India’s plastic currency crush | Explained
The Reserve Bank of India is considering the introduction of plastic polymer banknotes to improve durability and security. While these notes last longer than traditional cotton-paper currency, concerns remain regarding their higher production costs and environmental impact.
Why it matters
Transitioning to polymer currency could significantly reduce long-term cash management costs for one of the world's largest economies, though it poses challenges for sustainability and low-denomination affordability.
India, which is among the five largest economies of the world, is still toying with the idea of introducing plastic currency, three decades after Australia put in place a full series of its denominations and as many as 60 nations use such currency in some form.
Early this month, the Reserve Bank of India’s (RBI) currency printing subsidiary invited global Expressions of Interest (EoI) for supplying polymer substrates with embedded security features, signalling its most concrete step towards implementation since the original 2009 proposal.
Plastic banknotes, which last 2.5 to 4 times longer than cotton-paper notes, depending on denomination, require highly specialized biaxially oriented polypropylene—derived from petroleum and natural gas, a sector that has a direct correlation with environmental concerns.
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