Watch out, you may be holding a fake Rs 500 note

31 Jul 2009, 0438 hrs IST, TNN

Around Rs 1,69,000 crore of fake money is in the system. And it's growing. TOI looks into the growing threat.

• Last month when Maharashtra Crime Branch and Anti-terrorism Squad sleuths caught six persons with counterfeit currency worth over Rs 9 lakh, they themselves couldn't make out the difference between the fake and genuine notes. "They have 95% features of genuine notes," says an official. The provisions of the Unlawful Activities Prevention Act (UAPA) have been invoked, for the first time against fake currency.

* Zahoor Ahmad Mir of Rawalpora, Srinagar, withdrew Rs 2,000 from an ATM. He was told by a shopkeeper after his weekend shopping that the currency was fake. A frantic Zahoor rushed to the bank, the ATM of which had coughed up the 500-rupee notes. "But the bank officials refused to accept it. They suspected I had got the fake note from somewhere else," he says.

The proliferation of fake Rs 500 notes has just got bigger. You never know when you are holding one, or more. Even ATMs are disgorging them, indicating the counterfiets are so good that bankers are failing to detect them. Despite measures taken by RBI, the home ministry and intelligence agencies, the fear of the fake has grown, from Kashmir to Kanyakumari, from Gujarat to Assam.

Officials say there's a high volume of fake notes of Rs 100, Rs 500 and Rs 1,000 in the market, and that they have had limited success so far in controlling their spread. The Naik Committee, set up to assess the menace of fake currency, says counterfeit money in the range of Rs 1,69,000 crore is sloshing around the system. And just a tiny fraction of it has been seized: Rs 63 crore.

Both the government and common people are aware of the problem, but feel ill equipped to deal with it. In Chandigarh, traders, banks employees and petrol pump attendants turn suspicious whenever they get a Rs 500 note. "A petrol station attendant refused to accept the Rs 500 note I gave him and warned me about the glut of fake notes in the market," said Rajinder Singh, a resident of Sector-27. Even in Delhi, shopkeepers take extra time in accepting high denomination notes. They first hold a note against bright light and ensure that a watermark is intact.

Many in Kerala are worried over outsourcing loading of currency in the ATMs to private agencies. "My salary account is with a private bank and I also have a savings account with SBI. Lest I should get a counterfeit note, I have now started transferring money only by cheques," says A K Nair, a government employee.

"The extent of the problem can be gauged from the huge gap between actual seizures and circulation of fake Indian currency notes (FICN). Although several steps have been taken by the finance ministry and RBI, weeding out FICNs may take long," says a senior home ministry official. According to security agencies, Uttar Pradesh, Gujarat, Maharashtra, Andhra Pradesh and Karnataka have reported the maximum seizure of fake notes in recent years. The latest haul in Ghaziabad, Noida and Meerut reveal how organized gangs, said to be funded by Pakistan, have penetrated right up to Delhi's borders.

Shopkeepers' associations in Delhi are actively involved in monitoring the counterfeits, many of which come out of ATMs and banks. Says Sanjeev Mehra, president of Delhi's Khan Market Traders' Association, "Every shopkeeper has been issued a circular listing 10 ways of detecting a fake note. The local bank in the market has an officer posted for this very purpose."

Experienced shop-keepers feel the texture of the note, particularly when it's of a large denomination, and hold it under lights to see the water-mark. However, if this year's three major seizures, amounting to over Rs 35 lakh, in UP and Maharashtra are any indication, it's the quality of FICN that has alarmed the security agencies. The paper, say intelligence sleuths, is almost identical to the original, which makes their identification very tough.

The UP STF suggests most of these notes were printed in the security press at Malir Cantonment in Karachi and three other printing presses in Pakistan. Maharashtra's security agencies, too, believe that the fake notes seized by them were printed in a Pakistan government printing press at Quetta.

Fearful businessmen and shopkeepers are installing machines to check counterfeits. In Kerala, the state-run SUPPLYCO (Kerala State Civil Supplies Corporation Limited) with 12 petrol pumps has issued specific instructions to its outlets to be wary of fake notes.

But there are limitations. For instance, large business outlets that handle heavy transactions can't run a counterfeit check every time it receives cash. "During a hectic day, one can't check every Rs 500 and Rs 1,000 note," says Mujtaba Haaziq, manufacturer of signages in Panaji. "In any case, it's the government's job to tackle the problem," says Barnabe Sapeco, a well-known Panaji restaurateur.

The police say arresting the carriers has not taken them to FICN masterminds. "The carriers are briefed on a need-to-know basis and are not aware of the entire network," said a Maharashtra crime branch official. Intelligence agencies are fairly certain that the brains behind the FICN racket are sitting in Bangladesh and Pakistan. As proof, they cite the seizure of an Indian currency-minting machine in Bangladesh in 2006.

Cost of bailing out the US could soar

» Cost of bailing out the US could soar
India's GDP is in the vicinity of US$ 1 trillion and that of the US in the vicinity of US$ 14 trillion. The reason we gave you this stats was to put into perspective another number. And that number concerns the total cost of the bailout of the US financial system. Many of you must be having the US$ 700 bn in TARP (Troubled Asset Relief Program) money in mind give and take a few billion dollars. But not Neil Barofsky, the special inspector general for the TARP program, who has come up with the largest figure yet. He believes that the total federal government support to the financial system could reach a whopping US$ 23 trillion. This number, as per New York Times, would amount to US$ 77,000 for every person in the US and of course, is US$ 10 trillion more than the US GDP.

However, if reality would have been anything close to that, don't you think the global financial markets would have tanked by now? Indeed. But the fact remains that the number as per Mr. Barofsky's own admission is vastly overrated. It assumes that every bank in the US fails and also assumes that all of the assets held by money market mutual funds, including Treasury Bills, turn out to be worthless. What then is the actual number? While Mr. Barofsky does not have an answer to it, as per estimates, the US has spent less than US$ 2 trillion so far. The global financial markets can thus breathe easy for the time being. The US$ 23 trillion number was blurted out just to have a proper context.

More power deficit in store

» More power deficit in store
India has faced a lot of power problems in the past, and from the way things are going currently, may continue to do so in the future too. As per a Mint report, minister of state for oil Bharatsinh Solanki recently expressed how India will fail to meet its power generation capacity addition goal yet again this year, causing India's peak power deficit to widen to 12.6% in FY10. Yes, the power cuts and load shedding will continue to cause harm to the country's productivity. The reason? For one, coal which is used in thermal power plants as a fuel continues to be in short supply. Second, delays in supply of power generation equipment also continue to restrict capacity addition. All this has led to a situation where India is likely to add only 70% of an estimated target of 14,500 MW power capacity addition in FY10. Compare this to China, which is adding capacity at the rate of about 100,000 MW a year. India has not been able to add even 10,000 MW in any single year. Another example of how core infrastructure problems continue to prevent our country from achieving its full potential.

Hot money is leaving India...but only for now!

Hot money is leaving India...but only for now!
» Beware of P-Note backed 'hot money'
As per numbers released by the SEBI (Securities & Exchange Board of India), net FII inflows into Indian stockmarkets have crossed US$ 6 bn (approx Rs 299 bn) in 2009 so far. This is good news for those who believe that greater FII investments always act like a virtuous circle - more FII investments pull in more FII investments and so on.

Now, here's another FII-related number that might be 'bad news' for punters - the total value of Indian shares held via participatory notes (P-Notes), after touching Rs 1 trillion at the end of May 2009, has declined by around 21% YoY in June 2009. For starters, participatory notes (P-Notes) are instruments used by foreign investors or hedge funds that are not registered with the SEBI to invest in Indian securities. In short, P-Notes remain an 'unidentified' source of foreign money.
And while P-Note holders might be selling their investments in Indian stocks (as data would have us believe), we remain unsure of their motive behind this i.e., moving out of Indian stocks. After all, we have always been unsure about their real motive behind investing in India in the first place.

So, while public data might make us and you believe that the role of P-Notes in FII investments is on a decline (as the above chart also shows), we should not count out a sudden strike that these 'unidentified' source of hot moneycan have on Indian markets. At least this is what history teaches us.

China's stock market may overtake the US as the world's largest by value in 3 years

After being credited as the fastest growing economy in recent times, China is set to add another feather in its cap in the next 3 years. And what is it this time you may ask? Well, leading emerging market fund manager Mark Mobius is of the opinion that China's stock market may overtake the US as the world's largest by value in 3 years as state-owned companies sell new shares and the country's 1.4 bn people put more of their money into equities.

Equity as an asset class is holding a lot of allure for the Chinese as they are increasingly looking to increase their exposure to the stockmarkets. Also, state-owned companies are showing a new keenness in coming up with IPOs and ushering in some more private participation. As reported on Bloomberg, at present, China's market is valued at US$ 3.2 trillion as compared to US$ 11.2 trillion in the US. As far as the performance of the indices is concerned, while the S&P 500 has gained 4.1% in 2009, China's Shanghai Composite Index soared 75% this year.

Having said that, what needs to be noted is that with the brouhaha surrounding investments in emerging markets, stocks have run up considerably in China. This means that while China's stock markets may surpass the US in the future, it will definitely not be a smooth road going forward.

Govt to set up 350 food processing units in 100 days

Source: IRIS (15 July 2009)
Govt to set up 350 food processing units in 100 days
The ministry of food processing industries (MoFPI), which is powering India`s Evergreen Revolution, will help set up as many as 350 food processing units within the next 100 days as part of its target of creating 10 million jobs by 2015 at a total investment of Rs 1000 billion.

The ministry, as part of its Vision 2015 action plan, has already helped create 4.7 million incremental jobs in the last four years through several measures initiated during the term of the first UPA government. In the next five years, the ministry intends to finish the unfinished agenda of creating 10 million jobs by 2015.

The Vision 2015 targets formulated in 2005 during the term of the first UPA government included increasing India`s level of food processing from an abysmal 6% in 2004 to 20% by 2015, value addition from 20% in 2004 to 35% and share in global trade from 1.5% to 3%.

As a result of the slew of initiatives introduced by the Government of India and the MoFPI during the last five years, the food processing sector has made rapid strides and is well on its way to achieve the targets set for 2015. The level of processing has already gone up to 10% with consequent wastage of perishables coming down from Rs 580 billion a year to less than Rs 500 billion, value addition has gone up to 26% from 20% earlier and the entire sector`s growth rate has gone up to over 13% from about 7% before 2005.

To achieve the Vision 2015 targets, however, a lot more needs to be done during the next five years. The Ministry has identified as many as 13 key areas where action needs to be taken.

It has also identified nearly 100 measures that will be initiated within the first 100 days from today to facilitate and enable rapid development of the food processing sector. The Ministry believes such growth will transform India by making agriculture viable, ensuring inclusive growth and reducing mass poverty.

The Ministry`s first priority is to ensure supply of trained manpower at all levels- technicians, managers and entrepreneurs since the massive investment targeted for the food processing sector cannot be achieved without the necessary human resources.

In the first 100 days, the Ministry intends to commission a study to ascertain/identify the requirements of the industry for trained manpower at various levels. It will also prepare a blueprint for training 1 million skilled workers and 0.5 million women entrepreneurs within the next 5 years.

The Ministry will also inaugurate the first phase of the National Institute of Food Technology, Entrepreneurship and Management (NIFTEM) within the next 100 days. NIFTEM has been conceived as an apex training institution needed to build the human resources capacity necessary for supporting rapid increase in the investments in the sector.
The Ministry will also inaugurate the 1st Phase of upgraded Indian Institute of Crop Processing Technology (IICPT), Thanjavur which is taking shape as an ``International Centre of Excellence``. Ministry will also inaugurate the 1st Food Processing Mega Incubation Centre at IICPT, Thanjavur in the first 100 days.

Among many other steps, the Ministry will also commission within the next 100 days two integrated cold chain projects and the first processing unit in the country`s first Mega Food Park.

The Ministry will also launch a new Website and magazine to disseminate information about the sector to all stakeholders.
The Government of India has already introduced several fiscal incentives for the sector during the last five years. The MoFPI will continue to champion the industry`s cause and seek more fiscal incentives including tax holiday for all food processing units and further lowering of custom, excise and VAT on food products, raw materials, machinery and packaging used by the industry.