New Delhi: The ambitious plastic currency note programme of the Reserve Bank is running the risk of falling victim to environmental issues. And the roll-out will depend on a study of the project's impact on the environment.

The RBI is in the process of starting a pilot project for issue of plastic currency notes, wherein plastic notes of Rs 10 denomination would be distributed through the central bank's five regional offices.

The proposed shift to plastic currency notes, instead of the normal paper notes, is primarily aimed at checking the high cost associated with printing of paper currency, as they need early  replacement due to soiling and mutilation.

Besides studying the potential cost savings through plastic notes, the pilot project will also look into the environmental impact of the proposed plastic notes.

In an address at convocation last week at Sambalpur University in Orissa, RBI Governor D Subbarao also said the central bank would need to study the "carbon footprint" of recycling and disposal of plastic notes.

"During the pilot phase, we need to study not only the relative costs, but also the carbon footprint associated with the recycling and disposal of plastic notes vis-a-vis paper notes," he added.

At a time when the government is trying to balance the twin challenges posed by climate change and achieving economic growth, the Survey called for steps to ensure that green growth strategies do not result in slow growth.

Terming cost and longevity as important for currency management, Subbarao said that India was the second largest producer and consumer of currency in the world after China.

Some of the countries to have moved to plastic currency notes include Singapore and Australia.

Later in August, the central bank said in its annual report for 2009-10 that it was exploring methods to increase the life of currency notes, especially those of lower denomination, which have a much shorter life.


(Agencies)