India to produce currency paper at Mysore

MYSORE - India is setting up a mega currency paper mill here in Karnataka to become self-reliant in printing currency notes and check circulation of fake ones, Finance Minister Pranab Mukherjee said here Monday.

“For a vast and growing country like India, self-reliance in the manufacturing of currency notes is of strategic importance,” Mukherjee said after laying the foundation stone for the Rs.1,500-crore paper plant at the Bharatiya Reserve Bank Note Mudran Pvt Ltd, a subsidiary of the central bank.

Mysore is 150 km from state capital Bangalore.

Noting that the ratio of currency to the country’s gross domestic product (GDP) had increased marginally to 13 percent from 12 percent nearly six decades ago (1951) despite quantum jump in population and economic growth rate, Mukherjee said the indigenisation process of printing currency from paper to notes would be a significant milestone.

“The benefits of such an integrated project are manifold, assuring the people timely supply of crisp notes, cost savings, security and employment generation,” Mukherjee said after flying into the state’s cultural capital from Bangalore by a chopper along with Reserve Bank of India (RBI) Governor D. Subba Rao for the event.

Expressing concern over the increase in the circulation of counterfeit notes from across the border, the minister said self-reliance in currency paper production would act as a deterrent to counterfeiting, which was detrimental to the country’s economy and security.

“To put an end to this menace of counterfeit notes from across the border, it has become necessary to produce the currency paper indigenously and print notes that cannot be duplicated,” Mukherjee pointed out.

Rao, who was present on the occasion, said since the central bank was established 75 years ago, the value of notes in circulation had increased to about Rs.700,000 crore in 2009 from a mere Rs.172 crore in 1935.

“India is the largest producer and consumer of currency notes in the world after China. Though the entire quantity of currency notes required is printed in the country, we produce hardly five percent of the banknote paper from Hoshangabad security paper mill in Madhya Pradesh,” Rao noted.

The RBI also plans to soon introduce polymer notes in five cities, including the four metros, on a pilot basis and extend it to other cities subsequently.

The RBI, which printed 15 billion notes from four security printing presses located across the country last fiscal (2008-09), has indented for 17 billion notes this fiscal (2009-10), requiring a whopping 18,000 metric tonne of banknote paper, mostly from overseas.

“The requirement of notes and demand for currency paper is projected to go up in a growing economy,” Rao said, adding, “We need to alter this position and the 12,000-metric tonne Mysore plant will be a state-of-the-art production unit, showcasing the best international quality and security standards.”

Of the four high-security presses, the central government owns two currency note printing presses and the RBI the other two through its subsidiary.

The government-owned presses are at Nashik in Maharashtra and Dewas in Madhya Pradesh. The other two presses are at Mysore and Salboni in West Bengal.