India’s Supreme Court upholds legality of 2016 demonetisation
NEW DELHI, Jan 2 (Reuters) – India’s Supreme Court on Monday upheld the legality of the government’s 2016 decision to demonetize 86% of the country’s cash in circulation, saying that the decision was taken in consultation with the central bank and followed due process.
A five-judge bench of the country’s highest court handed down the majority verdict on a batch of petitions questioning the move. One of the five judges wrote a dissenting opinion.
“The… notification of 8 November 2016 does not suffer from any defect in the decision-making process,” said Judge BR Gavai, one of the four judges who agreed on the decision, in a written opinion.
The petitioners included lawyers, political party, cooperative banks and individuals.
India’s former finance minister, P Chidambaram was among the lawyers who argued against the note ban measure.
In November, 2016, Prime Minister Narendra Modi personally led the shock move to ban 86% of cash in circulation to target undeclared “black money” and fight corruption.
But the move, widely known as demonetisation, has badly hurt India’s cash-dependent economy. Hundreds of thousands of people lined up outside banks for days to exchange their savings for legal tender.
Despite the chaos caused, many people supported demonetisation after Modi framed the decision as a fight for the poor against the corrupt rich.
Some of the petitioners had argued that the recommendation to ban or declare any series of currency notes invalid should have come from the Reserve Bank of India and not from the government.
India’s main opposition Congress party said Monday’s ruling by the top court said nothing about the impact of demonetisation, which the party called a “singularly disastrous move.”
“The Supreme Court’s majority verdict deals with the limited issue of the decision-making process, not its results,” said Jairam Ramesh, the party’s spokesperson in a statement. (Reporting by Arpan Chaturvedi, writing by Shilpa Jamkhandikar; editing by Sudipto Ganguly)