NEW DELHI: India has made significant gains in the war on fake currency, inflicting anoxic damage on terrorism in Kashmir and elsewhere in the country. Two main Pakistani presses engaged in printing counterfeit Indian currency have been forced to shut shop, investigating agencies have told the Centre after assessing the impact of demonetisation on national security.This has choked terrorism financing, they said, with the result that terrorism-related violence in Kashmir saw a sharp decline of nearly 60% during December, with just one bomb blast in the Valley during the month, and left-wing extremism suffered a debilitating blow.Besides, call traffic by hawala agents in India fell 50%, as per the assessment of the impact of demonetisation in the past 30 days. The radical change in design and use of extra security features in the new currency notes has annihilated the fake notes industry operating from across the border, senior government officials told ET on condition of anonymity, quoting from the findings of the assessment carried out at the instructions of the Centre.“Pakistan had been printing fake Indian currency notes in its government printing press in Quetta and its security press in Karachi. Post demonetisation, Pakistani state and non-state actors had no option but to shut shops of fake Indian currency notes. The assessment has said that,” a senior official said.Prime Minister Narendra Modi had in his address to the nation on November 8, 2016, highlighted the need to curb fake currency notes to combat cross-border terrorism while announcing the decision to withdraw Rs 500 and Rs 1,000 notes as legal tender.Most fake currency notes circulated in India were of Rs 500 and Rs 1,000 denominations, the official said. Inputs were gathered from every state for the exercise, especially from districts in sensitive states. The PM chaired several high-level review meetings, where the impact of demonetisation on Pakistan-sponsored terrorism in Kashmir, use of counterfeit currency and weakening funding networks of Maoists were discussed with senior officials. “A weakened on-ground network of terrorists has resulted in several successful counter-terrorist operations in the Valley in the past several weeks. Local area commanders who lure youth for stone pelting in Kashmir valley are choking for cash now,” an official said.Demonetisation has also led to a sharp decline of deals by corrupt government officials and a price correction in the “artificially skewed real estate market by land mafia,” according to the assessment.Investigation agencies have noted that “due to demonetisation, procurement of arms by insurgent groups has been hit and many cadre appear to have left the Northeast and crossed the border for safety.”Areas affected by left-wing extremism have suffered an even more pronounced impact. “Senior Maoist leaders in Bastar (Chhattisgarh) and Jharkhand have contacted people to seek help in converting old notes into new currency. The replenishing will not happen with new levy collection. There is pressure on them to surrender in large numbers,” an official said, quoting from the assessment.