With so many scams in the near past and in the pipe line the money that is funneled into the bank accounts of a few is beyond a mathematicians’ comprehension. While the Indian economy continues to grow, although at a single digit rate in past few years and projected to grow in the single digits, it is really incomprehensible to imagine if there were no scams or kickbacks and the entire money was funneled back into the Indian economy and not in someone’s hidden places around their many homes and cars or in secret numbered accounts in overseas havens.
Last week a Hindi movie “Special Chabbis” shoed how a politician’s money was stanched in his house and car, and the ease at with which the raiding police was able to find the stash. The irony of the movie is that the movie itself was made of real life incidents, and depicted the brazen nature of how the Indians simply take and keep the money. It probably has to be kept close to the chest as it has no accounts to show, and it cannot always be sent to an overseas bank account as simply as we say it. It simply gets lodged into the closets and closed spaces of the opportunists that take every opportunity to take the money from every source that they can get the loot from.
The world, especially India has a lot of issues with fake currency and people are always getting sucked into to fake currency. There is always track of who might be dumping fake currency into the market, and typically a common man may or may not encounter the fake currency in day to day living. There are a lot of instances of groups trying to print money or circulate get caught, and perhaps they are not as well reported as the scams. However the currency manipulation and fake currency is a fairly entrenched problem with all nations. In the USA we see fake bills quite often and they don’t have to be large denominations of bills, they could be very small denomination bills that get into circulation and being passed on to the unsuspecting population. With the USA or western economies adopting a greater use of credit and debit cards, we may eventually phase out the use of bills and perhaps limit the counterfeiting of currency. But in India and other developing (loosely using the term developing as I don’t have any other way to distinguish the economies) nations the use of credit or debit cards is still not at the every person level and might be a long time before you can educate 100% of the population to use the banking systems for currency protection.
By and large the fake currency is not been identified as a major problem as the governments around the world track down the counterfeiters and dispose them off, and the banks and financial institutions regularly catch the fake bills and dispose them off from circulation.
It is however a problem as even if a small portion of the currency in circulation is fake, it represents the losses for the overall economy and someone who is carrying the fake not has lost that much f real value by simply conducting normal transactions, and believed that the money was real until someone identifies that as a bad not, and refuses to accept it as legal tender. The losses typically are small and they can never trace the bill back to origination point immediately to catch the perpetrator and regain the value. But, the effect of fake bills is really not depicted in the economic sense as it is an industry that gets dismantled quickly by the authorities.
The scammed money is where the real money and real assets get stored in the lockers and cars and under or over the roofs, and overseas accounts of a very few individuals. This money really is more damaging to the global economy than any other type of cheating. It takes real value from the economy and takes it into hiding, while the value is of no use to the economy. It’s hidden and not in circulation, and of no use to the person who is hiding it from the very people who could benefit from the large asset base, and could be best used for economic development and employment creating. If the trend of hoarding money illegally continues, the global economy simply will continue to lose the ability to properly fund the continued economic development, especially with reference to the developing nations where the hoarding of illegal wealth is more rampant than the developed nations. Perhaps there should be a threshold of hoarding so that there a mechanism to funnel the money back into the economy to keep the real value of the money to be deployed for the benefit of the society, rather than make it as worthless as the counterfeit currency that gets illegally into the public domain.