{"id":79941,"date":"2026-07-23T18:29:20","date_gmt":"2026-07-23T12:59:20","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=79941"},"modified":"2026-07-23T18:32:15","modified_gmt":"2026-07-23T13:02:15","slug":"plastic-currency-india","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/23-07-2026\/plastic-currency-india","title":{"rendered":"Plastic Currency in India"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Recently, <strong>Bharatiya Reserve Bank Note Mudran Pvt. Ltd. (BRBNMPL)<\/strong> invited <strong>Expressions of Interest (EoI)<\/strong> for supplying polymer substrate sheets with embedded security features.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What are Polymer Banknotes?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>These are made from<strong> biaxially orientated polypropylene (BOPP)<\/strong>, not paper based on cotton.<\/li>\n\n\n\n<li><strong>Australia <\/strong>became the <strong>first country<\/strong> to introduce polymer currency in <strong>1988<\/strong>, and today over <strong>60 countries<\/strong>, including the UK, Canada, Australia, New Zealand, Singapore, Malaysia and Vietnam, use polymer notes either fully or partially.<\/li>\n\n\n\n<li>The Reserve Bank of India (RBI) has revived its long-pending proposal to introduce <strong>polymer (plastic) banknotes<\/strong>, nearly 15 years after the first pilot project was announced.<\/li>\n<\/ul>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"wp-block-group has-background\" style=\"background-color:#fff2cc\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<p><strong>Digital Payments Paradox<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>UPI\u2019s Explosive Growth: <\/strong>Over 24,000 crore transactions a year, close to 85% of retail digital payments.<\/li>\n\n\n\n<li><strong>RBI\u2019s Currency Demand Paradox: <\/strong>Even if the growth of digital:\n<ul class=\"wp-block-list\">\n<li>The currency outstanding has surged from<strong> around \u20b916-17 lakh crore <\/strong>nearly a decade ago to <strong>more than \u20b941 lakh crore in 2025-26.<\/strong><\/li>\n\n\n\n<li>Currency to GDP ratio is still <strong>over 11%<\/strong>, indicating physical cash is still in demand.<\/li>\n\n\n\n<li>Reasons include the informal economy, rural areas with poor digital connectivity, cash preference by households and small retailers, and precautionary cash holdings.<\/li>\n\n\n\n<li>It shows that <strong>digital payments and cash are complements rather than perfect substitutes.<\/strong><\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Trends in Currency Printing Costs: <\/strong>RBI Annual Reports indicated that the <strong>cost of currency printing<\/strong> was \u20b95,101 crore (2023-24); \u20b96,373 crore (2024-25); and \u20b94,875 crore (2025-26).<\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Why is RBI Reviving the Proposal?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Longer lifespan:<\/strong> Polymer notes last on average 2.5-4 times longer than cotton-paper notes.\n<ul class=\"wp-block-list\">\n<li>India replaces <strong>20-24 billion soiled notes under the Clean Note Policy every year &amp; RBI spends about \u20b95,000 crore a year on <\/strong>printing and managing currency.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Enhanced Security:<\/strong> Polymer notes incorporate improved anti-counterfeiting technologies such as transparent windows, micro-printing, sophisticated holographic elements and embedded security features.\n<ul class=\"wp-block-list\">\n<li>The RBI data indicated that the number of counterfeit notes detected climbed to <strong>around 2.3 lakh pieces in 2025-26.<\/strong><\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Lower Lifecycle Costs:<\/strong> Higher cost of manufacture is offset by fewer replacement cycles, meaning less printing, transportation, storage and destruction of soiled notes.<\/li>\n<\/ul>\n\n\n\n<p><\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full is-resized\"><img data-dominant-color=\"d4cfc6\" data-has-transparency=\"false\" loading=\"lazy\" decoding=\"async\" width=\"579\" height=\"610\" src=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/07\/image-218.png\" alt=\"\" class=\"not-transparent wp-image-79945\" style=\"--dominant-color: #d4cfc6; width:221px;height:auto\" srcset=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/07\/image-218.png 579w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/07\/image-218-285x300.png 285w\" sizes=\"auto, (max-width: 579px) 100vw, 579px\" \/><\/figure>\n<\/div>\n\n\n<p><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The earlier <strong>Life Cycle Impact Assessment<\/strong> of polymer notes by TERI has shown that the <strong>overall environmental footprint of polymer notes can be lower<\/strong> as a lesser number of notes need to be manufactured and transported over time.<\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large is-resized\"><img data-dominant-color=\"d8dfe3\" data-has-transparency=\"false\" loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"609\" src=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/07\/image-217-1024x609.png\" alt=\"\" class=\"not-transparent wp-image-79942\" style=\"--dominant-color: #d8dfe3; aspect-ratio:1.6814712873764543;width:421px;height:auto\" srcset=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/07\/image-217-1024x609.png 1024w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/07\/image-217-300x178.png 300w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/07\/image-217-768x456.png 768w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/07\/image-217.png 1087w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<\/div>\n\n\n<h2 class=\"wp-block-heading\"><strong>Major Concerns<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>High Production Cost:<\/strong> Polymer notes are <strong>30-60% more expensive<\/strong> than cotton-paper notes.\n<ul class=\"wp-block-list\">\n<li>In some countries manufacturing costs for lower denominations have been in the vicinity of <strong>20-24% of face value of the note<\/strong>, raising questions of cost-effectiveness.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Petrochemical Dependence:<\/strong> The polymer substrates are made from polypropylene.\n<ul class=\"wp-block-list\">\n<li>India still imports a lot of polypropylene and so costs are vulnerable to crude oil prices, geopolitical tensions and supply disruptions in West Asia.<\/li>\n\n\n\n<li><strong>Reliance Industries and Indian Oil Corporation<\/strong> are scaling up domestic capacities, but import dependence remains a strategic concern.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Transition costs:<\/strong> The switch to polymer currency would require recalibration of ATMs, cash sorting machines, vending machines and currency processing equipment.\n<ul class=\"wp-block-list\">\n<li>Commercial banks, retailers and cash logistics firms would also face costs of adapting.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Existing investments in paper currency:<\/strong> India has made substantial investments in domestic currency infrastructure including <strong>Bank Note Paper Mill India Pvt. Ltd<\/strong> and indigenous ink manufacturing facilities.\n<ul class=\"wp-block-list\">\n<li>Sudden shifts might mean these investments are under-utilised.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"wp-block-group has-background\" style=\"background-color:#ebecf0\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<p><strong>Digital Payments Paradox<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>UPI\u2019s Explosive Growth: <\/strong>Over 24,000 crore transactions a year, close to 85% of retail digital payments.<\/li>\n\n\n\n<li><strong>RBI\u2019s Currency Demand Paradox: <\/strong>Even if the growth of digital:\n<ul class=\"wp-block-list\">\n<li>The currency outstanding has surged from<strong> around \u20b916-17 lakh crore <\/strong>nearly a decade ago to <strong>more than \u20b941 lakh crore in 2025-26.<\/strong><\/li>\n\n\n\n<li>Currency to GDP ratio is still <strong>over 11%<\/strong>, indicating physical cash is still in demand.<\/li>\n\n\n\n<li>Reasons include the informal economy, rural areas with poor digital connectivity, cash preference by households and small retailers, and precautionary cash holdings.<\/li>\n\n\n\n<li>It shows that <strong>digital payments and cash are complements rather than perfect substitutes.<\/strong><\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Trends in Currency Printing Costs: <\/strong>RBI Annual Reports indicated that the <strong>cost of currency printing<\/strong> was \u20b95,101 crore (2023-24); \u20b96,373 crore (2024-25); and \u20b94,875 crore (2025-26).<\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n<p><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Looking Forward<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Deploy in Phases:<\/strong> Don\u2019t replace all denominations, but begin with \u20b910 and \u20b920 notes where durability benefits are highest.<\/li>\n\n\n\n<li><strong>Build up domestic manufacturing:<\/strong> Atmanirbhar Bharat: Promote indigenous production of polymer substrates to cut down strategic dependence on imports.<\/li>\n\n\n\n<li><strong>Full cost-benefit analysis:<\/strong> RBI to weigh lifecycle and transition costs, environmental and security benefits.<\/li>\n\n\n\n<li><strong>Build recycling infrastructure:<\/strong> Set up recycling facilities to maximise environmental benefits.<\/li>\n\n\n\n<li><strong>Continue with digital expansion: <\/strong>Polymer notes are meant to supplement, not replace, India\u2019s digital payments strategy, ensuring financial inclusion where cash is still king.<\/li>\n<\/ul>\n\n\n\n<p><a href=\"https:\/\/www.thehindu.com\/business\/Economy\/indias-plastic-currency-crush-explained\/article71248468.ece\" target=\"_blank\" rel=\"noopener\">Source: TH<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p><strong> Context <\/strong><\/p>\n<li class=\"ms-5\"> Recently, Bharatiya Reserve Bank Note Mudran Pvt. Ltd. (BRBNMPL) invited Expressions of Interest (EoI) for supplying polymer substrate sheets with embedded security features. <\/li>\n<p><\/p>\n<p><strong> What are Polymer Banknotes? <\/strong><\/p>\n<li class=\"ms-5\"> These are made from biaxially orientated polypropylene (BOPP), not paper based on cotton. <\/li>\n<li class=\"ms-5\"> Australia became the first country to introduce polymer currency in 1988, and today over 60 countries, including the UK, Canada, Australia, New Zealand, Singapore, Malaysia and Vietnam, use polymer notes either fully or partially. <\/li>\n<p><a href=\" https:\/\/www.nextias.com\/ca\/current-affairs\/23-07-2026\/plastic-currency-india \" class=\"btn btn-primary btn-sm float-end\">Read More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-79941","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/79941","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=79941"}],"version-history":[{"count":2,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/79941\/revisions"}],"predecessor-version":[{"id":79946,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/79941\/revisions\/79946"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=79941"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=79941"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=79941"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}