ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Demonetisation and the Rule of Law

The challenge in the Supreme Court and high courts to the current demonetisation exercise requires some serious discussion for what it tells us about the state of the rule of law and constitutional government in India. 

Since 8 November 2016, for the third time in modern Indian history, the central government has declared notes of certain denominations to no longer be valid legal tender. When announced by the Prime Minister on 8 November, it was pitched as a measure, inter alia, to tackle the black money problem in India. Since then, the justification has changed; it is now supposed to make India a cashless society. The chaotic effects of demonetisation have been in the banks and ATMs which are out of cash, the businesses suffering severe losses, and the loss of income and assets of the poorest (Bharadwaj 2016; Gopalakrishnan 2016). Not to mention the people who are said to have died as a result of standing in the queues (Wire 2016), the shock of having lost their money or some proximate reason, whose ultimate cause lies in the unprepared and ill-thought-out manner in which the demonetisation exercise has been carried out.

The larger effects of demonetisation on the Indian economy are debatable. There are, however, questions that have been raised about the manner in which demonetisation has been carried out by the government. Several petitions have been filed in the high courts and in the Supreme Court as well, challenging the demonetisation or its specific aspects. No final verdict has been rendered at the time of writing this, but if the approach of the Madras, Karnataka and Bombay High Courts is anything to go by, the courts seem reluctant to interfere in the process. While the Supreme Court did make a few stray observations about the difficulties being faced by people as a result of demonetisation, it has not stepped in either.

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