Why the Indian Government Avoids Printing Plastic Currency Notes
The Indian government has long been hesitant to adopt plastic currency notes, a practice widely used by other nations around the world. There are several compelling reasons behind this decision, ranging from high costs and technological challenges to social and economic factors. Here, we delve into the reasons why plastic notes have not been embraced in India.
The High Cost and Technological Challenges
The primary reason for the Indian government's reluctance to print plastic currency notes is the significant investment required. Switching from traditional paper money to polymer notes is not a trivial undertaking. The technology, machinery, and expertise required for printing and handling plastic notes are quite different from those used for paper notes. Moreover, the cost of production for plastic notes is substantially higher. This makes the transition a costly endeavor with no immediate returns.
India also faces challenges with its existing infrastructure. The current facilities for printing, storing, and disposing of paper notes are deeply entrenched and would require substantial changes to accommodate plastic notes. Upgrading this infrastructure would incurs significant expenses and disruptions. Additionally, the transportation and storage of paper notes are relatively straightforward, whereas plastic notes can be more cumbersome due to their larger size and weight.
Digital Payments and the Future of Money
While plastic notes may seem like a modern solution, the rapid adoption of digital payments is gradually changing the landscape of currency management. Debit and credit cards, often referred to as "plastic money," have become an increasingly popular alternative to physical currency. With the rise of online transactions and digital wallets, the necessity of printing plastic notes diminishes.
India has been actively pursuing a cashless society, with the Reserve Bank of India (RBI) playing a crucial role. The central bank has been piloting new technologies and policies to encourage digital transactions. For example, the Jan Dhan Yojana (People's Wealth Scheme) aims to provide bank accounts to every family, promoting financial inclusion and reducing reliance on physical cash. This shift towards digital payments has made the transition to plastic notes less of an urgent necessity.
Environmental and Ethical Concerns
While plastic notes offer potential environmental benefits, such as increased durability, the issue of disposal looms large. Unlike paper notes, which can be recycled, plastic notes are challenging to dispose of properly. This environmental concern is compounded by the fact that some individuals, particularly those with dietary restrictions, may find the use of plastic notes objectionable.
For instance, in the United Kingdom, there have been issues with the use of plastic notes due to the inclusion of animal fat or tallow, especially beef or pork. Vegans, Hindus, and Muslims, among others, have objected to the use of such materials, leading to a social backlash. Although these concerns have not been as pronounced in India, they still represent a potential challenge for the widespread adoption of plastic notes.
Current Initiatives and Future Outlook
Despite these challenges, the Reserve Bank of India (RBI) has shown interest in introducing plastic notes in the future. In collaboration with other central banks, the RBI is exploring the potential use of polymer notes, similar to the technology adopted by Australia. However, the cost of production remains a significant barrier. As of now, the RBI is considering more cost-effective alternatives, such as improving the durability of existing paper notes and introducing new denominations like 10 Rupee coins and 20 Rupee coins.
The RBI has initiated various measures to introduce plastic currency, and it is believed that such notes may enter the Indian market this year or early in 2018. However, it is unlikely that India will transition entirely to plastic notes in the near future due to these ongoing challenges.
In conclusion, while the idea of plastic currency notes seems appealing in theory, practical and economic factors, along with environmental and ethical concerns, continue to hold back their widespread adoption in India. As technology evolves, it will be interesting to see how the Indian government navigates these challenges and determines the future of its currency.