The Supreme Court on Friday asked the government to find ways to resolve the cash crunch issue without prejudice to the larger goals of demonetisation and report back to the court on December 14.
A Bench of Chief Justice of India T.S. Thakur and Justices A.M. Khanwilkar and D.Y. Chandrachud was hearing a clutch of public interest litigation (PIL) pleas challenging the demonetisation scheme.
At one point during the hearing, the Supreme Court asked Attorney-General Mukul Rohatgi, appearing for the Centre, whether demonetisation was a planned move or done on an “impulse.”
“Was there any application of mind as to how much money will come in and how much you need to print?” Chief Justice Thakur asked.
“Of course there was a plan. Our expectation was for Rs. 10 to 11 lakh crore to come into the system... now it has been reduced to a trickle. We cannot reach our objectives to weed out black money, counterfeit currency and fight terror without demonetisation. There has to be some inconveniences,” Mr. Rohatgi replied.
Real motives questioned
He said the government was not “just sitting back” and had introduced several digital incentives to alleviate public suffering.
He denied submissions that 91 people died in the aftermath of demonetisation, saying it was political propaganda. He questioned the real motives behind the PIL pleas “filed by lawyers and district co-operative societies.”
“Ninety-one deaths do not occur when people do not have money,” Mr. Rohatgi said.
Senior advocate P. Chidambaram, appearing for one of the 32 petitioners, asked how a family can subsist on Rs. 2,000 a week in a place like Delhi. He said “each bank has its own rule about the amount that can be withdrawn.”
Mr. Rohatgi countered that each member of a family can withdraw up to Rs. 24,000 a week. “How much more does a family need to spend in a week?” he asked.
“Not every member of a family will have a bank account. There may be cases of one bank account operated by a family of five. Banks run dry in half a day. Only 35 percent ATMs have some money. In the seven Northeastern States, there are only some 5,000 odd ATMs... a family must be allowed to withdraw its own money,” Mr. Chidambaram responded to the AG.
Mr. Chidambaram said the government seems to have no other option now but to “ration money.” He said demonetised notes of Rs. 500 and Rs. 1,000 worth approximately Rs. 12 lakh crore were deposited back into the banking system. However, in contrast, only Rs. three lakh crore new notes were in circulation.
He said there were four mints — two owned by the RBI and two by the government — churning out a capacity Rs. three crore new notes a month. A note-for-note replacement would take at least six months.
Mr. Chidambaram compared the new Rs. 2,000 bank notes to “Monopoly money.”