India’s Supreme Court says 2016 demonetisation decision was legal
The government’s decision to demonetize 86 percent of the country’s cash supply in 2016 was confirmed as valid by the Supreme Court of India, which noted that the decision was made in accordance with the law and after consulting the central bank.
A majority of a five-judge panel of the nation’s highest court rendered the decision on a number of petitions challenging the action on Monday. Out of the five judges, one expressed disagreement in writing.
One of the four judges who concurred in the ruling, Justice BR Gavai, stated in a written opinion that the notification dated November 8th, 2016, “does not suffer from any defects in the decision-making process.”
However, in a dissenting opinion, Justice BV Nagarathna referred to the ruling as “unlawful” and “an exercise of power, contrary to law.” She claimed that instead of the government, a parliamentary act might have enacted the cash restriction.
Lawyers, a political party, cooperative banks, and private citizens were among the petitioners.
P Chidambaram, a former finance minister of India, was one of the attorneys who argued against the note ban proposal.
In order to combat corruption and target undeclared “black money,” Prime Minister Narendra Modi announced on national television in November 2016 that all 500 and 1,000 rupee notes, which made up 86 percent of the currency in circulation, would be banned.
However, the widely known “demonetization” initiative seriously affected India’s cash-based economy. Small firms and manufacturers suffered losses, which sparked a recession and months of financial upheaval for common, cash-dependent Indians.
As cash ran out, hundreds of thousands of people formed long lines in front of banks and ATMs to exchange their savings for legal value. In the end, the government issued new notes with denominations of 500 and 2,000 rupees.
India lost 3.5 million jobs in the year after demonetisation, claims Mumbai-based research company the Centre for Monitoring the Indian Economy.
