India Court Refuses to Stay Petitions for Scrapping Currency Banby
Supreme Court judges say can’t shut door to a problem
Country’s top officer says difficulties in cash distribution
India’s top court refused to stay petitions filed against Prime Minister Narendra Modi’s surprise decision last week to ban high value bank notes to eliminate unaccounted money.
Petitioners have approached the high court in several states seeking intervention to scrap the ban on 500 and 1,000 rupee notes that sent millions scrambling to banks to draw funds in a largely cash-dependent economy. Unable to cope with the demand, the government on Nov. 18 capped currency exchange over the counter to 2,000 rupees from 4,500 rupees.
“We asked you to give some relief. You have reduced the limits? What is the problem? Is it a problem of printing?” Chief Justice T.S. Thakur said at start of the hearing. “How can we shut even our doors to people when there is such a problem.”
Ten days since Modi’s announcement there was no sign the government had managed to print enough notes to replace its withdrawal of 86 per cent of currency in circulation. Small denomination currency was still in short supply even as the government had managed an adequate circulation of 2,000 rupee bills.
Even as the situation was improving every day, the government was facing constraints in printing notes and transporting them to remote locations that were facing shortages, Mukul Rohtagi, Attorney General, the country’s top law officer said.
In a teary speech in Goa recently, Modi asked people to support him for 50 days as frustration and anger built up among those queuing up at banks to withdraw or exchange cash. His administration has changed the limits for exchanging cash several times and resorted to measures such as the use of indelible ink to handle the rush at bank branches.
Proposals are also being considered to cap large cash withdrawals from banks, while the government is planning to limit currency notes that can held by an individual to stem a generation of unaccounted money, according to finance ministry officials with direct knowledge of the matter. The budget, due in February, may also have steps to encourage the use of checks, credit and debit cards, they added, asking not to be identified citing rules.