THE LOK Sabha on Tuesday passed a Bill that ends the RBI and the government’s liability on currencies demonetised on November 8 last year. It makes holding, transferring and receiving scrapped Rs 500 and Rs 1,000 a criminal offence.
The Specified Bank Notes Cessation of Liabilities Bill, which will replace an ordinance, was passed after a long discussion. Opposition parties raised issues of legality behind the decision to demonetise, and stressed upon the hardships faced by people.
Brushing aside legal concerns, Finance Minister Arun Jaitley quoted laws that provided legal cover for such an action and reiterated that the move will benefit the country in the long run.
Emphasising that the government took the decision on November 8 on RBI’s recommendations, Jaitley said the Bill would terminate the government’s liability towards scrapped notes and also eliminate the possibility of their being used as parallel currency. “No economy in the world survives with ceased currency in circulation…. It would create anarchy with a parallel economy…no country allows it. So only legal tender can be allowed to be kept,” he said.
Jaitley said exceptions to the rule would be for currency kept for purposes of research, or for historical study.
Brushing aside RSP MP N K Premchandran’s argument [see ‘5 questions’ on left] that government’s decision was not valid under the RBI Act, Jaitley said, “Section 26(1) of RBI Act is subject to provisions of Section 26(2) of the Act, which says that on recommendations of the central board of RBI… any series of bank notes shall cease to be legal tender. So if the government decides that certain currency is not legal tender, it will prevail over Section 26(1).”
Jaitley also rebutted Congress MP Shashi Tharoor’s contention that no law allows a government to prevent its citizens from withdrawing their own money from their bank accounts. Jaitley said orders setting limits on withdrawal have been issued dozens of times by RBI in case of banks facing severely poor financial health.
The Bill, to replace the ordinance promulgated on December 30 last year, also provides for a minimum fine of Rs 50,000 for false declaration by people who were abroad during the demonetisation period (November 9-December 30, 2016) and given time to deposit the scrapped notes with RBI till March 31.
Calling demonetisation a “morally and ethically” correct decision, Jaitley asked the Opposition not to defend black money in the name of farmers. “Farmers do not have black money. They have nothing to worry. They are not taxed, and they won’t be taxed,” he said.
“This (demonetisation) decision needed a lot of courage and broad shoulders,” he said, wondering why such a decision was not taken in the last 70 years. He also dared the Congress, which has been attacking the government’s demonetisation decision, to list out any single step which its government took to curb the black money in the 10 years till 2014.