beyondbrics

India’s trillion dollar economy is thriving on hard cash transactions – but something nasty is lurking among the banknotes.

Drug-resistant strains of E. coli and 10 other bacteria can be found on almost all notes in the country, according to a study conducted in Mumbai by Manipal University.

Of every 100 rupees spent in India, 97 are spent in cash, according to Visa, the payments processing firm. That makes India the world’s second largest consumer of currency, second only to China. But 98 per cent of Indian currency is contaminated, according to the study.

Every single note sampled in the study and 96 per cent of the coins carried at least one kind of bacteria. The strains found can cause severe gastric and respiratory diseases, according to the researchers.

India’s humid climate and the national habit of keeping notes at home in insalubrious places such as underneath shoes contribute to the problem. Crumpled, dirty and soiled notes are commonplace, spreading germs across the country and across the social classes – turning banknotes into a public health hazard, the report warns.

India had 56,549m banknotes in circulation in March 2010, mostly low-denomination notes, according to the RBI, the central bank. Notes of lower denominations (Rs10 and Rs20) carry the most pathogens.

The RBI has been trying to implement a clean note policy since 2002 with limited success. The bank recently asked commercial banks to pitch in by stopping re-circulation of damp, mutilated cash and screening notes dispensed in ATMs for cleanliness.

The bank has also run tests with cleaner, polymer-based notes to replace the paper-based Rs10 note.

“If the pilot proves successful, we will mainstream the use of plastic currency,” Governor D Subbarao had said at a conference this year.

The problems of pathogens on currency is not restricted to India. But given the low rate of adoption of electronic payment systems in the country, it demands an urgent solution.

Related reading:
India file, beyondbrics