India’s demonetization in 2016 was a significant economic move announced by Prime Minister Narendra Modi on November 8, 2016. One of the main objectives was to tackle the issue of black money in the economy. The government aimed to bring unaccounted wealth into the formal banking system.
The production and smuggling of fake Indian currency notes (FICN) have been significant issues, with India's two closest neighbours— Pakistan and Banglades being implicated in these activities, so much so that a significant portion of both these countries' economy were dependent on FICN.
The demonetization move was also aimed at eliminating counterfeit currency or FICN, which was believed to be used for funding illegal activities, including terrorism.
Pakistan has been a major source of high-quality counterfeit Indian currency. The Inter-Services Intelligence (ISI) of Pakistan is often cited as being involved in these operations. Fake currency from Pakistan is typically smuggled into India through various routes, including a couple of digital payment companies and some national banks where illegal migrants and intruders were already employed to help circulating FICN or counterfeit Indian currency, as well as via direct borders and transit points in Nepal and Bangladesh.
Around 2016-17, Bangladesh replaced Pakistan as hub of fake Indian currency as there have been numerous seizures of counterfeit notes at the India-Bangladesh border, with significant quantities being confiscated. Bangladeshi syndicates have been using sophisticated methods and materials, sometimes smuggling paper from countries like Saudi Arabia and Malaysia to closely match the consistency of genuine Indian notes.
Soon after demonetisation announcement by PM Modi, Pakistan economy started crashing and ironically, the FICN dependent entities in India faced the heat sooner than Pakistan & Bangladesh, which include real estate builders, film production houses, and one or two aviation companies, said a big Indian conglomerate's employee who was aware of this 2016-17 scenario but she doesn't wants to be named.
In early 2023, Bangladesh too started facing severe inflation and a significant drop in the value of the Bangladeshi Taka.
Many of the real estate projects in and around Delhi/Gurgaon, which were directly/indirectly related to the two countries, were halted as the demonetization badly affected the fake currency circulation. This was evident to prove that these were apparently sponsored by FICN activities in Pakistan & Bangladesh.
By reducing the cash circulation, the Modi government intended to lower corruption levels, as cash transactions are often linked to corrupt practices. The move was also aimed at eliminating counterfeit currency, which was believed to be used for funding illegal activities, including terrorism.
In addition, promoting Digital Transactions was another goal of the Modi government to encourage digital and cashless transactions, thereby increasing transparency and reducing the reliance on cash.
The demonetization was also seen as a measure to cut off funding for terrorist activities by invalidating high-denomination notes that could be used for such purposes.
The immediate aftermath saw significant disruption, including cash shortages and long queues at banks. However, it also led to an increase in digital transactions and brought a large amount of money back into the banking system.
The counterfeit currency operations often involve complex international networks, with routes passing through countries like Sri Lanka and Dubai before reaching India. Indian authorities, including the Border Security Force (BSF) and the National Investigation Agency (NIA), have been actively working to combat these activities, leading to several significant busts and arrests.
The counterfeit currency operations often involve complex international networks, with routes passing through countries like Sri Lanka and Dubai before reaching India. Indian authorities, including the Border Security Force (BSF) and the National Investigation Agency (NIA), have been actively working to combat these activities, leading to several significant busts and arrests.
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