 "A foreign tourist takes pictures of people standing in a queue outside a bank to exchange and deposit their old, high denomination banknotes in Kolkata")
The Supreme Court on Tuesday declined to stay the central government’s demonetisation drive but told the Centre to justify the need for such a drastic step through an affidavit. The apex court will examine its legality with reference to the provisions of the Reserve Bank Act.
Meanwhile, the government decided to introduce a system of marking customers exchanging defunct currency notes with indelible ink in a bid to tackle long queues and chaos in banks and ATMs and also check the operation of ‘money mules’ said to be bringing in cash to exchange for other people.
The Centre is also willing to rope in former bank and post office employees on a temporary basis to curb the staff shortage in banks and post offices.
Prime Minister Narendra Modi took another review meeting late on Monday night, following which it was decided that indelible ink would be used to mark people to prevent them from visiting banks again and again to exchange old notes and adding to the rush. The PM is expected to take a review meeting every day.
"It has come to the notice of the government that in many places, the same people are coming back again and again and we've also received reports that certain unscrupulous elements who are trying to convert black money into white have organised groups of innocent people and are sending them from one branch to another to exchange notes and get Rs 4,500," Economic Affairs Secretary Shaktikanta Das told reporters here on Tuesday.
"As a result, what is happening is that the benefit of withdrawal of cash is getting restricted to a smaller number of people. To prevent such kind of misuse, banks should take recourse to use of indelible ink marks for disbursement of cash," he added.
Later in the day, a senior government source said that the indelible ink would be used on one of the fingers of a person’s right hand as the left hand is marked during elections.
While the government has maintained that its preparation has not fallen short and the initial disruption was expected, another source told Business Standard that the topmost planners were taken aback by the sheer number of people coming in as likely surrogates to exchange cash not belonging to them.
“If you leave the situation in ATMs aside for a moment, you'll see that the withdrawal and deposits are manageable. It is in currency exchange that rush has really been caused. These people are coming in multiple times a day and a lot of them could be proxies,” the person added.
In the Supreme Court, a Bench presided by Chief Justice T S Thakur said it did not intend to interfere in the economic policy of the government but asked the Attorney General to file an affidavit explaining the steps that the Centre has taken to ease the burden on people.
Everyone carrying Rs 500 or Rs 1,000 cannot be painted as a black money hoarder, the court observed. It will take up the case again after the government’s reply on November 25.
The court was hearing a batch of four public interest petitions challenging the black money crackdown, alleging that it was arbitrary and discriminatory, and restricted freedom of trade and profession. They wanted a rollback of the step saying it was illegal and caused immense inconvenience to the common people.
Senior counsel Kapil Sibal, arguing for one of the petitioners, submitted that he was not asking for a stay of the notification, but only seeking answers from the government the steps it had taken to ease the inconvenience caused by this measure. He described the step as a surgical strike against the public.
The central government had filed a ‘caveat’ in the court soon after the November 8 notification that if any petition was posted, the government should also be heard before passing any order. Attorney General Mukul Rohatgi appeared for the government justifying the step.
Rohatgi said that Rs 3.25 lakh crore has been deposited in banks two days after the notification, and Rs 11 lakh crore will be added in a few days. Thus, the present crisis will be defused, he said. He agreed with the judges who observed that there will be 'collateral damage' but the step had to be taken in view of the threat to the nation and financial terrorism.
After Modi’s review meeting, the government has also set up a high-powered group under Cabinet Secretary P K Sinha to monitor supply of essential goods in the wake of disruption of trade due to shortage of currency notes. Sinha on Tuesday held a meeting with state chief secretaries to review the ground situation in several parts of the country.
In his media briefing, Das said the government was keeping a close watch on deposits in Jan-Dhan accounts as in many cases, such accounts were being misused for parking black money.
"For any legitimate deposit in Jan-Dhan account, the person concerned would not be put to any inconvenience. I take this opportunity to appeal all the Jan-Dhan account holders not to allow themselves to be used by other people for putting (illegitimate) money in their accounts," he added.
There are reports that many Jan-Dhan accounts are getting deposits of Rs 49,000. The deposit limit of Jan-Dhan account is Rs 50,000.
On augmenting delivery channels, Das said the cash availability with the District Central Cooperative Banks and 130,000 post offices has been enhanced, which should be able to meet the requirements of rural population.
Besides, religious organisations such as temple trusts are encouraged to deposit the smaller denomination of notes that usually come to them, he said, adding that it would help increase supply of lower-denomination currency into the market.
Das also said that a taskforce had been set up to monitor counterfeit notes in ‘vulnerable areas’, but he did not give more details.
Meanwhile, the finance ministry has written to Indian Banks' Association to explore the possibility of hiring retired bank staff on a temporary basis.
