded in their objective and some failed disastrously.

Mainly Demonitisation is carried
out with the objective of removing black money and counterfeit currency from
the economic circulation. This will further break down the growth of terrorists
and naxalites in the country who are totally depended on counterfeit or fake
currency for their livelihood as well as operational purpose.

As this paper mainly focuses on
the Demonitisation that took place in India last year and its practical impact
on fake currency, I will firstly like to give a brief summary on what happened
in the country on 8th November 2016 and its following 50 days.



Fake currency were always been
used by the non-social parties to exploit the backward and economical people of
the country. Hence, one of the major aim of Demonetization was elimination of
counterfeit currency from the country. In this paper it will be analysed to see
whether this objective got accomplished or not after the decision of

The purpose of writing this paper
is to study about the fake currency circulating in the country, their sources
both in and outside the country and what deathblow demonetization really gave
to it. Moreover, this paper helps me to analyse the reality on what media and
experts says on this issue.


forward or A step backward

8th November  2016 is the date that every citizen of India
will not forget for decades. Specially the black money holders, terrorists and
corrupted people of India. On the very same day at 8.00 p.m, our Honourable Prime
Minister Sri Narendra Damodar Das Modi gave a huge surprise to the country with
his one liner while addressing the countrymen. His one liner was :

” Aaj raatri 12 bje se vartmaan me
zaari 500 aur 1000 rupaye ke note legal tender nahi rahenge.”

This initiated Demonetization in
India which proved to be a historic as well as drastic event for the people.
The citizen of India were under huge pressure to exchange and deposit the
currency which were banned. And why not, afterall the banned denominations of
500 and 1000 consists nearly 87% of the total currency circulating in the

Look at the below presentation :-


It is clear from the above
presentation that the Demonetization in 2016 was really a bold decision that
our government has taken. But what are 
the various issues that forced our leaders to implement such an action?
Turning India into a digital and cashless nation were the secondary causes,
while primary causes being against black money and elimination of fake currency
from our system.

People were aware of the fact that
after this Demonetization drive, their wallets will have all the genuine
denominations. But the immediate consequences of this so called surgical strike
was miserable. No legal cash in the pocket, ATM’s devoid of money, banks
providing only limited cash, all these have effected millions of ordinary
citizens, ruined thousands marriages and even causing death of few.


FAKE CURRENCY : The biggest reason
behind PM’s masterplan

Firstly, look at this data of how
much FICN (Fake Indian Currency Notes) was seized by RBI and law enforcement
agencies from year 2011 to 2015 which results in Demonetization in the year

FICN notes seized between 2011 and 2015






Value in crore (Rs)


Value in crore (Rs)


3.8 lakh





5.3 lakh


1.65 lakh



4.29 lakh


1.94 lakh



2.9 lakh


1.46 lakh



2.61 lakh


1.58 lakh



18.9 lakh


7.64 lakh



The above data clearly reveals
that 99,050 notes of 1000 and 3.8 lakh notes of 500 were seized in 2011 alone.
And the number somehow keeps on increasing or decreasing over the years.

Also more than 26.5 lakh fake
notes of the denominations of Rs. 500 and Rs. 1000 with a face value of nearly
Rs. 168 crore have been either seized or recovered by Reserve Bank of India
(RBI) and other agencies in India from 2011 to 2015. There is no doubt that
Rs.100 and Rs. 50 fake notes are also in circulation. But its just nearly 3% as
compared to the FICN in Rs. 500 and Rs. 1000 denominations.

These fake currency notes are
mostly used for terror related activities which disturbs a country’s peace and
economy on a large scale. In short, fake currency is really a threat to any
country in various aspects. According to various reports, it is found that the
smuggling of FICN to India occurs from its neighbouring countries which
includes Pakistan, Bangladesh and Nepal. The evidence behind this fact is the
quality of FICN which clearly indicates that they can only be made in currency
making machines, which are available only with sovereign states.

Various previous reports also
confirms that in more than 90% cases, fake notes of Rs. 500 were traced to
Pakistan. There are various sophisticated presses located in Pakistan where
high quality currency notes are being printed. Moreover, high quality

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