Kishore Deo critical on P Chidambaram days as FM on outsourcing printing of Indian currency?

V KISHORE CHANDRA DEO 

COPU CASTIGATES RBI ON OUTSOURCING PRINTING OF INDIAN CURRENCY

CRITICAL ABOUT P CHIDAMBARAM MINISTRY 

By Delhi correspondent

The Committee on Public Undertakings (COPU) has castigated the RBI and the Finance Ministry for outsourcing of printing of Indian currency notes amounting to a sum of rupee one lakh crore to three foreign countries in 1997-98 which it described as “an unprecedented, unconventional and uncalled for measure”.

Taking up the functioning of the PSU —Security Printing and Minting Corporation of India Ltd (SPMCIL) for a detailed study—the company was incorporated in January 2006 following a decision by the government to corporate four mints, four presses and one paper mill earlier functioning under direct control of the Ministry of Finance as industrial departmental units, the COPU report was tabled in Parliament on Friday by its Chairman Mr.V.Kishore Chandra Deo.

It recalled that 2000 million pieces of 100 rupee denomination and 1600 million pieces of 500 rupee denomination of notes were outsourced for printing at American Banknote Company(USA)—635 million pieces, Thomas De La Rue-UK—1365 million pieces (100 rupee denomination) and Giesecke & Devrient Consortium (Germany)—1600 million pieces (500 rupee denomination).  

Stating that the reasons for outsourcing such as the bad conditions of the notes and the ‘soilage’ factor attributed by the RBI representative to the Committee are “far from convincing”, the Committee asked how a decision was made to get the currency notes printed abroad in three different countries. “There was always a grave risk of unauthorised printing of excess currency notes, which would have been unaccounted money”, it said adding “that in any case the very thought of India’s currency being printed in three different countries is alarming and during that particular fateful period our entire economic sovereignty was at stake”.

The Committee has highlighted “the likely danger of destabilising the economy by the agencies or authorities who could have misused our security parameters vis-à-vis printing of currency notes, the use of such notes which could have been printed in excess could easily have fallen in the hands of unscrupulous elements such as terrorists, extremists and other economic offenders”. In order to prevent such incidents from recurring in the future, the Committee said the SPMCIL must be strengthened to undertake the printing and minting of the required currency note/coins domestically. It asked the Finance Ministry to clinch the issue with the RBI so that the latter projects the indents for currency notes and coins five years in advance. This way, it said, “the capacity of each unit of SPMCIL is neither kept idle nor overburdened due to uneven annual demands nor difficulties faced in meeting the increased demands as had happened in 1996-98 when the government of India had to resort to outsourcing of printing of currency notes to foreign agencies”.

The report took exception to the remarks of the CMD, SPMCIL on the operational role of the company in checking counterfeit currency when he deposed before the Committee stating that “…counterfeit matter remains with the government. I am basically their vendor”. It said that SPMCIL is not “ just a vendor but a government agent equally accountable for production of an ideal currency which cannot be easily counterfeited.” It urged the company to direct its efforts to wards “continuous design innovations conforming to international standards so as to meet the challenges of counterfeiting effectively”.

It deplored R&D and indigenisation were not being given due attention making the country vulnerable to counterfeiting due to excessive dependence on imported currency paper and ink for printing of bank notes, Hence, it urged the MoF and SPMCIL to formulate a concrete plan for R&D set-up with enhanced financial allocation and draw a roadmap with timeframe for achieving indigenisation in security-sensitive items.

Critical of the company’s delay in disposal of impaired currency printing machinery and the move to preserve such machinery which is fraught with the risk of theft and its subsequent misuse in printing of fake currency or stamp papers, the COPU cited the instance of the Telgi stamp paper scam. It asked the company to undertake the safe and irreversible disposal of impaired machineries lying with the Corporation.