Common Man's Predicament Due To Demonetisation Stirred Me, So I Had To Dissent : Justice BV Nagarathna

Justice BV Nagarathna in recent address at the NALSAR University dwelled elaborately on the policy of demonetization and her dissent in the  'Demonitization Case'. 

Initially aimed as a measure to eradicate black money, the results of demonetization seemed to contradict its objectives, according to Justice Nagarathna. With 98% of the currency finding its way back to the Reserve Bank of India, the effectiveness of demonetization in flushing out unaccounted wealth came under scrutiny. The Supreme Court Justice opined that it inadvertently provided a mechanism for converting black money into white, a stark deviation from its purported goals.

“98% of the currency came back to the RBI, so where were we heading towards black money eradication (the aim of demonetisation)? I thought it was a good way of converting black money into white money. What happened about income tax proceedings thereafter, we don't know. So, therefore, the common man's predicament really stirred me and hence, I had to dissent.”

The immediate and palpable impact of demonetization was on the ordinary citizen. Justice Nagarathna painted a vivid picture of the daily wage laborer, who suddenly found the currency in his possession worthless, grappling to exchange old notes to fulfill his basic needs. This scenario underscores the acute distress and chaos experienced by millions, highlighting a disconnect between policy intentions and ground realities.

“86% of the currency was 500 and 1,000 notes, which I think the Central government lost sight of while Demonetising 86% of the currency. Imagine a labourer, who went to work those days, had to get his notes exchanged before he could go to the grocery shop to buy the daily essentials”

Another critical issue underscored by Justice Nagarathna was the lack of adequate communication and preparedness surrounding the demonetization decision. The announcement was abrupt, giving no time for the citizens or even key governmental officials to prepare for the drastic shift in the economy. This approach, as per her observations, did not support the transition towards a more digital or 'plastic currency' based economy but rather plunged it into uncertainty.

“The manner in which Demonetisation was done, was not correct. There was no decision-making process, which was in accordance with the law. The haste with which it was done...some people say even the then Finance Minister did not know about it. The communication went on one evening and the Demonetisation happened the next day. If India wanted to go from paper currency to plastic currency, surely, the Demonetisation was not also a reason for that, I thought.”  

In her dissenting opinion, Justice BV Nagarathna held that the RBI has not applied an independent mind in cancelling currency notes of Rs.500 and Rs.1000. Declaring the impugned notification dated November 8, 2016 (policy of demonitization) as 'Contrary to Law', Justice Nagarathna observed that the Central Government could not have made such a decision through an executive notification while skipping the lawful legislative process (through a Parliamentary Law or an Ordinance). 

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