Counterfeiting: A significant Political Risk of India Today

by Sugato Hazra

Counterfeiting is good business. In developing economies, the typical Myrdalian soft states, one can get away with counterfeiting and make good money. There are many ways to engage in this apparently illegal activity in a legal way. The intent here is not to explain, and therefore encourage, some fertile brains to engage in counterfeiting. Not that counterfeiter needs any prodding, given the powerful state backing some enjoy. Take the case of currency notes in circulation in India. The Indian intelligence sources claim that Rs 1,60,000 crore worth counterfeit currency notes are in circulation in the country. Though India’s central bank Reserve Bank of India disputes the figure the fact remains that forged currency notes are a menace to the nation’s economy. While India’s neighbour Pakistan is said to be responsible for the business of forged currency notes the other neighbour China is busy exporting ‘made in India’ drugs to Africa. In the process Chinese manufacturers are making money what is rightfully India’s. True, the Chinese example does not reflect any weakness or lack of governance in India but illustrates the lawlessness and unscrupulousness of the Chinese. The circulation of counterfeit currency from Pakistan exposes both the stage of rot the country is in and also the weak governance system in India. This led us to the proposition that counterfeiting can be a good business in states where governance is weak.

This brings one to the next proposition that investors in such a weak state get exposed to a huge external risk. There can be no two opinions on that. Investment can flow only to a country governed strictly by a set of civilized law where life, liberty and profitability are guaranteed as per the statute. Judged by the rampant scourge of counterfeiting India cannot merit consideration among the global investment destination. In sum the currency counterfeiters have managed to brand India as an unsafe destination thus hitting the nation’s economic prospect. If despite that India still has been growing at more than six per cent per annum in a year when global economies are contracting, at best stagnating, one can visualize the inherent strength of the economy.

Not content with their failure the nation’s detractors attempt off and on to destabilize the country by spreading terror. Last year they attacked the two-most prominent hotels in the financial and entertainment hub of India. Certain parts of the country, like the states of Jammu & Kashmir have always been under terrorist attack of varying degrees. The threat of terror attack where people gather, elite or not-so-elite, rich or not-so-rich, for fun or business, is undercurrent in India. More so the fear is widespread abroad. Though sometimes an Indian wonders why Britain, no less a target than India, is so concerned. The alacrity with which it pulled out its team from the World Badminton Championship is curious to say the least. Equally curious is the Australian decision to skip the Davis Cup match with India. The point to note is that while some sports managers from such countries are concerned at the security of its team the cricketers from these countries are spotted at every nook and cranny of India busy earning money. So when it comes to earning money making opportunities terrorism has failed to leave its mark. But this does not mean that the efforts of terrorists, mostly sponsored by the weak administrations of Indian neighbours, will not be successful in the long run.

The major political risk in India thus is coming from the rogue states in its hinterland. The miscreants are successful largely due to the feeling of isolation among a large section of India’s billion strong population. The Myrdalian soft state is working against its attempts to overcome the softness. The Indian civil society must find a way out of the imbroglio – to stop the miscreants at the border by using the vulnerable sections as a bulwark against such misdeeds. There are two views on the risk but unfortunately there are too many opinions on the solution.

In India today this happens to be the greatest political risk.