The latest affidavit of the Union government in the case reiterated that the move was to fight the menace of fake currency notes, unaccounted income and terror funding. Further, it was not a standalone notification but part of a series of transformative economic policy steps intended to formalise the Indian economy.
“The withdrawal of the legal tender character was one of the significant steps in the enhanced formalisation of the economy with the aim of expanding opportunities for the millions living on the periphery of the economy.”
Pertinently, it is stated that the Central Board of the RBI had made a specific recommendation to the government in this regard, and the central bank had also proposed a draft scheme towards implementation of demonetisation.
The gazzetted notification issued was as per the substantive powers under the RBI Act. This, coupled with Parliamentary affirmation by means of the 2017 Specified Bank Notes (Cessation of Liabilities) Act of 2017, mean that the current matter does not survive, the government affidavit said.
The affidavit also stated how the consultation with the RBI for the move had begun, albeit confidentially, in 2016.
It, thus, involved advance preparations and extensive discussion before arriving at the ‘well-considered’ decision including plans for notes in new sizes, it is submitted.
The affidavit also highlighted that any restrictions on citizens at the time were only on cash withdrawals, with a series of exemptions for the convenience of the general public, and not digital/electronic payments. This was coupled with relaxations in the agricultural sector including extra time for repaying loans and allowing on-the-spot bank account opening for plantation workers.
Since all measures were taken to mitigate the hardships of the people, the question of an enquiry into the same is moot at this stage, it was contended.
Further, demonetisation has to be seen in context of the following moves around the time: formation of an SIT in 2014 to probe into black money in the country, the 2015 Black Money and Imposition of Tax Act, the 2016 Benami Transactions Act, tax treaties with other countries, the Income Declaration Scheme, and the 2018 Fugitive Economic Offenders Act.
The petitioners’ submissions, it is argued, look at the exercise as an isolated measure and wrongly compare it with the demonetisations in 1946 and 1978 that had different context.
The impact of the move was also transient, as the economic growth rate of 6.8 per cent in the succeeding financial year was more than that decadal growth rate in the pre-pandemic years.
The top court’s decision in Bhavesh Parish is relied on to state that Courts generally do not exercise judicial review in the realm of economic policy.
Source: Barandbench
