"We can´t allow circulation of Rs 1000 and Rs 500 denomination IC notes in Nepal given the high chances of circulation of counterfeit currency to India from Nepal. One of the issues of discussion at our recent meeting with governor of Nepal Rastra Bank (NRB) was the problem of counterfeit currency," told Subbarao to visiting Nepali economic journalists.[break]
He also stressed on the need to take joint measures to end the circulation of fake IC notes through the open border between the two countries.
Amid rising incidents of cross-border flow of fake IC notes, India imposed a ban on the circulation of Rs 1000 and Rs 500 denomination notes in Nepal about ten years ago. Back then, the decision was supposed to have been taken on political considerations. According to NRB sources, the RBI may be ready to change its decision but only if it is taken up and endorsed at the political level.
Stating that shooting fuel prices is the common factor behind rising inflation in both the countries, he said giving fuel subsidy would not help ful for sound economy for long run though it commonly taken as a easy measure to curb inflation in short run. "Fuel subsidy is bad in the long run for a sound economy," he added.
He said India has given high priority to bring down inflation stating that inflation dropped to 9.1 percent in 2011, down from 11 percent in 2011.
"It has become a challenge to mange economic growth and inflation in India. So, we are laying focus on strengthening supply side to tame the rising inflation," he added.
Meanwhile, joint-secretary in the Indian Ministry of External Affairs (MoEA) Satish C Mehta asked Nepali businessmen to focus on the vast market of bordering Indian states — Uttar Pradesh (UP) and Bihar — for the market of their products and bring down trade deficit. "Nepal has to tap the high potentials of UP and Bihar for the marketing of Nepali goods as these states are home to over 250 million people.
These states are far nearer to Nepal compared to other states of India," said Mehta at the concluding function of two-week long training program organized for 15 Nepali journalists at Indian Institute of Public Administration (IIPA) in New Delhi with the support of Indian MoEA. The program included a visit to capital and financial markets in New Delhi and Mumbai and interactions with senior officials.
He said export from Nepal to India has grown 11 times between 1996 and 2009. He advised Nepal to focus on medicinal herbs, high-value agriculture products, and generation of electricity by taping immense hydropower potential.
"Ongoing tarai roads, Integrated Customs Points, and railway links at major cities of Nepal with Indian bordering cities will not only facilitate the bilateral trade but also bring down the cost of doing business in Nepal," Mehta said.
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