Demonetisation: Crucial SC Hearing Tomorrow. 10 Big Grounds Cited By Centre In Its Affidavit Justifying It [Read Affidavit]
The Supreme Court will tomorrow hold a crucial hearing of petitions challenging the constitutional validity of the demonetisation of Rs 500 and Rs 1000 notes set in motion exactly a month ago. LiveLaw highlights the ten main points in Centre's affidavit justifying the controversial monetary step.
- Curb financing of terrorism through proceeds of fake notes and use of such funds for subversive activities such as espionage, smuggling of arms, drugs and other contraband into India and for eliminating black money which casts a long shadow of parallel economy on our real economy
- Cash transactions do not leave any audit trail and act as a conduit for black money. Elimination of black money will be very positive for India’s growth outlook. Parallel economy corrodes and eats into vitals of country’s economy.
- To bring transparency, efforts needs to be made to promote digital mode of payments. As per study report on the ‘cost of cash in India conducted by Fletcher School, Tufts university in collaboration with National Institute For Bank Management in 2014, 87% of all transaction in India were cash based. The ratio of currency to GDP in India (12.2%) is higher than countries such as South Africa (3.9%), Brazil (4.1%) and Mexico (3.7%).
- A report by VISA indicates a high volume of cash transaction has positive co-relation with percentage of shadow economy (estimated) to GDP. So a thrust has been made for increasing the digital payments in the economy through credit and debit cards, internet banking, mobile apps and e-wallets. In the last ten days there has been a nearly 300 percent jump in the number of transactions that have taken place by the use of cards alone
- Disproportionate growth in circulation of high denomination notes. As per data available in economic survey 2014-15 and 2015-16 size of economy has grown less than 30% from 2011-12 and 2015-16. Though inflation may be another reason for enhanced circulation of such notes but the level of growth, even incorporating the inflation during 2011-2016 does not explain increase of circulation of high denomination notes to the extend
- Earlier exercise of demonetization undertaken in 1978 declaring that specific high denomination notes will cease to be a legal entity was eventually upheld by the Supreme Court inJayanthilal Shah Vs Reserve Bank of India
- Achieving financial inclusion is the aim. All these measures are eventually towards not only bringing more people within banking system and enabling usage of digital receipts and digital payments but also making system more accountable
- Hostile intelligence agencies have not only been pumping in huge amount of fake Indian notes to finance terrorist groups and their operations in the country but also printing fake currency in large number to destabilise the nation
- There is excessive use of cash in the real estate sector due to large cash transactions in purchase of land and housing property. The real estate prices get pushed up artificially. This reduces the availability of affordable housing for the poor and the middle class. Greater over the board transactions will lead to a decline in real estate prices making housing affordable to all.
- A high-level committee is monitoring the situation on a day-to-day basis and appropriate decisions were being taken to ensure that no one suffered due to the move.
Read the Affidavit here.
This article has been made possible because of financial support from Independent and Public-Spirited Media Foundation.