The Union government has informed the Supreme Court that the demonetization carried out in 2016 was a well-considered decision integral to a broader strategy aimed at addressing issues such as counterfeit currency, terror financing, black money, and tax evasion. In response to a set of petitions challenging the demonetization, the government defended its move, stating that it was implemented after thorough consultations with the Reserve Bank of India and extensive preparations.
The government, in an affidavit filed with the Supreme Court, asserted that the withdrawal of legal tender status for Rs 500 and Rs 1000 notes was not only an effective measure but also part of a comprehensive plan to tackle various economic challenges. It emphasized that the decision was in line with the powers conferred by the RBI Act, 1934, and subsequently acknowledged by the Parliament through the Specified Bank Notes (Cessation of Liabilities) Act, 2017.
The withdrawal of legal tender status for specified bank notes was highlighted as a crucial step in a series of transformative economic policies. The government clarified that the demonetization decision was specifically recommended by the Central Board of the Reserve Bank of India, which had proposed a draft scheme for its implementation.
The affidavit emphasized that the demonetization decision was executed to combat fake currency, black money, and financing of subversive activities, while also promoting the formal sector, digitalization of transactions, and broadening the tax base. Measures were taken to minimize hardships, with specified bank notes exempted for certain transactions such as booking transportation, medical treatment, and purchase of essential goods.
The Supreme Court, comprising a five-judge constitution bench, is set to address the matter on November 24. The government assured that steps were taken to mitigate the challenges faced by the public during the demonetization process. The case involves 58 petitions challenging the government’s decision to demonetize Rs 1000 and Rs 500 denomination currency notes, which was referred to a larger bench of five judges for a definitive ruling on its validity and related matters.
