With the Covid-19 pandemic compelling a national lockdown and social distancing, the entire population has resorted to hand-washing, mask-wearing, and even glove-wearing in the case of shop counter personnel and machine and device operators. At the same time, there is no shortage of poor and superstitious behavior with entire buildings, housing societies, and gated communities restricting the distribution of daily newspapers.
In the more sensible states such as Kerala, daily newspapers continue to be printed and distributed in high numbers. The major widely circulated dailies are said to be maintaining circulations at levels such as 90 and 95% (although ad revenue has declined). Many homes with children have designated a particular time every day for children to read the dailies. However, in an odd anomaly, in places such as Mumbai, newspapers are allowed to be printed but not distributed.
On the other hand, in some North Indian urban communities, newspaper deliverymen, while allowed to deliver the papers that are still being printed (albeit with few ads and fewer pages), are being stopped at the gates from distributing these. Livelihoods are lost as a single multi-story building can have as many as 140 flats, and printed dailies wasted. This behavior applies to Eastern India as well. The irony of the matter is that the same flat and society residents continue to handle milk pouches and even currency notes, known to have passed through multiple unknown hands.
Plastic currency notes?
This brings about the question of plastic currency notes that have been discussed from time to time by the Indian government only for plans to introduce these shelved repeatedly. Apart from adequately produced plastic currency being harder to counterfeit, thus far, there have no reports globally of polymer-based notes being counterfeited. Having a longer shelf life than paper-based currency, of approximately 10 to 12 years, they are washable in mildly hot or warm water, which could make them substantially more hygienic as well.
Australia launched the first polymer banknotes in 1988, a substrate and process since adopted by more than 30 countries since. Indonesia, Thailand, Malaysia, New Zealand, Kuwait, Nepal, Bangladesh, the United Kingdom and Sri Lanka are among the countries that started with commemorative polymer substrate banknotes and subsequently replaced the paper-based currency with polymer notes.
Security in printing and security in destruction
Fibrous polymer substrates for printing commonly have at least three levels of security to prevent counterfeiting and are also not easily if at all tearable. They have effectively replaced cotton-based paper with a security thread, in many countries. Significant cost-savings have accrued since the notes last from three to four times longer than the 4 to 5-year life-cycle of paper-based currency. In addition, the proponents of plastic-based currency claim that these substrates can be recycled.
Since paper-based notes are easily soiled and torn, there is a massive annual cost in India of citizens returning them to the Reserve Bank as well as the cost of securely destroying these notes. While automated systems are now available for the systematic and accountable destruction of soiled banknotes, it is not yet clear whether the RBI has adopted these methods.
Currency printing politics
In September 2009, the Reserve Bank of India announced that it would introduce one billion ₹ 10 notes on polymer-based substrates. There were reports that market research and trials were also held in several cities and towns ostensibly to evaluate ‘climactic factors.’ Even with the great opportunity of demonetization when a large number of newly designed and printed notes were produced, nothing has happened on the polymer-based production of currency notes in India.
At the time, the announcement was followed by press reports that the RBI was conducting market research in select towns, and that trials were being held in Bhubaneshwar, Jaipur, Kochi, Mysuru and Shimla, to evaluate the climatic factors on the use of the new plastic currency.
Regrettably, no further progress has been reported in the last decade, and demonetization, although an opportunity to introduce new technology, has likely delayed it further. The notes are made from polymers such as biaxially oriented polypropylene (BOPP), for which Indian manufacturers have the latest technology and are significant producers and exporters.
Cash will have to remain king
Even with a lot of talk about digital cash-less transactions, currency notes are vital for a diverse cash economy such as India. There are many issues in currency printing, such as the design and production for security against counterfeiting, the secure destruction of the spoiled and worn currency, and the introduction of polymer-based notes in a gradual manner.
The entire life-cycle cost, as well as the costs of security and ease of use costs, need to evaluated by an integrated government team. Otherwise, counterfeiting will continue to undermine the country’s economy, and safety and progress will again be hindered by one department or the other not being a stakeholder in an important national project. The introduction of plastic-based currency is of concern to the greatest majority of the population.