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NEW DELHI: Law enforcement agencies in India are finding it hard to check the growing menace of terrorism, which is funded by fake currency.
According to some estimates, US$51 billion worth of counterfeit currency is currently in circulation in India.
The threat is being labelled as “Economic Terrorism” because of its close ties to terrorism.
Alarmed over the Indian central bank's shocking estimates and some well-publicised police arrests, the government has issued new measures.
On August 28, the government decided to phase out the 1000 and 500 rupee bills of the 1996 series and replace them with the new ones of the 2006 series, with added security features.
This was done following the latest scam, where a government owned bank was used to systematically push counterfeit currency into the open market.
The counterfeit notes used the same serial numbers as genuine ones in the bank, which indicated that the fake currency printers were told which serial numbers to use.
Analyst Kapil Kak said: "The aim is very clearly to weaken the economy (of India) and expose certain vulnerabilities. There is no greater vulnerability than currency because all of us handle currency on a day-to-day basis.
“The problem is a live one and we will have to evolve mechanisms both at the global, regional and national level (to counter it)."
Police sources said that counterfeit currency has close links with terrorism.
Recent terror attacks have shown that all payments for vehicles purchased, explosives, and rents for apartments were done by cash transaction by terror suspects.
India's intelligence agencies have long accused Pakistan of smuggling fake currency notes into India - a charge that Pakistan firmly denies.
It is one of the issues that comes up during high-level meetings between officials of both countries.
Said Kak: "A Talibanistan has been formed de-facto (on Pakistan-Afghanistan border).
“The moderate elements east of that within Pakistan including India, and also west of that Talibanistan in Afghanistan including US and other regional players are worried because this is a virus which can spread. And if it does, it can pose huge security challenges to the countries involved."
It is also possible that India's 12 per cent inflation could be a result of the black market transactions in which fake currency is being used.
If the estimate of US$51 billion in counterfeit currency in India proves correct, that would mean that almost 25 per cent of the currency exchanging hands is fake.
Increased use of credit cards and printing polymer bank notes like those in Thailand and Israel could be solutions to this growing problem.
But in a country where more than 70 per cent of the population does not even have a bank account, it seems an impossible task.
- CNA/yb
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