New Delhi The Bharatiya Janata Party on Monday said the Supreme Court’s majority verdict reaffirming the Centre’s 2016 decision to demonetise ₹500 and ₹1,000 denomination bank notes was an endorsement of the government’s right to effect the move, and also of the motives behind it, even as the Congress maintained that the court was only ruling on the correctness of the procedure followed, and not on the merits.
“The Supreme Court today by a majority judgement dismissed all the 58 writ petitions that challenged the historic demonetisation scheme… it said this whole exercise was done for a valid cause, to check fake currency, terror funding and black marketing. The court said the government has the right to take such a policy decision and that the RBI was consulted,” senior BJP leader and former union minister, Ravi Shankar Prasad said.
He dubbed the Congress “anti-poor” for criticising the policy, which he said was designed to benefit the poor. “The Congress in its own way promoted and protected informal economy elements in the country.”
Recalling the Congress’s criticism of the policy, he asked: “Will Rahul Gandhi who went across the country criticising the Centre’s decision on demonetisation now apologise?”
“The only dissenting judge also said the policy was well intentioned…But the Congress had created such a fuss about the policy; Rahul Gandhi during his visits abroad used to take up the issue,” he added.
The Congress maintained that the apex court has only ruled on the procedure followed. “The Supreme Court has only pronounced on whether Section 26(2) of RBI Act, 1934 was correctly applied or not before announcing demonetisation on November 8 2016. Nothing more, nothing less. One Hon’ble Judge in her dissenting opinion has said that Parliament should not have been bypassed,” Congress general secretary for communications Jairam Ramesh said in a statement.
A Constitution bench of the Supreme Court on Monday affirmed the Union government’s 2016 demonetisation policy by a 4-1 majority. Justice BR Gavai read out the majority verdict on behalf of himself, SA Nazeer, AS Bopanna, and V Ramasubramanian. Justice BV Nagarathna authored a dissenting judgment.
The Congress argued the verdict said “nothing on the impact of demonetisation which was a singularly disastrous decision. It damaged the growth momentum, crippled MSMEs, finished off the informal sector & destroyed lakhs and lakhs of livelihoods”.
“The verdict has nothing to say on whether the stated objectives of demonetisation were met or not. None of these goals — reducing currency in circulation, moving to cashless economy, curbing counterfeit currency, ending terrorism & unearthing black money — was achieved in significant measure,” Ramesh added.
Prasad, however, said that demonetisation has ushered transparency into the financial system. There has been a growth in digital transactions and in October 2022 alone saw 7.03 billion transactions worth ₹12 lakh crore, he added.
The policy had a positive impact on the tax collection as well, Prasad said. “In 2017-18 the tax collection was 18% higher than the previous year at ₹10.3 lakh crore. Also, 2.38 lakh shell companies were busted. Property being registered under benami (proxy) handles and money laundering was stopped.”
The informal sector’s share in the economy has reduced from 52% to 20% and there was a blow to terror funding, Prasad added.
Senior Congress leader and former Union finance minister P. Chidambaram expressed his satisfaction with the dissenting judgment, terming it as a “welcome slap on the wrist of the government.” The former finance minister also noted that the majority had steered clear of the question of whether the objectives were achieved at all.
“… You don’t focus on the majority judgement, this is unfair, improper and condemnable,” Prasad countered in his media briefing.
The CPI(M) issued a statement saying the majority judgment the Supreme Court exclusively dealt with the legal right of the central government to take such a decision. “The dissenting opinion of one of the honourable judges maintained that this Section of the RBI Act says that RBI must recommend to the government to initiate demonetisation. In this case the decision was taken by the Central government which sought the opinion of the RBI. Hence, the approval of Parliament should have been taken before this decision was executed,” the statement said.