By far the most important aspect of illegal economy in Jammu and Kashmir, particularly in valley which has received minimum attention, is the introduction of fake Indian currency. During last decade the role of fake currency in impacting the socio-economic scene in Kashmir Valley is more than anything else. Injection of fake currency seems to have crossed the boundaries of clandestine operations. It is becoming the part of socio-economic culture.
The hawala transactions reveal not only the modus operandi of money transactions but also the elaborate network of over ground workers who are part of a elaborate subversive establishment. This establishment is gradually transforming Kashmir valley into a den of illegal economy causing irreparable damage to the social set up.
Regular seizures of drugs along the LoC and IB in the state, hawala money and counterfeit currency has been a feature of counter terrorism operations in the state and local papers have been regularly reporting such incidents. The discourse on Kashmir at the political level in India eschews this dimension. However experts of International repute have taken significant and serious notice of linkages between terrorism in Kashmir and its financial support through drug trade.