Demonetisation Hiccups

The New Mysore Printed Notes

Mysore’s bank note printing line is of recent vintage, though the press has been around for several decades.  Despite its limited capacity to churn out notes, the Narendra Modi Government decided to use it to churn out the new Rs 2,000 and Rs 500 notes as it was supposed to be one of the most secured printing locations, manned by staff who could be counted upon to keep a secret. Next to it was a security note manufacturing plant set up in collaboration with the European security printing giant De La Rue.

The historical town also had a small, sleepy airport which could be used to fly aircraft to ferry the notes to major centres where RBI had currency chests. However, this need to keep secrecy mean that only 48 crore Rs 2000 notes and an equal number of Rs 500 notes could be manufactured and printed in the four to five months that led up to the sudden demonetisation of the money.

The total value of the new notes printed being just Rs 120,000 crore. The problem that the Government faced was that when it demonetised all Rs 500 and Rs 1000 notes, it sucked out some 86 % of all money in circulation in the country. With some 16 lakh crore rupees worth of money in circulation, this meant that 13.76 lakh crore rupees was being sucked out.

The replacement money was just not in place to take care of the huge demand.

Till now banks have been able to dispense just about Rs 50,000 crore worth of money.  Except a few top officials in North Block, the prime minster,  the finance minister and home minister, as well as the RBI Governor, very few officials were kept in the loop.

Officials who were in the know seemed to have been in a hurry to get the scheme going instead of taking stock of the logistics which needed to be worked out for such a huge operation. Hopefully in the weeks ahead things will improve as more security presses including Bengal’s Salboni are pressed into action.

The secrecy again meant that not too large a stash of extra Rs 100 notes could be printed and kept in storage. Added to that was the imperative of another decision prompted by intelligence inputs that Rs 100 notes too had been counterfeited by the secret service of a neighbouring country. “It has been decided in principle to replace all notes in  a gradual manner,” said officials. Some 6-7 % of all Indian notes in circulation are believed to be counterfeit, and this was probably the driving reason for the note replacement excercise. 

For the ordinary citizen of course to the `pain’ of sudden demonetisation, was the added discomfort of non-functional automatic teller machines. Again secrecy meant banks were not told to recaliberate ATMs which dish out notes to recognise the new notes.

All ATMs in India need to be calibrated afresh to recognise the new notes by  their weight, dimensions, design, and security features. Bankers say this could take over a month to complete as some 2 lakh ATMs will have to be worked on. Finance Ministry is working to a deadline of 3 weeks.

The recaliberation, Which would involve readjusting the cash trays, or cassettes, and the software running the machines, has to be done by technicians and takes about 4 man hours of work on each ATM. This translates to some 8 lakh man hours of work. With security cleared technicians in short supply, this means long work hours and the possibility of the 3 week deadline being missed, admit officials.

Till then, as consumers of money, citizens will have to grin and bear the “pain”.