Demonetisation was part of drive to eradicate black money, says government

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The central government has defended its decision to demonetise the currency notes of ₹500 and ₹1,000 in November 2016. The government in its affidavit has told the Supreme Court that demonetisation was a ‘well-considered decision’ and ‘part of a drive to eradicate black money’.

Defending the move, the Centre has submitted that the step was taken following the recommendation of the Reserve Bank of India and that advance preparations were made. The government has stated that the move was part of the Centre’s efforts to curb tax evasion, combat black/fake money and increase digital payment. Demonetisation was an economic policy decision, it has said.

The government has further said that the overall impact of the move on economic growth was transient, with real growth rate being 8.2% in FY16-17 and 6.8% in FY 17-18 – both being more than the decadal growth rate of 6.6% in the pre-pandemic years.

The Supreme Court on October 12 directed the Centre and Reserve Bank of India to file comprehensive affidavits.

A Constitution bench of justices S Abdul Nazeer, BR Gavai, AS Bopanna, V Ramasubramanian and BV Nagarathna also directed the Centre to keep ready files relating to the Centre’s November 7, 2016, letter to RBI; the decision taken by the RBI board the next day and the immediate announcement of demonetisation.

The bench is considering nearly 60 petitions challenging demonetisation. SC had verbally remarked in October that it was its duty to answer the issue one way or the other for “posterity”.

During the last hearing (on November 9), the Supreme Court had expressed its displeasure over an adjournment sought by the Centre after the Constitution bench had assembled to adjudicate a clutch of pleas challenging demonetisation. The matter is slated for resumed hearing on November 24 and 25.

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