It will be February 2017 before enough currency is printed to replace the value demontized.

Before you read further note: This is an attempt to estimate time required to replace in value the amount demonetized as result of rendering 500 and 1000 Indian rupee notes as illegal in India on 8 Nov 2016. The actual time estimated here is likely to be more. However, I request readers to look at calculations that are based on Reserve Bank Data and if there are any errors please let me know  for which I will be grateful.

How much time it will take to print and replace 500 and 1000 currency notes India?

A realistic and optimistic answer: Nearly three months going into February 2017.

According to Reserve Bank of India annual report for 2015-16 following is relevant data about INR 500 and 1000 denomination currency notes. There were 15,707 million 500 denomination and 6,326 million 1000 denomination currency notes in circulation as of March 2016.  

	Volume of currency notes (millions) as of March 2016	Value (in billions) As of March 2016
500	15,707	7,854
1000	6,326	6,326
All notes	90,266	16,415
Source: Based on RBI Annual Report 2015-16 published 29 August 2016. 10 million = 1 crore, 1 billion = 100 crores

Together 500 and 1000 denominated notes constitute 86.4% of the total value of all currency notes in circulation (See Table VIII.1 reproduced from RBI Annual report.)

Source:  Reserve Bank of India, Annual Report 2015-16, dated 29 August 2016. Page 89. Accessed online 25 November 2016 Full annual report of RBI is available here https://www.rbi.org.in/SCRIPTS/AnnualReportMainDisplay.aspx Only Currency Management section from which this data is extracted is available here https://rbidocs.rbi.org.in/rdocs/AnnualReport/PDFs/8CURRENCYC8DA67E8EB574B8C84A75AE4D52DEBED.PDF

With effect from 9^th November 2016 total of 22,033 million currency notes (volume) valued at 14,180 billion were made illegal tender. This decision though makes exception for certain type of payments such as paying for electricity, petrol, and water bills etc for few weeks. But eventually a value worth 14,180 billion will need to be printed in new currency notes of different denominations like 50, 100 and new denomination 2000 and new 500 ones. Question now bothering people is how much time it will take to replace currency of this value? To answer this question three further questions need to be answered. 

1. In what denomination the replacement currency will be printed?
2. How many new currency notes are required in chosen denomination? 
3. And finally what is the capacity of printing machines to print?

If it is assumed only 2,000 denomination currency notes will be printed to replace value of 14,180 billion, then number (volume) of new 2000 notes to be printed will be:

14,180,000,000,000 /2,000 = 7,090,000,000 currency notes will need to be printed which is 7,090 million notes (volume) of INR 2000 each.

Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL) is a wholly owned subsidiary of RBI which prints the notes. The process is that every year RBI puts request (indent) for printing of volume of different denomination currency notes which then are printed and supplied by BRBNMPL to RBI which releases it in the economy through banking system. In 2015-16 BRBNMPL printed 21,195 million currency notes of different denomination out of which 500 rupee notes were 4,291 million and 1000 notes were 977 million against RBI’s specified requirement of 5,600 and 1,900 millions respectively (see Table VIII.4 below).

Table VIII.4 shows that total printing capacity of BRBNPML is around 25,000 million units (notes) per year. For benefit of doubt let us take 30,000 million units. Now further assume that RBI decides to print only 2000 denomination currency notes from 9 November 2016 after the announcement, this means to print 7090 million notes it will need 7090/30,000 = 0.24 years or about 86 days non-stop printing without holidays. So the earliest 7,090 million currency notes of 2,000 denomination can be printed is February 2017.

Source:  Reserve Bank of India, Annual Report 2015-16, dated 29 August 2016. Page 90. Accessed online 25 November 2016. Full annual report of RBI is available here  Only Currency Management section from which this data is extracted is available here 

However, most likely it will be much after February 2017 because BRBNMPL may not be able to work 86 days without any break. Also look at the past patterns of printing notes in table VIII.4. It is obvious that in most recent years the RBI’s printer has not been able to meet the demand (compare indent and supply numbers).

The other reason is that RBI is not likely to print only 2,000 as it is printing new 500 denomination notes as well, hence the likely period to replace new currency with same value that has been demonetized will be longer than three months. 

The plans for 2016-17 shown in table VIII.4 show that RBI wanted to print 16,625 million notes of 100,50,20 and 10 denomination. If these planned printing of smaller denomination notes is stopped to print only 2000 and 500 denomination notes, it will create big difficulties for small traders and consumers who need smaller denomination notes for transactions in cash. If the planned printing of smaller denomination notes is continued then clearly replacement of withdrawn value will be much longer than 3 months. Of course, if the capacity for printing is somehow expanded then this claim is contestable.

RBI planned to print 5,725 million new 500 denomination and 2,200 million new 1000 denomination notes in 2016-17(see the last column of above table). This plan seems reasonable considering the volume of currency indented in previous years and also does not imply any demonetization plans. The RBI report explicitly mentions that it had no plans for demonetization until publication of the report. Here is the direct quote form page 93 Box VIII.1, “The legal tender status of all the banknotes of these denominations issued earlier which do not contain these features will remain unchanged.” 

So it seems that the government was planning the demonetization so secretly that RBI itself was unaware of the plan.  Or that Dr. Raghuram Rajan, who was governor  at that time knew about plan in August 2016 but chose not to disclose it in the annual report that he signed. Or the plan to demonetize was prepared after new governor took over on 4 September 2016. 

Fake currency notes

The RBI Annual Report also provides details about counterfeit notes detected in the banking system. It is seen from following table that there are more 500 and 1000 counterfeit notes than other denominations.

Source:  Reserve Bank of India, Annual Report 2015-16, dated 29 August 2016. Page 92. Accessed online 25 November 2016. Full annual report of RBI is available here Only Currency Management section from which this data is extracted is available here 

What I took away from watching India’s Daughter

Hope, inspiration, extreme sadness, anger, love, and courage are among various emotions that I experienced when I watched today the much talked about documentary India’s Daughter on BBC4 online in the UK.

Jyoti Singh, a brave and intelligent young woman, experienced the most horrific trauma and lost her life at hands of a gang of drunkards, perverts, with pathologically sick views about half of humanity. Many men with their uneducated, sick and unevolved mind view women as weaker, dependent and vulnerable half of mankind. They forget that their mother belongs to that very half. This heinous crime took place in India but such crimes happen all over world. The most shameful thing for India is not what one of the convicted rapists says in the documentary but it is something I mention later. But first let me say what I liked about documentary.

What I liked in the documentary:

A friend and tutor of Jyoti, who helped her prepare for studies, portrays picture of Jyoti as a courageous, compassionate and intelligent young person. There is story of a poor boy snatching Jyoti’s handbag on streets of Delhi. The boy was caught by police but Jyoti stopped the policeman and asked him to let go the boy. She took the boy to side and asked him why the boy did what he did. The boy said he too wanted to eat burger and to consume things people with money could afford to pay for. Since he could not afford he snatched the bag from her. Jyoti bought the goodies for the boy in exchange for the promise that the poor boy would not steal again.

Jyoti was daughter of enlightened parents. With inadequate income to afford medical education for their daughter the parents sold their only piece of land to part pay for her education. Jyoti told her parents to spend money that they were saving for her wedding instead on her education. That’s foresight and ambition that most young Indian men and women have. They want to make it in life. But unlike most Jyoti was above the average. Her dream was to set up a clinic in her ancestral village. Sheer determination and self-esteem of Jyoti shone through, like her name, in her conduct and work. To finance her medical studies she worked 8.00 p.m. to 4.00 a.m. in a call centre. She slept 3-4 hours only and was doing very well in studies. Compassion, love, determination, thrift, and courage are all visible in this extraordinary story of an ordinary Indian. Jyoti comes out as a bundle of virtues in the documentary.

On the fateful night in December 2012, six men took away the light out of Singh family but that light, as Jyoti’s father says in the documentary, started a storm. What appeared spontaneous mass mobilisation of protests by students and residents of Delhi actually seems to be a volcano of anger and frustration that was waiting to erupt. This tragic and gruesome crime just ignited the volcano that manifested in the protests. The solidarity in pain of other ordinary residents of Delhi, particularly youth and women was a spark that was and is sign of hope. Peaceful marches and street protests are a hope and a signal that the government dare not ignore the crimes against women.

What I did not like in documentary

I did not like to hear the graphic details about the injuries and brutalities inflicted on a young woman and her friend. The pain in the eyes of parents of Jyoti was more saddening for me than the description of the nature of injuries mentioned so many times. The moist and blank eyes of Jyoti’s mother let you peep into the abysmal darkness and void that death of Jyoti has left in her. The soft spoken father of Jyoti recounts raising her lovingly and then having to cremate her. Jyoti means lamp flame  but in the Singh family she shone like sun. Her death has thrown the family into an emotional black hole from which both parents are shown struggling to come out. That parental pain is enough to choke one's throat. There was no need to provide gory details of the crime in the documentary.

I did not like Sheila Dixit, the only politician seen in the documentary, pontificating about family background of criminals and explaining how seeing things bad in life and surrounding one becomes insensitive and therefore, takes violence against women for granted. She was the Chief Minister of Delhi when the incident took place. I heard no word of sympathy, shared pain (human concern) or criticism of the judicial system (governance and institutional concern). It is possible that Ms Dixit did say something on those lines but the editorial scissors did their work.

What was shameful in the documentary

The most shocking sentences in the documentary were not from the criminal. What the criminal says is outrageous but one could expect no different from such people. He only gives voice to his sick views about women. I have heard versions of such thoughts from a range of people including politicians and others which does not make such attitude less sick but these are not rare to find in India. There is a former lady jurist who argues in the documentary that the solution to problem of sexual violence lies in educating men. There may be some connection between lack of education and tendency to commit crimes against women. Fact is that rapists can be rich, poor and middle income, old, young and juvenile, degree holder and school drop outs or those who saw no door of school.

The most shocking statements come from the two lawyers who demonstrate their sick and prejudiced views about Indian culture and women. It is shameful to see these ‘educated’ lawyers practising in  courts of India. These lawyers could one day become judges as fears Prof. V Raghunathan in his blog posting. If this happened the judiciary in India will have regressed to the bottom of humanity and that will be real shame for India.

Ban of documentary

Banning of the documentary has achieved following. The attention of the media and public at large has now been shifted away from the seriousness of the problem of crimes against women to issue of freedom of expression. Whether the government intended to do that is not my worry in this instance and neither do I want to imply conspiracy theory. But freedom of expression debate replacing the debate on horror of crimes against women is worrying. The government must be happy with this consequence than to face two potential consequences that telecast of the documentary could have entailed.

The documentary shows immense crowds and strong public opinion that seized Delhi in aftermath of the Nirbhaya Jyoti case. It is plausible to expect that after watching the documentary people would have asked difficult questions from the judiciary and political establishment about the lack of progress in not only in the Nirbhaya case but also about thousands of other cases of rapes pending in courts. Only about one in four rape cases tried in Indian courts results in conviction according to National Crime Records Bureau report. I don't know how this ratio compares internationally but absolute ratio does not inspire confidence in prosecution. This time the questions would have been asked not only by frustrated, awakened and agile residents of Delhi but perhaps by people from other parts of India.

One of the lawyer in the documentary questions why there was no hurry to pursue cases against 250 MPs against whom the cases involving sexual violence were not being pursued with same speed as these cases. Given the context of the documentary and the debate it would have generated, the parliamentarians would have found this question too hot to deal with. This Is second potential consequence avoided by banning the telecast in India. A pointed question on accountability and responsibility of people’s representatives in parliament is once again buried under the noisy TV studio debates and protests by media against the ban.