Presidential ordinance shifts the focus of note-ban from the executive to the legislature
By Parsa Venkateshwar Rao Jr
The President’s ordinance declaring the Specified Bank Notes (SBN) to be illegal henceforth tells an interesting story of its own. Remember, that on November 8, Prime Minister Narendra Modi had used the techno-legal term “cease to be legal tender” with regard to Rs 1000 and Rs 500 notes.
That is, these notes could still returned to the bank and new notes obtained. What we have witnessed in these near-50 days through the serpentine queues at the banks across the country is the process of exchanging the old for the new. It is reckoned that most of the amount in circulation on till November 8 is now with the banks. The ordinance now prevents the remaining Rs 1000 and Rs 500 from entering the currency market.
This is indeed a calibrated move on the part of the government. They were aware that not all of the Rs 1000 and Rs 500 notes were part of the black money or counterfeit currency. It might be the case that some of the black money and counterfeit currency may have entered the bank chests, but how much of it landed in the bank’s dragnet remains to be determined.
A notification also provides that those Indians who were not in India between November 9, 2016 to December 30, 2016 will have time to return the Specified Bank Notes (SBNs) till March 31, 2017 and June 30, 2017. Indians returning to India with the SBNs, that is the Rs 1000 and Rs 500 notes, are allowed to bring in Rs 25000 worth in those notes. And these cases will now be dealt under the Foreign Exchange Management Act (FEMA) provisions. At the end of this period, the Rs 1000 and Rs 500 notes will become illegal. The curious question remains: Will it be an offence to possess these notes, which are cannot be used in any transaction any way? Or will it be an offence only if someone tries to sell or buy through these banned notes.
The ordinance in a way completes the process of the note-ban. The issue however is now in the legislative court because the ordinance is a temporary measure – six months, and which can be renewed endlessly for any number of six-month periods – and which needs the parliament’s seal of approval.
The ordinance in a way completes the process of the note-ban. The issue however is now in the legislative court because the ordinance is a temporary measure – six months, and which can be renewed endlessly for any number of six-month periods – and which needs the parliament’s seal of approval. Government will have to explain its position in a formal, official manner. The aborted debate on demonetisation during the just-ended Winter Session of Parliament was more a political gesture rather than a constitutional necessity. With the promulgation of the ordinance regarding the note-ban, it becomes necessary for the parliament to debate it formally and pass the legislation. Of course, the BJP-led NDA government of Prime Minister Narendra Modi can push the legislation through in the Lok Sabha, though they will certainly hit a roadblock in the Rajya Sabha where it does not have the numbers.
The government can plead that the bill with regard to note-ban can be construed as a money bill which does not necessarily require the Upper House to pass it as well. This could turn out to be a bone of contention between the Opposition and the government, as well as a point of legal quibble among the constitutional experts.
However, it will be now that the Opposition can rightly express its views on the matter in the two Houses of Parliament. But the next sitting of Parliament being the Budget session, the government may delay the introduction of the Bill making the Rs 1000 and Rs 500 illegal. And the Opposition is sure to cry foul. The government is expected to offer some sweeteners to counter the bitter pill of demonetisation.
Lead: President Pranab Mukherjee addressing at the centenary celebration of the Federation of Telangana and Andhra Pradesh Chambers of Commerce & Industry, in Hyderabad. Photo: UNI