The Modi government today asserted in the Supreme Court that the “bold move” of demonetisation would eradicate black money and slush funds operating since Independence which cast a “parallel economy” hitting the poor and the middle class.
The Centre, which filed an affidavit on demonetisation, said the decision on which a total secrecy was maintained, would now help in proper implementation of the ambitious ‘Jan Dhan Yojana’ under which around 22 crore bank accounts for poor people have been opened as reports of unscrupulous elements using these accounts to convert their black money into white surfaced.
Further, demonetisation is seen as a check on the real estate sector where prices get pushed up artificially, reducing the availability of affordable housing for the poor and the middle class.
Elaborating on several measures including the “thrust” given for increasing digital payments in the economy through credit and debit cards, internet banking, mobile apps and e-wallets, the Centre said their use has seen a jump of nearly 300 per cent in the last 10 days.
In its affidavit, the Centre also gave reasons for maintaining secrecy about the move which was announced by Prime Minister Narendra Modi just after 8 PM on November 8 and came into force from the midnight.
“The gigantic dimensions and possibilities of compromising on secrecy were taken into consideration. If elaborate prior arrangement for distribution of new currency notes were made prior to the announcement of the scheme, the very objective of the scheme would have been defeated.
Further, the scheme impacts several sectors in the short-term but promises large benefits in the economy in the medium-term,” the affidavit said.
The affidavit, filed a day before a crucial hearing, contended that “no serious attempt at this scale has been attempted in the past” and in the “two attempts made in 1946 and 1978, the scale of operation was not as expansive due to the sheer size of the cash component in the economy”.
The Modi dispensation said the decision on demonetisation was in line with successive actions it has taken since coming to power in May 2014 after which an SIT was formed to go into the black money issue.
“The decision was taken keeping in view the need for continuous pressure for the eradication of black money, in line with successive action being taken since the last two years, starting with formation of SIT in June 2014, provisions for declaration of undisclosed foreign income in June 2015, the approval of the measures to incentivise digital payments and move towards a less cash economy in February 2016 and the introduction of the income declaration scheme in July 2016,” the affidavit said.
While seeking dismissal of the petitions challenging the November 8 notification on demonetisation, it said the scheme was in coherence with the legal provisions and such actions can only be interfered by the courts if they are shown to be “arbitrary”, “unreasonable” and “illegal”.
Further, the demonetisation action fall in the realm of fiscal/economic policy and it is well-settled that there is a limited scope of judicial review over such actions, it said.
Elaborating the steps taken for better convenience of the public, the government said it was closely monitoring the implementation of the decision and to avoid inconvenience to the public, old high-denomination banknotes will continue to be accepted in carrying out emergent and urgent transactions.
It said old currency notes would be allowed for making payments in government hospitals and pharmacies in government hospitals, at railway ticketing counters, purchase at consumer cooperative stores and milk booths operated under authorisation of the central and state governments.
It would also be used for purchase of petrol, diesel and gas at stations operated by PSUs, for making payments to all toll plaza in the states and national highways, for payment on purchases of LPG gas cylinders, entry tickets for monuments maintained by the ASI, payments towards court fees and also for making payments towards utility charges including water and electricity.