The demonetisation decision of the Narendra Modi-led BJP government in 2016 was a “well-considered” decision and a part of a larger strategy to combat the “menace of fake money, terror financing, black money and tax evasion”, the Centre has told Supreme Court. The submissions were made in an affidavit filed in response to a batch of pleas challenging the Centre’s 2016 demonetisation decision in the top court.

On November 8, 2016, Prime Minister Narendra Modi announced the Centre’s decision to demonetise high-value currency notes of Rs 500 and Rs 1000.

The Centre told the apex court that the demonetisation step was taken after extensive consultation with the Reserve Bank of India (RBI). “The withdrawal of the legal tender character of the specified bank notes was by itself an effective measure and was also a part of a larger strategy for combating the menace of fake money, terror financing, black money and tax evasion, but not confined to them alone. It was an economic policy decision exercised in accordance with powers conferred by an Act of the Parliament (RBI Act, 1934), in conformity with the provisions of the said Act and was subsequently affirmatively taken note of by the Parliament in the Specified Bank Notes (Cessation of Liabilities) Act, 2017,” the Centre submitted.

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A five-judge Constitution bench comprising Justices S A Nazeer, B R Gavai, A S Bopanna, V Ramasubramanian, and B V Nagarathna is hearing the issue and will take up the matter on November 24. The bench was hearing a batch of 58 petitions challenging the demonetisation decision.

The Centre said that the RBI had also proposed a draft scheme for the implementation of its recommendation, and it was duly considered by the union government. “Based on that, the Notification was published in the Gazette of India declaring that the specified bank notes shall cease to be legal tender,” it said.

Further, in its affidavit, Centre contended that wide-ranging measures were taken to mitigate the hardships of the people, including exemptions from ceasing to be legal tender for certain transactions, including booking air, train, bus travel tickets, treatment at government hospitals, purchasing cylinders, among others.

“Rooting out the menace of fake currency, black money and financing of subversive activities, expansion of the formal sector, digitalisation of transactions, expanding communication connectivity to enable last mile reach, broadening the tax base, enhancing tax compliance… were high on the economic policy agenda of the government,” the Centre said.

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Earlier, on November 9, Attorney General R Venkataramani made an apology to the Constitution bench for not being able to file a comprehensive affidavit, and had sought a week’s time. Justice Nagarathna had observed that normally the Constitution Bench does not rise like this and it was very embarrassing, granting the Centre a week’s time to file the affidavit.

(With PTI inputs)