In fact, no currency is under more constant attack from counterfeiters than US$. Most money changers across the world know this. Few shops and establishments outside the US readily accept a cash $100 or $50 bill from a customer. Only last week, The Washington Post carried a long news feature on how Peruvians make the finest counterfeit money in the world after the US Secret Service announced the largest successful seizure of operational counterfeit currency in its history, amounting US$30 million, in a raid. Diplomatically, Peru to the USA isn't what Pakistan is to India. The South American country cooperated with US secret service agents. However, the raid and recovery of such a large amount of counterfeit US dollars is unlikely to have a big impact on the counterfeiters in Peru or elsewhere. It was reported that “the product is carefully created in rural facilities throughout the Peruvian countryside using cheap labor, then hoarded in stash houses controlled by violent gangs in Lima. Once there, the goods are packed into parcels, loaded onto planes or hidden inside luggage, pottery, hollowed-out Bibles, sneakers, children’s toys or massive shipping containers bound for major U.S. ports of entry, such as Miami.” According to the US Secret Service, the ultimate destinations of these counterfeit US$ are generally New York, New Jersey, Boston and cities in the Northeast. The illicit trade bears an uncanny resemblance to narco-trafficking. Currency faking is a big underworld business around the world. High value Euro, British Pound Sterling, Russian Rouble and even Japanese Yen and Korean Won are not spared.

While few will disagree with Prime Minister Narendra Modi that the government must act against the menaces of black money, fake currency and the use of such unaccounted funds to support terrorism and extremism in the country, yet the government’s extreme action demonetising high value Rupee currencies has not gone down well either with opposition parties or the generally net-banking ignorant common man. The claim that a digitised economy is an answer to these menaces is biased in the context of the growing threats from cyber criminals and data hackers. Only last week, a net savvy media organisation employee, having savings account with the nationalised Canara Bank branch in Delhi’s Janpath, found his account was hacked three times within a period of a few minutes using Alibaba-backed Paytm, before he got his credit card blocked and went from pillar to post to unsuccessfully lodge a FIR with the Delhi police. Though totally unconnected with this incident, the mobile wallet company Paytm suddenly suspended, last Friday, its app that allowed small shopkeepers to accept payment through cards amid ongoing cash crunch, citing risks to customer data and privacy.

Incidentally, demonetisation, last practised by a few countries in the 1980s and more recently by North Korea, mainly to fight the black money menace, had all failed. The worst experience of demonetisation was witnessed in the former USSR, when Mikhail Gorbachev took the action to withdraw large Rouble notes from the market that ultimately added to the problems leading to the Soviet Union breakup. Also, the oil-rich Nigerian economy nearly collapsed in 1984 after its demonetisation to curb black money-fed black market. No large democratic country has shown the courage of imposing demonetisation to curb black money and counterfeit currency though these economic evils are almost common around the world. If the action succeeds in India, where big unaccounted money is only in the hands of less than 10 per cent of its total population of 130 crores, the practice may gain ground elsewhere.

Unfortunately, the sudden currency demonetisation has caused immense suffering to India’s majority poor, lower middle class and nearly illiterate rural populace to whom cash has been the king for centuries. Advising them on mobile and electronic banking could be waste of words. They need education and decent daily income, dependable banking facility, electricity, mobile interconnection guarantee to avoid call drops, and, equally important, data security that will protect their accounts from hackers. Growth of digital economy has given rise to hackers and fraudsters. Lately, researchers backed by NASA have come up with a way to use quantum physics to make the internet secure.

On record, it is not the first time that the Indian government has demonetised high value currencies. The Reserve Bank had earlier withdrawn Rs. 10,000 notes from circulation. Small coins upto 50 paise have all slowly disappeared from the market. No one complained. Because, they had little utility value to the common man. But, this time, the demonetisation of Rs.1,000 and Rs.500 notes have hurt them all mainly because of the constant pressure of inflation since 2009 that severely devalued the buying power of Rupee. For instance, today a Rs.100 note can’t get even a litre of packaged cooking oil. A domestic cooking gas cylinder costs over Rs. 500. In the absence of reliable healthcare from the government, most people are also forced to save cash to pay for medical emergencies. Private doctors, clinics and hospitals accept nothing but cash, even after the current demonetisation. For these healthcare professionals, the demonetisation has little impact on their cash collection and, also, black money generation. (IPA Service)