Centre’s decision on demonetization upheld by the Hon’ble Supreme Court by 4:1 Majority
-Vinni
Background of Demonetization
On 8th November 2016, India’s Prime Minister Narendra Modi announced a historic move to demonetise two high-value currency notes, Rs.500 and Rs.1000. The move was aimed at curbing black money, corruption, counterfeiting and terror financing. The move created a shockwave amongst the public and was met with both criticism and appreciation. However, on January 2nd, 2023, the Supreme Court of India upheld the validity of the move by a 4:1 majority.
Overview of the judgement-
- The Supreme Court of India has upheld the constitutional validity of the demonetisation of Rs. 500 and Rs. 1,000 notes by the Government of India in a 4:1 majority judgement.
- The court held that the issue of demonetisation was a policy decision of the government and was within the government’s legislative competence to take. The court also noted that the government had taken the decision in good faith to tackle the issue of black money, fake currency and terror financing.
- The court also expressed its satisfaction regarding the measures taken by the government to reduce the difficulties faced by the public in the wake of the demonetisation. The court took note of the fact that the Reserve Bank of India had put in place a mechanism to ensure that citizens were able to exchange the demonetised notes.
- The court also observed that the move had resulted in an increase in income tax collection and digital transactions. The apex court, after going through the various arguments of the petitioners challenging the validity of the move, held that the demonetisation was a valid exercise of powers under the RBI Act and the Currency Act.
- It further held that the move was intended to bring about “monetary and financial discipline” and was “not a measure to destroy the economy”. It noted that the government had taken several measures to mitigate the difficulties faced by citizens, including providing relief to small traders and increasing the limit of withdrawals from banks.
- The dissenting judge however said that the government should have taken more steps to reduce the hardships faced by the public. Furthermore, he stated that the demonetisation was an “arbitrary and irrational” decision and that the government had failed to provide an adequate level of relief to the citizens. He further held that the move had adversely affected the common man and the economy.
Going forward with the decision, it’s true that demonetization has had a major impact on the Indian economy. By considering the dissenting opinion, we can also underline the hardship caused to many people.
While some experts argue that it has been beneficial in the long run, there are still some short-term economic implications that need to be taken into consideration. Now, it remains to be seen how the government will use this judgement to further its economic agenda in the future and what impact the demonetisation has had on the economy in the long term. What do you think about this decision? Let us know your views on the same by posting a comment!
Keywords: Supreme Court upholds Centre’s decision, Verdict on Demonetisation, Notes ban valid, Centre is right by 4:1 majority