The Demonetisation Verdict

The Wire writes

Even as the Bharatiya Janata Party (BJP) celebrated the Supreme Court’s majority judgement upholding the legality of the 2016 demonetisation move, the opposition attempted to corner the ruling party on the policy’s “disastrous” impact on the Indian economy.

The Congress hit out at the Narendra Modi government, while saying that the apex court has said nothing on how demonetisation singlehandedly “crippled MSMEs”, slowed down growth, and killed lakhs of jobs in the informal sector. “The Supreme Court has only pronounced on whether Section 26(2) of RBI Act, 1934 was correctly applied or not before announcing demoneti-sation on November 8, 2016. Nothing more, nothing less,” Jairam Ramesh, the party’s chief spokesperson, said, while emphasising upon dissenting judge B V Nagarathna’s observation that the decision should have been taken through legislation instead of a gazette notification. He went on to equate demonetisation with a “Tuglaqi decision”.

On January 2, 2023, four of the five-judge bench overruled the challenge to the 2016 policy and held that the Union government was within its powers in demonetising Rs 500 and Rs 1,000 notes.

Ramesh said that to interpret that the apex court justified the controversial policy will be “misleading and wrong” as the verdict didn’t say anything about whether the “stated objectives of demonetisation were met or not”.

“The majority Supreme Court verdict deals with the limited issue of the ‘process’ of decision making not with its ‘outcomes’…None of these goals- reducing currency in circulation, moving to a cashless economy, curbing counterfeit currency, ending terrorism & unearthing black money-was achieved in significant measure.”

Former Union finance minister and senior Congress leader P Chidam-baram echoed Ramesh’s views.

However, he said that the dissenting judgement, although in minority, will “rank among the famous dissents recorded in the history of the Supreme Court” and was a “welcome slap in the government’s wrist”.

The Left parties, which have consistently criticised the Union government for taking the sudden monetary measure, too didn’t believe that the apex court “upheld” demonetisation. The Communist Party of India (Marxist) in a polit bureau statement said that the Union government has not been able to establish the merits of the policy as most of its stated objectives–be it “unearthing black money” or “ending terror funding and corruption” or “reducing cash flows in the economy”–hadn’t been met.

“On the contrary, according to RBI, currency with the public has gone up from ?17.7 lakh crore, on the eve of demonetisation to ?30.88 lakh crore now, i.e., an increase of 71.84%,” the party said.

Similarly, Communist Party of India general secretary D Raja said that the judgement didn’t look into the “false claims” made by the Union government. Demanding a white paper by the government, he said, “The government, in fact, as the judgment itself points out, bypassed Parliament setting a bad precedent and ignoring the democratic traditions of the country.”

 Hours after the Supreme Court delivered the judgement, former BJP Union minister Ravi Shankar Prasad lashed out at Congress leader Rahul Gandhi for his negative campaign on demonetisation and demanded an apology from him. Prasad claimed that demonetisation was “a historic decision and in national interest”.

Responding to Prasad, Ramesh said, “We are still facing the brunt of the negative impact demonetisation had on the economy. So if anybody has to apologise, then the so-called father of new India should apologise.”

Nationalist Congress Party spokesperson Clyde Crasto said that although the Supreme Court upheld the legality of the decision, the BJP-led Union government should be made accountable for “the downfall of the economy due to demonetisation and the loss of many lives due to the disastrous, ill-planned process”.

Trinamool Congress MP Sukendu Sekhar Roy said that the dissenting judgment “exposed the fact that the policy fails on the factor of larger ‘common good’”. He said that the Supreme Court should have “also dealt with the questions raised by the plaintiffs on whether demonetisation met the goals it set out for”.

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Vol 55, No. 30, Jan 22 - 28, 2023