WAfter the Supreme Court’s pat on the back of demonetisation, the Narendra Modi government can now hope that the doubts cast on its action are no longer valid. A Constitution bench of the Supreme Court has upheld the government’s November 2016 decision to demonetise two denominations of currency notes to target black money and terror funding, among other reasons. In his appeal to the nation while announcing demonetisation, Prime Minister Modi blamed the slow pace of development on terrorism and unaccounted money in circulation. He had said, “Over the years this country has realized that corruption, black money and terrorism are holding us back in the race for development.” Told,
Critics of demonetisation seriously doubt the reasons behind the government’s action and question its intentions.
Eradication of corruption was one of the key issues on which the BJP challenged the Congress and came to power in 2014. Modi in his announcement on 8 November 2016, suggested that “the evil of corruption has been spread by some sections of the society for their selfish [who] The poor and the underprivileged have been neglected. Possibly with a view to extend banking facilities to a larger section of the people, the government announced the Jan Dhan Yojana in August 2014 and appealed to the people to reduce cash transactions. Though the initiative became popular, it was doubtful whether it alone could reduce the cash component in circulation and curb black money.
Another major step taken by the government to curb unaccounted money was the Income Declaration Scheme (IDS) in 2016, which demanded To give some tax exemption to those who voluntarily declare their unaccounted/undisclosed income. That was not the first time; Many governments in the past had announced such schemes.
IDS 2016 perhaps did not respond as expected and failed to meet its objective of identifying the perpetrators of corruption. It is possible that the government assessed the plan and announced demonetisation.
Read also: Justice Nagaratna’s dissent in demonetisation case – ‘well intentioned but illegal’
a white paper
Now that the Supreme Court has given a clean chit to the government, it would be appropriate for the Modi government to come out with a white paper on demonetisation and explain the steps taken before and after making the plan public. The specifics of the plan, how much effort has been put in and the course corrections made during the implementation will be known only to the government.
The Supreme Court has also said in its judgment that the decision-making process cannot be faulted just because the proposal (of demonetisation) came from the central government. “There has to be a lot of restraint in matters of economic policy. Court cannot take the place of knowledge [the] executive with his wisdom, “decide Told, Therefore, while there is no doubt about the wisdom of the government, a detailed paper on the process of dealing with black money by way of banning certain denominations of currency in circulation would be more educative for the people and those who are trying to curb this menace. seriously concerned.
A welcome outcome of demonetisation was the use of digital platforms for commercial transactions and banking transactions. With Unified Payments Interface (UPI) and other platforms and adoption of non-cash payment methods by banks, digital payments have grown to such an extent that small notes have lost their relevance and utility, let alone coins. Received “no-human-touch” payment methods extreme popularity And acceptance especially after the pandemic. Economic Survey 2016-17 (echap03.pdf Pages 59-60 Effect of Monetization Table) as well accepted it. The white paper might go into details of the enhancement digital transaction (799 crore by March 2022) but a corresponding increase in cash in circulation (CIC) as a proportion of GDP.
handling of criticisms
Although the Supreme Court has not considered the merits of the demonetisation scheme, the government has been able to manage the negative effects of the scheme.
According to the Economic Survey 2016-17, the country’s private sector wealth actually declined as some high-denomination notes were not returned and real estate prices fell drastically. The survey also said that there were job losses, decline in farm income and social disruptions especially in cash-intensive sectors such as agriculture, real estate and jewellery. Dispose of banned legal tender notes at these locations. The Economic Survey also noted an increase in uncertainty due to concerns over the economic impact and long-term effects. As per his suggestion, the government took some supplementary measures to clear the initial misgivings about demonetisation.
The Modi government won the 2019 general election with more seats and responded politically to critics. Now the time has come to give an economic answer and a logical rationale for the decision taken in November 2016 and how the government has stood up to the daunting challenges of demonetisation.
Seshadri Chari is the former editor of ‘Organiser’. He tweeted @sesadrichari. Thoughts are personal.
(Edited by Prashant)