Majority verdict finds no flaw in 2016 demonetisation process

• Four judges on a Constitution Bench of the Supreme Court found no flaw in the government's decision to demonetise ₹500 and ₹ 1000 currency notes in 2016.
• The sole woman judge on the Bench however disagreed with the majority, saying the demonetisation exercise was plainly unlawful and vitiated.

Rationale behind demonetisation

• To check “enemies from across the border using fake currency notes”.
• To “break the grip of corruption and black money”.

Impact

• Impact on Indian workforce: > 90% of India’s workforce still earn their wages in cash. Demonetisation impacted their life badly.
• Impact on India’s trade numbers: are at multi-year lows, industrial production is shrinking and job creation is anaemic.
• Dented the confidence of millions of Indian consumers: which can have severe economic ramifications.
• Ripple effects on GDP growth and job creation

Conclusion

• Leaders and governments have to care for their weak and at no point can they abdicate this responsibility. Most policy decisions carry risks of unintended consequences.
• It is important to deftly balance these risks with the potential benefits of such decisions.