Combating terror tops the priority list of security agencies in India. Even as cops bust new terror networks and crack cases, a key question that remains unanswered is who funds these terror operations and how is it done?

Although there are various versions, it has now become clear that a major fake currency racket operates in the country and this money is being used to fund terror operations in the State.

Security agencies have no qualms about claiming that Dawood Ibrahim [Images], the fugitive don settled in Pakistan, is the man behind the racket. It is said that he operates a huge network in both India and Nepal. Most of the money made through this racket is used to operate terror operations, the IB adds.

Fake Indian currency is made in Pakistan and later brought into India through either Nepal or Bangladesh, the same route that militants use to get into India. It is compulsory for each militant to carry the notes into India when they are sent in for a mission.

Again the big question that arises is how these people manage a free entry into India? Narco analysis tests conducted on suspected terrorists reveal that they manage to bribe authorities posing as illegal immigrants before gaining access into India.

Once the notes come into India, these persons meet up with agents who are spread out across the country, especially in states such as Uttar Pradesh, Rajasthan and Andhra Pradesh. The notes are then exchanged for genuine notes at a 2:1 ratio. The money is then sent back to the source and the same is used to fund terror operations.

The same money was used in the Hyderabad, Uttar Pradesh and Ajmer blasts recently.

It is being alleged that even for the Hyderabad blasts alone, over Rs 5 crore had been spent. Shahid Bilal, the alleged mastermind behind the Hyderabad blasts is said to have collected the money from Dawood and used it for the operation. Bilal's brother, Majid, in a narco analysis test, explained in detail as to how fake currency was used to trigger the blasts.

Interestingly, a huge haul of fake currency was seized in Hyderabad a few days before the blasts. Take the case of Nasir, who was arrested in Karnataka. The police now say that he is the same man who had placed the bag containing the bomb at Lumbini Park in Hyderabad on August 25, 2007.

In his confession statement, Nasir had said that he had visited Karachi and stayed at Gulshan-2-Iqbal, the same area where Dawood is believed to be staying. Investigating agencies do not rule out the possibility of him meeting with Dawood to discuss about the funds to be utilized in terror operations.

Security agencies say that a crackdown is the need of the hour to bust the fake currency racket. They feel that if this is busted that the problem could be nipped in the bud to a large extent.