Business & Economy

India’s top court validates PM Modi’s 2016 controversial bank note ban

New Delhi, Jan 2 (EFE).- The controversial decision by Prime Minister Narendra Modi to ban high-denomination banknotes in 2016 was upheld by India’s Supreme Court on Monday, saying the government planned it after consulting the central bank.

The court heard several petitions that challenged Modi’s sudden decision to recall all currency notes of 500 and 1,000 rupees, ostensibly to root out the shadow economy, unearth the black money hoards of the tax-evading rich Indians, fight corruption, and crack down on money laundering and terrorist financing.

Calling it a decision not well considered, the petitioners had urged the five-member bench of the court to strike down the plan, which was shrouded in secrecy until Modi announced the shock move during an evening broadcast on national television on Nov.8, 2016.

Four judges said there was no flaw in the decision made by the government after consulting the Reserve Bank of India.

“We hold that there was a reasonable nexus to bring such a measure, and we hold that demonetization was not hit by the doctrine of proportionality,” the judges said, considering that it was not more drastic than it ought to be for the desired result.

However, the fifth member of the bench, Justice BV Nagarathna, differed from the majority decision of the court.

Justice Nagarathna called the decision “unlawful” and “an exercise of power, contrary to the law.”

“(The) central government may proceed to demonetize the bank notes, but only through a legislative process or an ordinance followed by a legislation if the parliament is not in session, or by a plenary legislation before the parliament,” she said.

“Without parliament, a democracy cannot thrive, and parliament cannot be left aloof on such important decisions.”

The dissenting judge said the demonetization decision was recommended by the central government as per the records submitted by the central bank. “This shows there was no independent application of mind by the RBI.”

The decision to spike 86 percent of the currency notes in circulation came without a warning, with Modi declaring that 500- and 1,000-rupee notes had just become “worthless little slips of paper.”

The decision sparked an economic chaos in the country, with small businesses and manufacturers struggling due to a cash crunch that left long lines of people at banks and ATMs for weeks.

Dozens of people died in the long queues, with people struggling to deposit the scrapped currency notes in banks or withdraw money from cash machines.

Modi supporters called the decision a “surgical strike” against black money and terror financing, but others wondered whether it was not a “carpet-bombing” that affected the poor the most in a country where an estimated 78 percent of transactions were then done in cash. EFE


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