India will begin printing Rs500 & Rs1,000 banknotes on securitized "blue paper" in an effort to deter counterfeiting in the country.

After a significant “large-scale circulation of fake notes” throughout India over the past year, the Indian government has decided to begin printing Rs500 and Rs1,000 on special blue security paper to curtail counterfeiting in the region.

Blue paper is made by combining cotton and linen fibre with a special dye that only glows under ultraviolet rays. This dye also ensures the paper – which eventually in this case will be made into banknotes – also radiates a unique blue hue that makes it virtually impossible for colour photocopiers to reproduce.

The Indian government says the switch will not only deter counterfeiters, but will also pay off in the long run.
“The blue security paper has higher durability compared to normal currency notes. While it is costlier to produce, it is cheaper than having to deal with fake currency,” said a senior official.

Though it is an important component in the world of banknote security, blue paper is not a new idea. The first recorded mention of blue paper comes from Italy in the 14th century, where it was first used by artists as mounts for drawings. Over the centuries, blue paper sometimes became an alternative to white paper and was used in Europe during the 18th and 19th centuries for books.

Around the same time, manufacturers of blue paper began dyeing the paper pulp instead of using disintegrated rags which resulted in the paper achieving more intense colours.

Today, blue paper has moved from the artistic realm to the security realm thanks to this dyeing process. Because the dye is applied to the entirety of the banknote and not just to select locations on the note, the paper itself becomes a security feature and is, as researchers from the Fraunhofer Institute for Applied Polymer Research have said about notes using fluorescent dyes, “itself a component of the identification label.”

Colour is an important security feature as well. Embedding additional colour designs to the blue paper is beneficial to paper producers who specialize in anti-counterfeit devices.

Printing of the Rs500 and Rs1,000 banknotes is scheduled to get underway by August and the new notes are expected to enter into circulation by December 2010.

SOURCES:
BNet: “Blue Paper To Be used For Rs500-1,000 Notes”
The American Institute for Conservation: “Historical Manufacture and Use of Blue Paper”
Nanowerk: “Brilliant Counterfeit Protection”
Polymernotes.org: “A Paradigm Shift In Bank Note Security; Security Features in Polymer Bank Notes”

The zero banknote looks identical to Indian banknotes, though it has no worth.

Fifth Pillar, an Indian charity that confronts corrupt officials, has issued a zero banknote as a way to protest ongoing bribery and extortion in the country.

The notes have no value, but look identical to Indian banknotes and carry the slogans “Eliminate corruption at all levels” and the pledge “I promise to neither accept nor give bribe.”

“The note is a way for any human being to say no to corruption without the fear of facing an encounter with persons in authority,” the charity said in a statement.

Indian citizens are often faced with corruption when they are forced to pay cash bribes for everyday tasks like registering cars or homes, and getting Internet connections hooked up.

Fifth Pillar claims £3 billion is paid each year in bribes in India, but insiders believe the figure is considerably higher, and that several leading politicians have become billionaires through corruption.

The idea for the zero banknote came from an Indian physics professor at the University of Maryland in the US who says he “was sickened by the corruption he witnessed in India and wanted to give people the means to protest against the bribes they were expected to pay. “

Fifth Pillar’s president Vijay Anand took up the professor’s idea of a banknote which had no value, producing 25,000 notes initially, their popularity leading to the production of one million more notes. And the simple protest is catching on.

The World Bank blog tells the story of an elderly woman who was being bribed to obtain documentation of a land title and instead handed the Revenue Department official one of Fifth Pillar’s zero banknotes. “Remarkably, the official stood up from his seat, offered her a chair, offered her tea and gave her the title she had been seeking for the last year and a half to obtain without success,” the blog reports.

Though commonplace, bribery is a crime that is punishable with jail time in India. The World Bank says these zero banknotes are effectively making a strong statement condemning bribery. By providing the support of an organization, Fifth Pillar has given citizens the courage to stand up and no longer be afraid of the criminal practices.

“For people to speak up against corruption that has become institutionalized within society, they must know that there are others who are just as fed up and frustrated with the system,” says the World Bank on their blog. Once they realize that they are not alone, they also realize that this battle is not unbeatable. Then, a path opens up—a path that can pave the way for relatively simple ideas like the zero rupee notes to turn into a powerful social statement against petty corruption.”

SOURCES:
Digital Journal: “Indian charity issues worthless banknote to highlight corruption”
Telegraph: “India ‘issues’ zero rupee banknotes”
The World Bank: “Paying zero for public services”