Minting, printing and counterfeiting

Abstract

Last week RBI announced it will be removing all pre-2005 notes from circulation fairly soon. That prompted me to dig out the speech I gave at an RBI Annual Retreat in early last September in Agra. What follows is relevant excerpts of that speech, with slight modifications. At the outset, let us recognise that there is not one rupee crisis at present but actually two. Reflecting the excessively outward orientation of both India Inc and the financial media, the focus has been on the recent, sharp decline in the external value of the rupee.

Unfortunately, the far bigger crisis pertains to the rupees internal value, the decline in its domestic purchasing power. More specifically, there are insidious problems in the payments system, manifest not just in the flight to gold, but in the disappearance of coins, and the counterfeiting of notes. To coin an acronym, I will call this the MPC issue. To most of you this acronym would bring to mind the Monetary Policy Committee. I shall instead use it to refer to something else, generally ignoredminting, printing and counterfeiting. MPC entails huge costs that are seldom analysed. Read more at: https://www.financialexpress.com/archive/minting-printing-and-counterfeiting/1220851/