DeMo: SC ruling breather for govt

The Supreme Court ruling validating the decision to demonetise two high-value currency notes by the Central government must have come as a shot in the arm for the Narendra Modi-led dispensation. The validation by four senior judges with the fifth dissenting, is comforting for the Government which has long been criticised by all major Opposition parties for a decision which administered a crippling blow to the economy and failed to deliver the intended results. The ruling by the four judges has refused to find fault or flaws in the procedure while the fifth judge on the bench, Ms. Nagarathana has held it unlawful.

Surprisingly, the majority ruling has found no procedural lapses and accepted the official plea that the decision had followed adequate consultation with the Reserve Bank of India. The apex court has also upheld that the objective stated by the Government as well as restriction imposed through demonetisation -- curbing evils of fake currency, black money, drug trafficking, and terror financing-- were quite reasonable, and hence, satisfied the “doctrine of proportionality”.

The ruling comes in response to the 58 petitions that had challenged the decision and contended that it was flawed, opaque and caused distress and hardships to the common masses who stood in winding lines at the note exchange centres. The fiat of the Centre had slapped demonetization on the unsuspecting nation on November 8, 2016 allowing the people to exchange the banned notes between then and December 31, 2016.  

The Court limiting itself to the integrity of the decision by the Central Government found it to be flawless and refused to be drawn into discussing and passing judgement on the consequences that are evident in the six years since the process was set into motion. It has also said that it would be unwise on the part of the court to supplant the wisdom of the executive. While all this may be acceptable and the Court’s decision would remain unquestioned, it could be asked as to why it took six years to adjudicate the matter when failed objectives of the massive exercise are too evident to be missed.

Similarly, the doubts on the opacity of the exercise too would persist as the RBI was learnt to have been sounded about the decision of the cabinet rather than recommending it. The observation by the dissenting judge Justice Ms. Nagarathana that such an action should have been attempted through an act of parliament rather than a dramatic announcement by the Prime Minister also puts the issue in perspective.

Former RBI Governor Raghuram Rajan’s observation that the proposal to demonetize the Rs. 1,000 and Rs. 500 currency notes were never discussed during his tenure only adds to the murkiness of the adventurous step the Modi Government initiated on the evening of November 8, 2016. With demonetization now being a fait accompli and the apex court having validated it, the wiser course would be to let the issue rest where it is and remain vigilant against undemocratic decisions in future.