Perspective : Demonetisation Verdict | 02 January, 2023

Summary

The Supreme Court of India upheld the 2016 demonetization decision in a 4:1 majority verdict, asserting the process was not legally flawed. The court emphasized the separation of powers, stating that economic policies like demonetization are within the government's domain and not subject to judicial review on merits. The dissenting opinion argued for legislative action instead of a Gazette notification. Panelists discussed the ruling's significance, the impact on cash usage, digital payments, and the broader implications for policy-making and the economy.

Takeaways

• 🏛️ The Supreme Court of India upheld the government's decision to demonetize the 1500 denomination notes, ruling that the decision-making process was not flawed.
• 📜 The majority verdict (4:1) stated that the decision to scrap high-value currency notes was not legally or constitutionally flawed, emphasizing the consultation between the Reserve Bank of India and the government for six months.
• 🔄 Justice B. N. Srikrishna dissented, arguing that demonetization should have been implemented through legislation, not a Gazette notification, citing the need for parliamentary debate and representation.
• 🏦 The Supreme Court's decision is significant as it preserves the separation of powers between the judiciary, executive, and legislature, allowing the executive to govern without judicial review on economic policy merits.
• 💡 The court's focus was on the process of demonetization rather than its objectives or outcomes, highlighting the importance of the consultative process and the proportionality of the action taken.
• 🛡️ The judgment reinforces the idea that economic policies, especially transformative ones, should be within the domain of the government with limited scope for judicial review.
• 💼 Mr. Anand Singh Bell, former principal economic advisor, agreed that the government's monetary policy should be executed based on its consultations and expertise, without judicial intervention on policy specifics.
• 📊 AK Bhattacharya, editorial director of Business Standard, noted that while the Supreme Court validated the demonetization process, it did not address the outcomes or objectives, leaving the debate on effectiveness open.
• 📉 The demonetization exercise led to a significant impact on micro, small, and medium enterprises (MSMEs) that heavily relied on cash transactions, with many facing closure or disruption.
• 💡 The government claimed that the benefits of controlling black money, terror funding, and corruption outweighed the adverse effects on certain economic sectors, emphasizing the trade-offs inherent in economic policy decisions.
• 📈 Despite the intention to reduce cash usage, cash in circulation as a percentage of GDP has increased post-demonetization, suggesting that the objective of reducing cash prevalence was not met.

Q & A

What was the Supreme Court's verdict on the demonetization of 1500 denomination notes in India?

The Supreme Court upheld the decision to demonetize the 1500 denomination notes with a 4:1 majority verdict, stating that the decision-making process was not flawed and the procedure emanated from the government.

What were the main reasons for the Supreme Court to validate the demonetization process?

The Supreme Court validated the process due to the consultation between the Reserve Bank of India and the union government over six months, adherence to the RBI Act, and the proportionality of the action taken in relation to its objectives.

How did the dissenting judge, Justice B. N. Nagaratna, view the demonetization process?

Justice B. N. Nagaratna dissented from the majority judgment, arguing that demonetization should have been implemented through legislation rather than a Gazette notification.

What is the significance of the Supreme Court's judgment on the separation of powers in the context of demonetization?

The judgment is significant as it upholds the separation of powers enshrined in the constitution, allowing the executive to govern the country and make decisions on economic policies without judicial interference on the merits of the case.

What is the doctrine of proportionality mentioned in the script, and how did the Supreme Court apply it to the demonetization case?

The doctrine of proportionality suggests that the action taken should not be more drastic than necessary to achieve a particular result. The Supreme Court found the demonetization action to be proportional, considering the objectives it aimed to achieve.

What was the period of exchange given for the demonetized notes, and how did the Supreme Court view its reasonableness?

A 52-day period was given for the exchange of demonetized notes. The Supreme Court deemed this period to be reasonable and not flawed in terms of the process.

How did the panelists on the program view the impact of demonetization on micro, small, and medium enterprises (MSMEs)?

The panelists acknowledged that MSMEs, which heavily rely on cash transactions, were adversely affected by demonetization. However, the government believed that the benefits of controlling black money and corruption outweighed the negative impacts on these sectors.

What was the government's stance on the objectives of demonetization, according to the panelists?

The government claimed that the objectives of demonetization, such as controlling black money, terror funding, and tax evasion, were met, and the benefits of these outcomes outweighed the adverse impacts on certain economic sectors.

How did the Supreme Court approach the question of whether the objectives of demonetization were met?

The Supreme Court refrained from examining the objectives and outcomes of demonetization, focusing instead on the legality and procedural correctness of the decision-making process.

What was the dissenting judge's view on the process of demonetization, and how does it differ from the majority opinion?

The dissenting judge believed that demonetization should have been carried out through parliamentary legislation, arguing for a more formal legislative process rather than an executive decision.

What was the impact of demonetization on cash usage in the economy, as discussed in the script?

Despite the intention to reduce cash usage, the script mentions that cash in circulation has increased as a percentage of GDP, suggesting that the objective of reducing cash prevalence was not achieved.

Outlines

00:00

📜 Supreme Court Upholds Demonetization Decision

The Supreme Court of India has validated the government's decision to demonetize the 1500 denomination notes, stating that the decision-making process was not flawed and did not suffer from any legal or constitutional infirmity. The court emphasized the importance of the separation of powers, noting that the decision was an executive economic policy and should not be judicially reviewed on its merits. However, Justice B. Nagarathna dissented, arguing that demonetization should have been legislated rather than implemented through a Gazette notification. The panelists, including Mr. Nigam, an Advocate Supreme Court of India, Mr. Anand Singh Bell, a former principal economic advisor, and Mr. AK Bhattacharya, an editorial director, discussed the significance of the verdict and its implications for the balance of power between the judiciary, executive, and legislative branches.

05:01

🏦 Judicial Review and Economic Policy

The discussion focused on the Supreme Court's decision to refrain from judicially reviewing the economic policy of demonetization, highlighting the importance of allowing the government to undertake transformative economic policies without excessive judicial interference. Mr. Bell agreed with the court's stance, emphasizing that the 2016 demonetization was within the government's domain and should be executed in consultation with the RBI. The panelists debated the technical aspects of the judgment, including the process of policy-making and the role of the judiciary in exceptional circumstances only. The conversation also touched on the political implications of the judgment and the ongoing debate about the objectives and outcomes of demonetization.

10:03

🗣️ Debate on Demonetization's Legality and Secrecy

The panelists explored the dissenting opinion that the demonetization process should have been conducted through legislation and debated the feasibility of such a process in a country like India. They discussed the necessity of secrecy in demonetization to prevent people from circumventing the policy's intent. Mr. Nigam argued that the secrecy and the consultation with the RBI were crucial, and the decision was made under the right legal provisions. He refuted the claims that the consultative process was not followed and that the decision was based on hearsay or speculation. The conversation underscored the complexity of balancing legal technicalities with the broader economic objectives.

15:05

💡 Impact of Demonetization on Economy and Society

The discussion turned to the impact of demonetization on the economy, particularly on micro, small, and medium enterprises (MSMEs), which were adversely affected due to their reliance on cash transactions. The government's perspective was that the benefits of controlling black money and corruption outweighed the negative impacts. Mr. Bhattacharya pointed out that while the objective of reducing cash usage was not met, as cash in circulation has increased, the digital payment sector saw a significant boost. The conversation highlighted the trade-offs inherent in economic policy decisions and the ongoing debate about the effectiveness of demonetization.

20:07

🔑 The Role of Secrecy and Consultation in Policy Making

The panelists debated the role of secrecy in policy-making, specifically in the context of demonetization. Mr. Nigam argued that the secrecy was essential and provided an added advantage of consultation with the RBI, an expert body on monetary policy. He disagreed with the dissenting judgment's suggestion that the process should have been parliamentary, maintaining that the government has the power to make independent decisions on such matters. The conversation emphasized the importance of expert consultation in the decision-making process and the challenges of maintaining secrecy while adhering to legislative processes.

25:08

🎉 Reflections on Demonetization and Future Outlook

In the concluding segment, the panelists reflected on the broader implications of the Supreme Court's judgment on demonetization. They acknowledged the government's efforts to tackle black money and corruption and the impact on digital payments. However, they also recognized the adverse effects on certain sectors of the economy and the political debate surrounding the policy's effectiveness. The conversation concluded with the acknowledgment that while the Supreme Court has addressed the technical legality of the process, the wider debate on the policy's outcomes will continue. The program ended with a note of thanks to the guests and viewers, and a wish for a happy new year.

Keywords

💡Demonetization

Demonetization refers to the process where a government declares a particular currency unit illegal tender, thereby removing it from circulation. In the context of the video, it discusses the Indian government's decision to demonetize 1500 denomination notes, which was upheld by the Supreme Court as a legal and constitutionally sound economic policy, despite one dissenting opinion that favored legislative action over a Gazette notification.

💡Supreme Court

The Supreme Court is the highest judicial body in a country, responsible for interpreting laws and ensuring their constitutionality. In the video, the Supreme Court's judgment on the demonetization process is central, highlighting the court's role in affirming the legality of government actions and maintaining the separation of powers.

💡Separation of Powers

Separation of Powers is a political doctrine that divides the government into three branches: the executive, the legislative, and the judiciary, each with separate and independent powers and areas of responsibility. The video emphasizes the importance of this principle, as the Supreme Court's decision on demonetization respects the executive's domain in formulating economic policies without judicial interference in the merits of the case.

💡Economic Policy

Economic policy refers to the strategies and actions undertaken by the government to achieve economic goals such as growth, inflation control, and employment. The video discusses the government's demonetization as an economic policy aimed at curbing black money, terror funding, and tax evasion, which the Supreme Court deemed to be within the executive's purview.

💡Legality

Legality pertains to the quality of being in accordance with the law. The video script focuses on the Supreme Court's validation of the demonetization process, stating that it was not flawed legally or constitutionally, thus affirming the government's right to implement such measures under the law.

💡Proportionality

Proportionality, in a legal context, refers to the principle that the means used to achieve an administrative or policy goal should not be excessive or disproportionate to the aim. The Supreme Court found the demonetization measure to be proportional, meaning it was an appropriate response to the intended objectives, such as curbing black money and terror funding.

💡RBI Act

The RBI Act refers to the legal framework governing the functions and powers of the Reserve Bank of India. The video mentions the RBI Act in the context of the powers granted to the central government and the RBI to undertake demonetization, highlighting the legal basis for the government's actions.

💡Legislation

Legislation is the process of making or enacting laws by a legislative body, such as a parliament. The video script includes a dissenting view that the demonetization should have been carried out through legislation, debated in Parliament, rather than through an executive decision, reflecting a debate on the appropriate process for implementing such a significant economic measure.

💡Gazette Notification

A Gazette notification is an official announcement or notification published in a government's official journal. In the video, the dissenting judge's argument is that demonetization should not have been implemented through a Gazette notification, which is seen as a more direct and swift method without the deliberation of legislative bodies.

💡MSME Sector

MSME stands for Micro, Small, and Medium Enterprises. The video discusses the impact of demonetization on this sector, which is known to rely heavily on cash transactions. The government's decision to proceed with demonetization took into account the potential adverse effects on these businesses but deemed the broader economic benefits as outweighing the negative impacts.

💡Digital Payments

Digital payments refer to the transfer of funds via electronic methods rather than cash. The video mentions that one of the outcomes of demonetization was an increase in digital payments, indicating a shift towards a more cashless economy, although the overall objective of reducing cash prevalence in the economy was not fully realized.

Highlights

Supreme Court upholds the government's decision to demonetize 1500 denomination notes with a 4:1 majority verdict.

The decision-making process of demonetization was found not to be flawed, emanating from the government.

The top court ruled that the decision to scrap high-value currency notes had no legal or constitutional infirmities.

There was a six-month consultation between the Reserve Bank of India and the union government before the decision.

Justice Bibi Nagarathna dissented, arguing demonetization should have been legislated, not notified.

The Supreme Court emphasized the separation of powers and the role of the executive in economic policy.

Demonetization was addressed as an economic policy issue, not subject to judicial review on merits.

The court examined the powers given in the RBI Act and the process of demonetization.

The doctrine of proportionality was discussed, with the court finding the action proportional to the objectives.

The period of exchange (52 days) post-demonetization was deemed reasonable by the Supreme Court.

The debate on the objectives and outcomes of demonetization was highlighted as a political issue.

The Supreme Court's judgment was seen as significant for the process of policy-making within the government.

The judgment clarified the limited scope for judicial review in economic policies.

The impact of demonetization on micro, small, and medium enterprises was acknowledged.

The government's claim of achieving objectives through demonetization was contrasted with opposition claims of harm.

The Supreme Court refrained from evaluating the outcomes of demonetization, leaving that to the executive domain.

The dissenting judgment's focus on the process rather than the merits of demonetization was noted.

The feasibility of discussing economic policies like demonetization in Parliament was debated.

The judgment was seen as reaffirming the separation of powers among the judiciary, executive, and legislature.

Demonetization's effect on digital payments was highlighted as a positive outcome.

The increase in cash circulation post-demonetization was discussed as a contrary outcome.

The impact of demonetization on reducing terrorism funding and tax evasion was debated.

The judgment's focus on the legality of the process rather than its objectives or outcomes was underscored.

Transcripts

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foreign

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you're watching perspective well more

than six years after the center's

decision to demonetize the 1500

denomination notes the Supreme Court in

a four is to one majority verdict has

upheld the move saying the

decision-making process was not flawed

merely because the procedure emanated

from the government ruling that the

decision to scrap the high value

currency notes does not suffer from any

legal or constitutional flaw the top

Court said there was consultation

between the Reserve Bank of India and

the union government for a period of six

months besides the top Court also

observed that the decision being the

executive's economic policy cannot be

reversed Justice Bibi nagaratna however

dissented from the majority judgment

saying demonetization should have been

done through a legislation and not

through a Gazette notification so with

eminent panelists today we'll analyze

the key points of the Supreme Court's

judgment on demonetization in

perspective pleased to welcome Mr

deshratha Nigam his Advocate Supreme

Court of India and joining us virtually

is Mr Anand Singh Bell he's former

principal economic advisor government of

India and Mr AK bhattacharya editorial

director business standard thank you

gentlemen for joining us on the program

today Mr Nigam allow me to begin the

program today with you your response to

the Supreme Court's judgment on

demonetization and why is this verdict

so significant

energy one thing is very important that

this judgment if it had gone otherwise

would have you know destroyed the

separation of powers that the

constitution enshrines

then executive would not have been able

to run the country govern the country in

the wake of

emerging challenges that we face

the new challenges that are there or the

existing challenges or the old

challenges say for example fake currency

was a problem in this country and our

neighboring country was quite a culprit

in it and then you had Terror funding

and new laws have been made with respect

to Terror funding as well which is one

of them is uapa then about black money

tax evasion these are the issues that

only you know government of the day can

deal with it not the Judiciary hence the

Supreme Court clearly said that since

it's an economic policy and the settle

noise will not judicially review on the

merits of the case but we'll look at the

process of you know

this notification of demonetization

therefore they went into it and saw the

powers given in the RBI Act

now there are two ways of demonetization

one through executive decision through

notification or through legislation or

ordinance

and the dissenting judgment

went on to the fact that it should have

been done through legislation

having its own interpretation of section

26 2 of the RBI act saying any series is

there the word name given is any series

out there rather than all series so the

Supreme Court gave an example Suppose

there are 20 series of a particular

denomination of a currency then it

demonetizes 19 of them and leaves one

series because you are saying it can

only do any series that will lead to

chaotic situation because then people

will not know whether that remaining one

is also fake or not so it gave a very

pertinent example and the consultative

process which is given in 26 section 26

has been followed for six months the

argument was that it was not done

secondly it says the doctrine of

proportionality doctrine of

proportionality in simple terms is

suppose somebody goes for hunting it's a

very limits example

you don't take a cannon to shoot a lion

so what doctrinal proportionality says

the action that executive action or the

administrative action that you take

should not be so drastic

which should not be more than what is

desired for a particular result so it

should be proportional and the Supreme

Court find it to be completely

proportional looking into the objectives

it was supposed to achieve

and and the third it says that the

period of exchange was also not

unreasonable

52 days were given and that was also

reasonable so consultative process

reasonable Nexus uh with the objectives

was also there they said we'll not go

into the objectives because the

government that's a separate field

altogether how much it has been achieved

not achieved it's a executive domain it

can be you know that you can raise

questions in Parliament that's what I am

adding I mean if anybody has a problem

whether you can raise a start question

in Parliament saying that please tell me

how far the objectives have been

achieved of demonetization that the

government is bound to answer if it's a

start question I think the larger debate

is around the objective and the outcome

of the entire procedure but Mr Bell the

fact that the the Judgment today was

largely on the technicality of the

demonetization process do you think it

sort of affirms the fact that when it

comes to economic policies and specially

series of transformative economic

policies that the government is

undertaking there should be either no

scope or restricted scope for judicial

review do you read is that the sense of

the Judgment today

yeah I I totally agree with that

1000 rupee notes taken in 2016 was

within the domain of the government in

in consultation with the RBI the

monetary policy is a

stated objective of Reserve Bank of

India which it executes in consultation

with the government of India so uh the

the freedom to execute its monetary

policy based on its consultations based

on its expertise

aligns totally with the RBI in the

government and the Supreme Court has

very rightly uh decided that the process

was all right and the proportionality

was also not uh out of uh the picture

and hence it has gone ahead and

validated the thing and so this is a

this is a good sign it says occurs well

for the process of policy making in the

government I mean it's it's fairly

obvious it's not rocket science that

policy making should fall within the

domain of the government and the

judicial sort of intervention engagement

should be only on a very exceptional

circumstances and if only if the basic

structure of the Constitution is being

changed here nothing like that was

happening it was a monetary policy taken

in consultation with the RBI based on

the exigencies of the situation and the

government went ahead and did it and

very rightly so the Supreme Court has

not got into whether the objectives were

met in this that is not the domain of

the Supreme Court that lies entirely

with the executive of the government

thank you clearly Mr bhattacharya the

you know the fact that uh the political

debate has revolved around the outcome

so while the government claims that it

has managed to achieve the objectives

with which the policy was brought about

the the opposition's claims have clearly

been on the contrary that it has done

more harm than good and the debate

continued it went to the Supreme Court

and we've seen today the Judgment has

refrained from getting into the

objectives and outcomes because of which

the response is now coming in from the

political parties have once again raised

questions but that leaving aside the

fact that you know uh the separation of

powers is a extremely important and we

keep discussing how it's important for

each of the institutions to remain

within their domains while performing

their uh you know duties their functions

as prescribed by the Constitution do you

think this judgment reaffirms that

separation of power is clearly among the

Judiciary the executive and the

legislature and that is the biggest

takeaway from the Supreme Court's

judgment on demonetization

well there can be little drought

that this judgment

upholds the the legality of the decision

that was taken by the RBI under 26-2 of

the RBI act uh now it's very important

to note that the Supreme Court did not

go into idea the outcome or the

objectives and examined them at all what

it did was to establish that

that that whether the Reserve Bank of

India and the government of India had

the powers uh to to take such a decision

under the relevant laws so I think

that's Point number one that uh Supreme

Courts uh from the verdict from the

Judgment it is very clear that they are

restricting themselves itself to the

legality of that demonetization order

that's Point number one point number two

is that the the order uh does not find

except the dissenting order except does

not find any problem with the government

of India

making a move in consultation

RBI to go ahead uh with the

demonetization decision uh in other

words uh you will remember that on 7th

of November uh the the finance ministry

had sent a note to RBI uh asking the

board to consider what all necessary

steps needed to be taken to tackle the

question of our higher

circulation of of rupees 500 and 1000

rupee denomination notes

so it is on the based on on that on that

note that the RBI Central board met on

8th November afternoon

and took a decision uh to recommend uh

the Declaration of these these notes as

invalid and they were no longer legal

tender so technically uh you know

demonetization is a is a media word uh

it's a it's it's use but actually what

happened was these currency notes were

declared uh declared illegal Tenders in

that sense right that's not Point number

two and point number three and that's my

final point is this that uh whether the

the the the objectives or the outcomes

of the the demonetization decision uh

were desirable were achieved Supreme

Court has remained silent uh and the

jury will probably still remain out on

that issue

right and I think that will keep

lingering on outside of the Court also

Mr Nigam but the fact that you know the

one dissenting judge happens to say that

this the entire procedure was unlawful

uh instead a legislation should have

been brought about it should have been

discussed in Parliament because

Parliament is where you represent the

will of the people so

how much Merit is there in that

observation so each time there is an

economic policy like that is it possible

to discuss it in Parliament get the will

of all the representatives that you know

represent people from across the country

and then bring about such a legislation

in a country like ours how feasible

would that be see the fact is when such

kind of demonetization takes place it

has to be full of secrecy

because if it is declared in advance

people will start you know submitting in

the bank or a huge amount of cash

transactions will start all kinds of you

know things will start to defeat the

entire purpose of legislation so it is

it was done in secrecy so it had to be

done under 26 2 rather than the

legislation and secrecy was the

important ingredient in this kind of

demonetization secondly if you look at

the Judgment of the dissenting judgment

even the lady judge says

the demonetization was well thought of

well-intentioned and well considered

she has mentioned all these words only

she was on the process

in fact she touched the Merit

and said Merit if if we speak on Merit

it is a good thing but process she says

it had to be followed through

parliamentary legislation I have given

you one argument of secrecy second is

earlier to demonetizations had taken

place through legislation but government

has two routes available one under the

RBI Act where the RBI act itself

delegates the powers to the central

government

the RBI itself does not have an

independent function of demonetization

its role is to advise the government if

needed consultation is done to the

central board and the decision has to be

taken by the central government it can

be negative advice it can be positive

advice it is only recommendatory in

nature not necessarily binding on the

central government even if the RBI gives

a negative report don't do

demonetization central government still

has the power

to have its own independent decision on

that applying its own mind and can take

that decision so that's very clear so

what the dissenting judgment says out of

the true process you should follow one

process that is not the intention of the

legislation nor the separation of the

powers between the various organs of the

state it is not even intentional there

if the central government has a power

both under the Constitution and under

the RBI act to take a decision they can

take a decision

a judgment cannot tell the government

out of the do out of the two ways that

you have followed this particular way so

that I think to to that point I'll

disagree uh to that extent and uh the

fact remains I still feel these uh

challenges that had come politically

motivated

and they were caused in legal niceties

and one can easily do it you know saying

it a consultation has not taken place

the fact it is for six months

consultation had taken place so you

would see factually incorrect statements

were also made before the court and of

which there was no evidence the office

they did not have an Evidence it was

mere hearsay mere speculation pleadings

cannot be done if you write in a supreme

court or any court readings cannot be

speculative or based on hearsay this was

completely on the hearsay not even

hearsay it is lying on Earth let me tell

you to say that no consultative process

has taken place and you file an

affidavit with it which is perjury to my

opinion okay Mr Bal you know the the

fact that each of us would be following

what's happening in the Supreme Court as

far as this case was concerned the the

larger point of debate as I mentioned

earlier was of course the outcome so the

government has claimed that a lot of the

objectives that it's set to meet out

have been met out after the 2016

exercise what kind of difference do you

see in achieving those objectives which

of course that the opposition is

dismissing they're saying nothing of

that it's what happened it did more harm

than good in terms of impacting the the

lower ranks of society in terms of the

organized unorganized sector that it

impacted but what is the kind of

difference that you as an economist have

seen the demonetization exercise

bringing to our system

see the demonetization exercise did lead

to

a lot of micro and small medium

Enterprises closing

are being hampered because we all know

that they deal with cash in a huge way

it is an obvious fact that the micro

small and medium Enterprises before 2016

who are dealing with a lot of cash so it

was kind of accepted that once

demonetization is implemented they will

be adversely affected but that was taken

into account and the benefits which the

government and research through

controlling of

you know that um Terror money you know

so black money and to controlling of

corruption

far outweighed in its opinion uh the

impact it would make on the micro small

and medium Enterprises so this was a

fact which was taken into consideration

ultimately economic policy is a lot

about trade-offs the government of the

day in its wisdom had decided that the

benefits which will accrue to it through

implementation of the demonetization uh

process will does far outweigh the

negative adverse impact it has on

certain sections of the economy and

that's how it went on and took the

decision here let me also add you know

even in economic theory the effect of

money supply on prices and output is not

on a one-to-one corresponding it's not

truly well defined anyone who says that

he can control certain levels of

monetary policy and it'll have this

impact on real output and prices is uh

is not correct even the monetary

economists agree that this decision this

link between money supply and real

output and prices is slightly fuzzy and

it's not a one-to-one correspondence

it's not physics that you say you raise

it by two and that will increase by five

that doesn't happen so when it comes to

the final objectives being realized and

all there's a lot of difference in

opinion between the political parties

between experts and all but then that is

the

uh richness and strength of Economic

Policy I mean uh Economic Policy once

you know once uh decision is taken it

can be argued both ways that's a one

thing about economic policy is slightly

fuzzy the objectives also on the ground

are not absolutely clear that it's a

it's not in black and white you know you

can use your filters and see it in a

particular way but I would like to argue

that the government of the day

decide in its wisdom that the advantages

far outweighed the adverse impact it

would have on certain sections of the

economy okay Mr bhattacharya you know

amid the varied opinions on the

advantages and disadvantages of the

entire procedure how would you respond

to the contention and which concerns the

larger public also is that it said it

would reduce the use of cash whereas

when you look at the actual data the

currency in circulation has increased

from 12 percent of GDP in 2010 to about

14 which clearly means that usage of

cash has not reduced post demonetization

and this has been one of the major

arguments that was done so in that

aspect how do you look at the contention

what is your opinion

you asking me yes yes

you know uh you hit the nail on the head

because I think among the many

objectives that demonetization was

supposed to supposed to achieve uh

reduction in the prevalence of cash in

the economy was supposed to be tackled

but I think that objective has clearly

not been achieved as you rightly pointed

out the cash as the share in GDP has

actually gone up uh similarly the tax to

GDP ratio has also remained by and large

the same the msme sector has been

adversely impacted I think in one area

where demonetization has helped is

increasing use of digital digitalization

in terms of the payments space a digital

payment have certainly got a boost uh so

so the the results of of the

demonization uh have been uh actually

uh the actual result has been only on

digital payments on the other front uh

the outcomes has not been to the to the

desired levels in my view I think that

let me just disagree on one issue uh

with Mr negan's point about uh about the

secrecy uh you know secrecy could have

been maintained even through an

ordinance route uh if the government has

chosen to go in for an ordinance Rule

and then later on bring the the bring

the the ordinance into legal debate in

Parliament I think that the lady judge

was probably referring to that uh

remember back nationalization or 1978

demonetization happened through the

ordinance route and then they were

debated now in an ordinance route the

decision is taken right then and say

secrecy can be maintained okay and then

you give Parliament the right to debate

and discuss it and I think the lady just

was referring to that system that

secrecy can be maintained and yet a

process of of law can be followed

through a parliamentary system of debate

and discussion okay would you like to

respond yes

I was saying about secrecy see in this

case also secrecy was maintained but it

had added advantage of RBI consultation

which is an expert body on monetary

policy so that both the advantages the

central government had secrecy as well

as the consultation with the RBI which

is obviously an expert body which deals

with you know currency and monetary

policies so that added Advantage they

had and which which was already provided

under the act now secondly

the when we talk about the objectives it

has achieved today

the size of economy has grown

cash trans cash in in the market being

almost at the same level or more does

not mean it is all black money although

there is a link to it but it does not

mean entirely as a black money so

secondly the if the digital payments

have increased humongously which means

the cash transaction if it had not been

there cash transaction would have been

doubled and at the same time the economy

is very large today we are up we are

aiming for 5 trillion economy and we are

fifth largest economy of the world today

so if if the economy is increasing the

cash component is also increasing but

the fact remains we cannot say the all

is black money it is a fact that the

terrorism in India has gone down there

are various factors into it one of them

is that you have cut the source of

funding

and secondly the tax collection has gone

very high today 1.5 lakh crote per month

which is very high which means to some

extent tax evasion has also been

controlled and at the same time fake

money I remember there was a time this

huge amount of various currency notes

which were there the fake money and the

weather today nobody talks of fake money

today in the market and and at the same

time if you look at the and these are

demonetization was not the only step

government of India found uh you know

sit on black money

the foreign money black money was taken

care of through you know economic

offenders fugitive Act

binami transactions so number of steps

were taken this was not in isolation

mobile Jam platform which was created so

it was it was there was a series and

this was one of the uh factors in

between the government had a very clear

vision and this was one step among many

steps that the government had taken so

whether the merits far outweighed the

demerits or whether you know it impacted

the common man who had to suffer

ultimately because no matter what the

images of people standing in queues the

the impact that it had an unorganized

sector and as Mr Paul mentioned the

impact that it had on on the msme sector

particularly is something that political

parties will continue to bring about so

the outcome is the subject matter of

wider debate which will continue in the

times to come as well but what what the

Supreme Court has done today is address

the technical aspect by saying that the

demonetization process by the government

was not unlawful

in terms of technicality leaving alone

the outcome and object that the court

decided not to get into the Judgment has

been significant in terms of separation

of powers that we keep talking about

between the Judiciary the legislature

and the executive so that having been

said time allows me to take up only that

much on the program today I thank all my

guests for joining me on the program

sharing your thoughts your views with us

and our viewers and to you viewers thank

you very much for your time before we

wind up I would like to wish all of you

a very happy new year take care and

thank you for your time

thank you

foreign

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