{"id":32912,"date":"2023-01-03T01:48:28","date_gmt":"2023-01-02T20:18:28","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=32912"},"modified":"2025-04-19T17:06:19","modified_gmt":"2025-04-19T11:36:19","slug":"demonetisation-case-verdict","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/demonetisation-case-verdict\/","title":{"rendered":"Demonetisation Case Verdict"},"content":{"rendered":"<h3><strong>What\u2019s in today\u2019s article?<\/strong><\/h3>\n<ul>\n<li><strong>Why in news?<\/strong><\/li>\n<li><strong>What is demonetisation?<\/strong><\/li>\n<li><strong>Why countries opt for demonetisation?<\/strong><\/li>\n<li><strong>What are the advantages and disadvantages of Demonetization?<\/strong><\/li>\n<li><strong>Demonetisation in India<\/strong><\/li>\n<li><strong>What was the verdict of SC in demonetisation case?<\/strong><\/li>\n<\/ul>\n<p><strong>\u00a0<\/strong><\/p>\n<h2><strong>Why in news?<\/strong><\/h2>\n<ul>\n<li>The Supreme Court upheld the government\u2019s 2016 decision to demonetise currency notes of Rs 500 and Rs 1,000 by a 4:1 majority.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>What is demonetisation?<\/strong><\/h2>\n<ul>\n<li>Demonetization is the process through which a nation&#8217;s economic unit of exchange loses its legally enforceable validity.<\/li>\n<li>It is a drastic intervention into the economy that involves removing the legal tender status of a currency.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>Why countries opt for demonetisation?<\/strong><\/h2>\n<ul>\n<li>To address issues like hyperinflation and to stabilize the currency<\/li>\n<li>To eliminate negative situations or actions like counterfeit currency, terror, and tax fraud<\/li>\n<li>To introduce a new monetary system in some circumstances<\/li>\n<li>To facilitate trade and access to markets,\u00a0<\/li>\n<li>To push informal economic activity into more transparency<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>What are the advantages and disadvantages of Demonetization?<\/strong><\/h2>\n<p>&nbsp;<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/lh3.googleusercontent.com\/qowIXN79azQr3owA1xkzNlTJNdWP5Pj-zB85liKVXS8thOZq1P-dmvMHi3ci0UJ0CXRvTp95IbQFNHhU3RLhTfuTstkung6Tco_k76x1E9Y8APLC6BT2aCwFtfRG6YpbeJdPk-HFGFQLxJHumev8dg\" alt=\"\" \/><\/p>\n<p>Image caption: Advantages and disadvantages of demonetisation<\/p>\n<p><strong>\u00a0<\/strong><\/p>\n<h2><strong>Demonetisation in India<\/strong><\/h2>\n<ul>\n<li><strong>Previous demonetisation &#8211; <\/strong>Demonetisation has been implemented twice:\n<ul>\n<li>In 1946, RBI demonetized 1000- and 10000-rupee notes.<\/li>\n<li>In 1978, the government demonetized 1000-, 5000-, and 10000-rupee notes in order to curb the menace of black money.<\/li>\n<\/ul>\n<\/li>\n<li><strong>2016 demonetisation<\/strong>\n<ul>\n<li>On November 8, 2016, PM Modi announced the decision of the government to demonetise currency notes of Rs 500 and Rs 1,000 in a bid to tackle corruption.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>News Summary<\/strong><\/h2>\n<h3><strong>Why was demonetisation challenged?<\/strong><\/h3>\n<ul>\n<li>58 petitions challenging various aspects of the government\u2019s note ban decision was filed in the SC.<\/li>\n<li>These petitioners contended that the procedure prescribed in Section 26(2) of RBI Act, 1934, was not followed.\n<ul>\n<li>Section 26(2) of the RBI Act states that on recommendation of the Central Board of the RBI, the Central Government may declare that <strong>any series<\/strong> of bank notes of any denomination shall cease to be legal tender.<\/li>\n<li>The petitioners argued that the word \u201cany\u201d would have to be given a restricted meaning.\n<ul>\n<li>I.e., RBI has power only to recommend \u201ca particular series\u201d of notes. It does not have powers to demonetise \u201call series\u201d of a particular denomination.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li>They also argued that the demonetisation notification is liable to be struck down applying the test of proportionality.\n<ul>\n<li>The four ingredients of the proportionality test to be satisfied are:\u00a0\n<ul>\n<li>legitimate purpose; rational connection with the purpose; necessity; whether the action taken is proportional or balanced.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li>They also contended that the entire decision-making process was flawed in law as the proposal should have been emanated from RBI Board, not from the Centre.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>What is the Supreme Court\u2019s verdict on demonetisation?<\/strong><\/h2>\n<ul>\n<li>In its majority 4:1 judgment, it was held that the Centre\u2019s notification dated <u>November 8, 2016, was valid and satisfied the test of proportionality<\/u>.<\/li>\n<li>The court held that the central government\u2019s decision was after RBI board\u2019s approval which shows in-built safeguard against centre\u2019s powers.\n<ul>\n<li>The Centre is required to take the action after the consultation with the Central Board and there is an inbuilt safeguard.<\/li>\n<li>Decision-making process cannot be faulted merely because the proposal emanated from the centre.<\/li>\n<\/ul>\n<\/li>\n<li>The hardships faced by citizens following demonetisation six years ago cannot be a ground to reverse the decision.\n<ul>\n<li>The individual interests must yield to the larger public interest sought to be achieved by the impugned notification.<\/li>\n<\/ul>\n<\/li>\n<li>On creating a fresh window for return of demonetised currency, the majority verdict said it did not have the expertise to frame such a scheme.<\/li>\n<\/ul>\n<p><img decoding=\"async\" src=\"https:\/\/lh5.googleusercontent.com\/HcJ3R6Gap9D3BdpJKKI1otVQBlZJ2Bw0biotGeklPex-BeZyqG7fjWPzAT3oEY5pQGF3GA5NMWC4B_0OZzpMHSZqXUKd97e4hjL-W8Tdot0XdnsEoFySsdl_XzKuFHvEh53AHci0tXcXAekbwAEZXQ\" alt=\"\" \/><\/p>\n<p>Image caption: SC Verdict on demonetisation<\/p>\n<p>&nbsp;<\/p>\n<hr \/>\n<h3><strong>Q1) What is the history of Demonetisation in India?<\/strong><\/h3>\n<p>The Indian government had demonetised banknotes on two prior occasions\u2014once in 1946 and once in 1978.<\/p>\n<p>&nbsp;<\/p>\n<h3><strong>Q2) What are the benefits of Demonetisation?<\/strong><\/h3>\n<p>Demonetization is important for fighting various evils like corruption, counterfeit currency racket, tax evasion, etc. It helps in tracing and restricting illegal economic activities.<\/p>\n<p>&nbsp;<\/p>\n<hr \/>\n<p><strong>Source:\u00a0<\/strong><strong><u>Two views on six issues: What the Supreme Court\u2019s demonetisation verdict says<\/u>\u00a0 <\/strong><strong>|\u00a0<\/strong>\u00a0 <a href=\"https:\/\/economictimes.indiatimes.com\/definition\/demonetization\" target=\"_blank\" rel=\"nofollow noopener\"><u>Economic times<\/u><\/a>\u00a0 <strong>|<\/strong>\u00a0 <a href=\"https:\/\/indianexpress.com\/article\/explained\/supreme-court-upholds-demonetisation-what-was-the-challenge-about-8356303\/\" target=\"_blank\" rel=\"nofollow noopener\"><u>Indian Express<\/u><\/a><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>SC upheld government\u2019s decision to demonetise currency notes of Rs 500 and Rs 1,000 by a 4:1 majority.<\/p>\n","protected":false},"author":5,"featured_media":32915,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[],"class_list":{"0":"post-32912","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/32912","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=32912"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/32912\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/32915"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=32912"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=32912"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=32912"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}