More than 3 lakh Fake notes seized since Demonetization

As per data shared by the government in the Lok Sabha recently, more than 3 lakh fake notes were seized after demonetization. More than 60% of the fake notes were seized from Delhi & Gujarat.

One of the stated goals of demonetization was to reduce the fake currency in circulation. During his address to the nation when he announced demonetization, the Prime Minister mentioned the issue of fake currency multiple times and how demonetization was aimed at fighting fake currency among other things. Even the Finance ministry in its press release on the same day spoke about the menace of fake currency and demonetization as a step to counter the same. But how much fake currency was detected after demonetization?

More than 3 lakh Fake notes detected after demonetization
As explained in one of our earlier stories, the RBI has issued detailed instructions on the process to be followed when fake notes are detected. As per data shared by the government in the Lok Sabha recently, a total of 3,06,808 fake notes were seized across the country in the period between 09th November 2016 & 31st December 2017. This is not very different from the total number of fake notes seized in the year 2016. A total of 2.82 lakh fake notes were seized in the year 2016.More than 39000 fake notes of Rs 2000 denomination were seized during this period. The most number of fake notes seized (more than a lakh) were of Rs 500 denomination. More than 74000 fake notes of Rs 1000 denomination, which is no more legal tender, were also seized during this period.

Delhi & Gujarat accounted for more than 60% of all the seized fake notes
Of the states, Delhi & Gujarat together accounted for more than 60% of all the seized fake notes in the country in the period between 09th November 2016 & 31st December 2017. While Delhi accounted for 37.3%, Gujarat accounted for 23.6% of the fake notes seized. Only two other states (Andhra Pradesh & Kerala) accounted for more than 5% each.In fact, more than 90% of the Rs 1000 fake notes seized during this period were from Delhi & Gujarat alone. Only in the 3 states of Gujarat, Mizoram & Uttar Pradesh, more than 5000 fake notes of Rs 2000 denomination were seized. In the case of Mizoram, almost 80% of the seized fake notes were of Rs 2000 denomination. Gujarat was the only state from where fake notes of Rs 200 denomination were seized during this period.

How does it compare with previous years?
The RBI’s annual report has data on the number of fake currency notes detected and the reporting time period is the April to March cycle (financial year). The National Crime Records Bureau (NCRB) also started publishing data on fake notes, but only from 2016.  The NCRB’s reporting time period is the January to December cycle (calendar year) and has data on the number of notes seized.

The RBI data from 2014-15 to 2016-17 points to an increasing trend in the detection of fake notes. The increase in 2016-17 could be on account of demonetization. Curiously, there also appears to be discrepancy between the data published by RBI & the NCRB. For instance, NCRB reported the seizure of only 2.82 lakh notes in 2016, while RBI data for 2016-17 reports a detection of more than 7 lakh fake notes.