At 45 mn Rs 500 Notes a Day, It Could Take Months For Normalcy

Remonetisation could take months as printing Rs 500 notes is insufficient, report Chandan Nandy & Mayank Mishra.

Remonetisation could take months as printing of Rs 500 notes is insufficient. (Photo: Liju Joseph/ The Quint)

As of today, the four printing presses operated by two companies of the Reserve Bank of India and the Finance Ministry are together producing only 45 million pieces a day of the new Rs 500 notes amounting to a total face value of Rs 2,250 crores, The Quint has conclusively established.

This assumes significance in the context of reports that printing of the new Rs 2,000 was stopped at least 12 days ago at the Salboni (West Midnapore in West Bengal) and Mysuru printing presses operated by the Bharatiya Reserve Bank Note Mudran Pvt Ltd, a wholly-owned subsidiary of the RBI.

A national daily today published a report claiming that the central government’s expectation is that in the “coming 20 days (the remaining period of Prime Minister Narendra Modi’s 50-day patience notice), the position will be such that the economy would not suffer for want of currency.” The report goes on to claim that printing at “the government and the RBI presses was between Rs 12,000 crore and Rs 15,000 crore a day.”

Also Read: Check Your Wallets: Chances Are Your New Rs 500 Note is Defective

Cumulative Figures

The Quint double-confirmed from its sources in the RBI and the Security Printing and Minting Corporation of India Ltd (SPMCIL), overseen by the Finance Ministry, that the Nashik, Dewas and Mysuru and Salboni presses were producing 8 million, 12 million and 25 million (Mysuru and Salboni together) pieces of the new Rs 500 notes per day, respectively.

Also Read: Did a Corrupt Deal Result in Purchase of Glitchy Currency Machine?

(Infographic: Rahul Gupta/ The Quint)

Printing of Lower Denominations Stopped

The Quint has reliably learnt that fresh printing of the Rs 10, Rs 20, Rs 50 and Rs 100 notes have stopped completely since the Modi government accelerated the pace of the printing of the Rs 2,000 and Rs 500 notes. While printing of the Rs 2,000 notes began early October, the operation to print the new Rs 500 notes, including millions of flawed ones, began in early November.

When contacted, an RBI spokesperson said: “We don’t respond to such queries.” Likewise, a Finance Ministry spokesperson declined to comment when asked specifically about the situation arising out of the printing of the new Rs 500 note.

Also Read: Note Ban: Weak Imported Security Threads In Rs 2,000 & 500 Notes

The Calculation

Here is the math for the total value of the two high-value new notes printed so far: Assuming that printing of the new Rs 500 notes began on 1 November, in 42 days the total value stands at Rs 94,500 crore. The value of the total currency (both Rs 2,000 and Rs 500) is Rs 5.34 lakh crore. This includes days when work would have stopped for recalibration of machines at Mysuru and Salboni and time taken for fixing breakdowns, which has been quite frequent at all the presses.

If this is the rate of production of the new currency notes (to fill the massive vacuum created after Rs 15.4 lakh crore or 86 percent of the money was pulled out as a result of Modi’s demonetisation move), it may take several months to fully remonetise.

An earlier report by The Quint had given a calculation that it could take 175 days to bring the situation to full normalcy. But that calculation had taken into account continuous production of the new Rs 2,000 notes.

Also Read: Demonetisation: Corrupt Deal Disrupted Printing of Rs 500 Notes

Importing Currency Printing Paper

The same national daily also reported that the government has approached at least nine foreign companies, including a few that had previously been blacklisted for their acts of “commission and omission”, to supply 20,000 tonnes of currency printing paper. However, sources familiar with import of security printing paper revealed that it could take as much as three months for the supplies to reach India. Add to this the additional production time, which will further prolong the mammoth printing and distribution exercise.

A well-placed government source said that the government is “sinking into a quicksand even as it is trying to juggle numbers to show that the task of full remonetisation will be complete by Modi’s 50-day deadline.”

Also Read:
Govt Denies Rs 500 Note Printing Halted Amid Massive Shortfall
Security Scandal: New Rs 500 Note Is Vulnerable to Counterfeiting