My colleague Dilip Bobb, now senior managing editor of India Legal, and I had just wound up a popular talk show on APN news channel, our sister concern, on the day that Narendra Modi conducted what his spin doctors described as twin surgical strikes on black money and terror funding. In one fell swoop, shrouded in secrecy matching the Pokhran nuclear test, paper legal tender became rubbish overnight as Rs 500 and Rs 1,000 notes, with which most cash transactions are conducted across India, were demonetized.
In addition to the heated TV discussion in which senior chartered accountants, journalists, a former chief justice and Supreme Court lawyers participated, Dilip thought that this huge national story, suddenly competing for headlines with the Donald Trump victory, deserved healthy space in the magazine as well. We were in the process of putting the issue to bed with Donald Trump and air pollution already on the cover. So we decided to enshrine the editorial importance of the demonetization story in the leader.
It needed research, voices, legal background, opinion, weight, a point of view, the right mix of irreverence and rage, verisimilitude, balance—the editorial alchemy which bubbled with zing, sting and eyeball-grabbing urgency, once the gold standard of magazine writing pioneered decades ago by India Today. I mention this magazine because both Dilip and I once edited it, a large part of the India Legal-APN senior staff are its alumni, and because it will feature, albeit indirectly, in the larger part of this editorial which is to follow.
But, briefly, back to my story. In researching the story, I read the papers, talked to experts and also relied on the web. Now the net is a dangerous place. You have to navigate your way through a web of lies and deception, and journalists can easily be misled by plagiarized material thinking they are looking at original stuff. Remember, always, that the net produced America’s viral President—Trump.
But not in this case. In surfing around, I found and read with interest the most credible and voice-loaded chain mail on this subject which fulfilled the need of what I was looking for without having to run around anymore. It was the ghost of the India Today of yore speaking to readers as it used to do. This specter of wisdom appeared in the portal EX-IT (an acronym for ex-(former) India Today, a closed Facebook chatroom of reporters and editors who once worked at the magazine which was said to have “quickened the pulse” a day before each issue hit the newsstands. It is web-mastered by the fiery-eyed Sardar Harpal Singh, who worked with me as India Today’s news coordinator and later became Day & Night TV’s editor. He guards the contents of his chatroom with the same religious fervor with which he protected India Today’s newslist.
In a parliamentary democracy, the prime minister is the head of the executive who is duty-bound to consult the Cabinet and the Parliament. His powers are not supreme.—Harpal Singh
What follows is an online reality web-show which tells the story. The characters are real. All the action takes place in Act One Scene One. The people are all real. So sit back and enjoy:
HARPAL SINGH: Don’t know how all of you, my learned friends, are reacting to Prime Minister Narendra Modi’s drastic decision to declare invalid the Rupees five hundred and one thousand notes from midnight tonight, to curb black money & terror funding. Before I share my thoughts with you, I must make this disclosure: I do not have any unaccounted money. I am a salaried professional and I have recently received a scintillating commendation from the CBDT for continuously filing my I-T returns on time.
On the face of it, it looks like a bold move on the part of the central government which will cripple all those who have wads of currency stashed away in their cupboards and elsewhere and who do not pay their taxes. But as a regular tax-payer, why should I go through the inconvenience of not having any liquidity for two days—and then restricted liquidity—just because the central Government hasn’t thought things through to save me the pain?
Also, why should I be put through the process of returning/exchanging whatever currency in these two denominations I have through my bankers because it is no longer valid after two days of forced bank holiday?
After all, what is the legality of the central Government’s move to render currency of two denominations invalid when each note carries a solemn legal assurance under the RBI Governor’s signatures: “I promise to pay the bearer the sum of five hundred rupees” — a pledge which is “guaranteed by the central government”?
Also, we follow the Cabinet system of Government. Was this proposal put before the Cabinet Committee on Economic Affairs? If yes, then why has it not been disclosed to the citizens? If not, then why not? There are other questions which arise: Was it not necessary to take the Parliament into confidence on such a drastic step? Which law of the constitution has empowered the central Government to go ahead with this decision?
I am absolutely sure that our legal luminaries will rush to the Supreme Court first thing in the morning with these and other legal challenges to this decision. And it would be interesting to see how the top court deals with these.
Meantime, I would love to hear what you think.
ROHIT BANSAL: Appreciate your courage in conveying the sentiments of us, honest taxpayers. To criticize this madness means inviting the wrath of people who support everything the government does.
MANISH KUMAR: Boss, let’s not take pressure on this issue and celebrate the plight of those who were hoarding black money all these days.
VIJAY JODHA: In India we have a long tradition of finding quickfix solutions for pressing issues (in this case black money, but could be dowry deaths, atrocities on dalits, terrorism etc.) and ramming them down people’s throats regardless of how poorly they may be drafted or going against some other provision of our constitution.
NAYAN PADRAI: It is a big move and sacrifices are needed by all. They could not have publicly declared it earlier.
HARPAL SINGH: Nayan, there is no provision for such sacrifices in the Indian constitution. The issue is serious inconvenience to citizens and legality of the decision, not the intent to curb black money. In a parliamentary democracy, the prime minister is the head of the executive who is duty-bound to consult the Cabinet and the Parliament. His powers are not supreme; they are deliberately fettered and subordinated to prevent absolute authority of an individual. I know the move could not have been declared publicly earlier but the pain to the law-abiding citizen should have been anticipated and addressed. Also, I still think it is an arbitrary and illegal decision. The solemn pledge on each currency note cannot be suspended even for a minute.
These notes—Rs 1,000 and Rs 500—are already invalid since midnight last night. The ATMs have gone out of service for two days starting midnight last night. The banks won’t entertain any customers before Tuesday, the 15th. Once they do, the invalid currency can be deposited in one’s own account after showing an ID proof. The thing is that the supply of money should have been ensured before creating a demand. The banks should have been kept open beyond normal hours and there shouldn’t have been a break of two days which has got extended to five days because of the weekend and Guru Nanak birthday (this was the situation at the time of this chat). I have already mentioned above how the effects could have been partially mitigated.
I shudder to think what people in local bazaars and residents of small towns will go through.
FARAHEEM MOHD: It may be a good step… but executed in a very poor management. They should have liquidated Rs 100 notes well in advance through ATMs. I am upset as work is suffering and we are losing our hard-earned money… does it not need approval from parliament?
Power of government to devalue currency:
- The Government of India u/s 24(1) & 24(2) of Reserve Bank of India Act of 1934 may introduce new currency up to denominations of 10k and may devalue the currency of any value, and for any such devaluation government shall publish such order in its official gazette.
- Section 24 (of the Act). Denominations of notes.
(1) Subject to the provisions of sub-section (2), bank notes shall be of the denominational values of two rupees, five rupees, ten rupees, twenty rupees, fifty rupees, one hundred rupees, five hundred rupees, one thousand rupees, five thousand rupees and ten thousand rupees or of such other denominational values, not exceeding ten thousand rupees, as the Central Government may, on the recommendation of the Central Board, specify in this behalf.
(2) The Central Government may, on the recommendation of the Central Board, direct the non-issue or the discontinuance of issue of bank notes of such denominational values as it may specify in this behalf.
- Section 26(2) of the Reserve Bank of India Act empowers the central government to declare bank notes as ceasing to be “legal tender”: –
- Legal tender character of notes.
(1) Subject to the provisions of sub-section (2), every bank note shall be legal tender at any place in India in payment or on account for the amount expressed therein, and shall be guaranteed by the Central Government.
(2) On recommendation of the Central Board the Central Government may, by notification in the Gazette of India, declare that, with effect from such date as may be specified in the notification, any series of bank notes of any denomination shall cease to be legal tender save at such office or agency of the Bank and to such extent as may be specified in the notification.
RANJIT MONGIA: Exactly my thoughts Harpal Singh. I shudder to think what people in local bazaars and residents of small towns will go through. What about lower middle class, the elderly, the infirm, how will they get their currency exchanged?
SONALI GHOSH: Why not clean up the dirty black air first before a late night attempt to clean up black money. And don’t think 2000 rupee note can’t be counterfeited! I’m sure a 2000 rupee note in the absence of 500 and 1000 rupee notes is a bigger invitation. Also, why not leave poor working class people out of it? I mean people who are laborers, domestic staff, who don’t have bank accounts and are below the tax paying bracket…they could be allowed to keep and use their cash at least. This does not feel thought out or makes sense, I’m afraid.
INDERJIT BADHWAR: Guys, if you have Tata Sky, pls watch a very spirited and informed discussion on Modi’s demonetization on my TV Channel APN 542) at 10.30 pm. (Also on DD Direct, Airtel, Videocon, Hathway). Veteran Dilip Bobb is also on it.
Here’s link to my APN news TV channel (Dilip Bobb and me) on this vital, demonetization issue.