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Demonetizing Rs 500 and Rs 1,000 Currency Notes did not violate Fundamental Rights of People, Centre tells Supreme Court

It has only imposed reasonable restrictions in pursuance to its objective of eliminating black money and counterfeit currency, claims govt

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People standing outside ATM (representative Image), VOA
New Delhi, Dec 2, 2016: The central government on Thursday said that its decision to demonetize Rs 500 and Rs 1,000 currency notes did not violate the fundamental rights of the people as it has only imposed “reasonable restrictions” in pursuance to its objective of eliminating black money and counterfeit currency.

“The respondents (Centre’s) act of cancelling legal tender character of existing series of Rs 500 and Rs 1m000 bank notes is only a reasonable restriction and regulatory in nature. Merely because there is restriction on the public to use the old high denomination notes, the regulation cannot be held to be illegal or unreasonable restriction as there is no infringement of fundamental rights for the citizens,” it said in its reply filed before the apex court.

The government cited the Section 26 (2) of the Reserve Bank of India Act, 1934, to defend its decision.

The section says: “On recommendation of the Central Board the (Central Government) may, by notification … , declare that, with effect from such date … , any series of bank notes of any denomination shall cease to be legal tender ….”

It also defended its decision to introduce Rs 2,000 denomination currency notes, saying that it was done in view of the erosion in the purchasing power of the rupee on account of inflation.

Pointing out that currency note of Rs 1,000 denomination was reintroduced in year 2000, the Centre said: “Barring short-lived exceptions, Indian has consistently seen moderate to high inflation since then, thus progressively eroding the value of money in purchasing power parity (PPP) terms,”

The government said this in its affidavit filed by the Union Finance Ministry before the apex court which is set to hear a batch of petitions challenging the decision to demonetise Rs 500 and Rs 1,000 currency notes.

The court will also hear the government’s plea seeking the transfer of cases filed before different high courts and subordinate court challenging the demonetisation either to top court itself or Delhi High Court.

Making a distinction between regulation and deprivation, the government on Thursday said no one has been deprived from using the notes of different denomination or issuing cheques or e-transfer. All that has happened, that too for a limited period, is the restriction on the withdrawal of the money from their accounts.

The government has also sought to describe these restrictions as “reasonable”.

This appears to be the government’s response to senior counsel Kapil Sibal, appearing for one the petitioners before the top court, asking under what law people could be restricted from withdrawing their own money from their bank account.

As in its first affidavit, the government on Thursday give details of the steps it had taken to ameliorate the hardships being faced by the people and to encourage them to take recourse to cashless transactions. (IANS)

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Rahul Gandhi Points at PM Modi to Vacate the Seat over Gas price Hike

Rahul Gandhi's twitter attack on PM Modi: Vacant your seat over the gas price hike.

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Rahul Gandhi's verbal attack on PM Modi
Rahul Gandhi's verbal attack on PM Modi wikimedia commons

NEW DELHI: Congress Vice President Rahul Gandhi on Sunday attacked the Narendra Modi-led central government after the prices of cooking gas was again hiked, asking him to “vacate the ‘Sinhasan’ (post of the Prime Minister)”.

“Mehangi gas, mehanga rashan. Band karo khokala bhashan. Dam bandho kam do. Warna khali karo sinhasan (Expensive gas, expensive ration. Stop making hollow promises. Fix the rates and give employment or else vacate the post),” Rahul Gandhi tweeted attaching a news report of the hike.

Gandhi was referring to the price hike announced by the state-run oil firms on Wednesday.

The prices of the LPG cylinder’s went up by Rs 4.50, while the non-subsidised rates were hiked by a steeper Rs 93 per cylinder.(IANS)

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Small, medium firms were limping back when GST added to pain: Stakeholders (Note Ban Series)

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Small, medium firms were limping back when GST added to pain: Stakeholders (Note Ban Series)

New Delhi, November 3, 2017: The backbone of India’s manufacturing sector — micro, small and medium enterprises (MSMEs) — had not yet recovered from the demonetisation move when the Goods and Services Tax (GST) came in to add to the pain, according to industry stakeholders.

“The base of the MSME pyramid is comprised of informal sector, which has traditionally done business in cash. With withdrawal of cash, this market seized up for a quarter or so. They (MSMEs) are limping back to normality,” Anil Bhardwaj, Secretary General, Federation of Indian Micro and Small and Medium Enterprises (FISME), told IANS.

“The recovery is slow because of the new disruption in the form of GST. In the short term, there could be loss of business opportunities because of lack of capital in the informal markets,” he said.

Bhardwaj said that the housing sector, which had more than 60 product categories linked to MSMEs, was drastically hit, both directly and indirectly.

According to D.S. Rawat, Secretary General of Assocham, except for some payment gateways, most of the sectors lost out.

“The impact of demonetisation would have evaporated, but the GST roll-out issues are being braved by some sectors, particularly the SMEs and the traders,” Rawat told IANS.

In the Economic Watch report by Ernst & Young for September 2017, demonetisation has been blamed for an adverse impact on the economy in the short run, as its “benefits are yet to overtake” the costs.

“The government and people at large did have to bear considerable costs in the immediate aftermath of demonetisation. Some of these costs may be difficult to quantify, but objective evidence of the short-term costs is available in at least some important dimensions,” the report said.

“There was an erosion of growth, output and employment,” it added.

The overall economic growth is still contested, however, as some argue that the downward spiral in gross domestic product (GDP) growth preceded demonetisation.

“Though the GDP growth has been lower post the exercise, it will not be fair to conclude that demonetisation was the only factor responsible for this. The growth had started slowing right after the third quarter of 2016-17 and the trend continued post-November as well,” said Ranen Banerjee, Partner-Public Finance, Economics and Urban, at PwC India.

Others like the EY’s report indicate that demonetisation resulted in a “tangible adverse impact” on GDP growth.

“Real GDP growth has been falling steadily quarter after quarter since the fourth quarter of FY16, when it was nine per cent. It fell to 5.7 per cent in first quarter FY18, a decrease of 3.3 percentage points,” the report pointed out.

“The two quarters that can be considered as the demonetisation quarters in FY17 were the third quarter of FY17 and fourth quarter of FY17. In these two quarters, the GDP growth rate fell to seven per cent and 6.1 per cent, respectively.”

It mentioned that the downward trend in growth preceded demonetisation and was largely caused by an investment slowdown.

On the industrial production front, in December 2016, the Index of Industrial Production (IIP) had contracted by 0.4 per cent from a 13-month high of 5.7 per cent reported for November.

However, it rose 2.7 per cent in January 2017. The latest IIP figures for August showed that factory output grew 4.3 per cent against the same month last year on the back of robust mining and electricity sector growth.

According to the Ministry of Statistics and Programme Implementation, manufacturing output in the country in July 2017 had grown marginally by 1.2 per cent.

“The event clearly pushed the economy towards a higher degree of digitisation and financial inclusion. Accordingly, the digital finance sector seems to have gotten a push while over the longer term financial services should be the biggest gainer,” said Anis Chakravarty, Lead Economist, Deloitte.

(Rohit Vaid can be reached at rohit.v@ians.in)

(Editors: The above article is part of a series of demonetisation stories leading up to November 8)

–(IANS)

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‘1984 riots shut our doors to a better life’ (October 31 is the 32nd anniversary of Indira Gandhi’s assassination)

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Indira gandhi
32 years of Indira Gandhi assassination

Located in a dingy and dirty lane, there’s hardly any scope for the sun’s rays to penetrate into Surjeet Singh’s 50 sq yard home. The two room set is the only shelter for him, his wife, four children and widowed mother, to whom the house was alloted after his father was killed in the anti-Sikh riots of 1984 — when he was just eight at the time.

“You can see how we are surviving. It has been now more than three decades of the 1984 riots, but seems our lives have remained stagnant. Forget justice, our condition of living has rather deteriorated. The riots shut our doors to a better life,” Surjeet, now 40, told IANS.

 The Widow’s Colony in West Delhi’s Tilak Vihar was established by the government and alloted to the widows who survived as a part of the compensation to victims of the anti-Sikh riots that broke out on October 31, 1984 on the assassination of then Prime Minister Indira Gandhi. However, the present condition of the colony is extremely miserable; power lines hang low, garbage is littered over the narrow lanes and the drains are left uncovered.

Around 3,000 widows were alloted houses in Tilak Vihar but now only a countable are left. Many went back to Punjab while few have settled in other parts of Delhi.

Sixty-five-year-old Kuldeep Kaur, one a widow who has been residing in the colony since its inception, said that she has now learned to live with the traumatic and harrowing past pain but was worried about the future of her children and grandchildren

“I am old now and have accepted whatever was written in my destiny. The riots not just took away life of my husband but permanently closed the scope of leading a secured and decent life. My three children saw their father being burnt alive in front of their eyes; they didn’t attend school. And now, my son drives an e-rickshaw; what future will he give to his children,” Kuldeep Kaur lamented.

Surjeet Singh, who is a freelance photographer by profession, said he saw his father murdered by angry and violent mobs but was too young to understand what was happening. “Imagine a life without a father, how difficult it must have been for the widows to continue their lives with the sole earning member gone. At that time, women were not so educated to get a job. The situation after the riots was very bad,” he voiced.

The riots had majorly affected the children of the widows living in the colony; they got involved in addictions — started taking drugs and surrendered themselves to alcohol –and left schooling.

“Nobody could afford school, even though some went to school they couldn’t complete their education because the dreadful past was too difficult to forget and difficult to concentrate on studies. The boys of Tilak Vihar are actually useless but you cannot blame them,” Surjeet Singh pointed out.

Kuldeep Kaur recalled how their lives changed in a blink; she and her children had no roof to shelter them and had to spend many days hungery. Being less educated, she couldn’t get a job so took up a stitching work to continue her livelihood.

“And this is not just what I have gone through but tale of all the widows in Tilak Vihar. Kamane ka zariya khatam ho gaya hain (our medium of earning a livelihood is closed). Now they (the survivors of the riots) either run autos or have small shops of their own,” she further added.

The survivors pitched that despite knowing under what circumstances they live, there has been no help from the government.

“Its all gimmick by the political parties, whosoever comes to power. They leaders show their face either before the elections or during this time. They show their sympathy, give us false promises and then vanish, no sign of them for a year,” Surjeet Singh pointed out.

Kuldeep Kaur lamented that even the compensation amount which was offered by the government has not yet been fully given to them. She said: “Kishto mein milta hai (we get in installments). Had we got the money in time, our children could have at least completed their education, got a decent job and settled well.”

Surjeet Singh said that he doesn’t expect any monetary compensation — all that he wants is a better life for his children and doesn’t want them to struggle for a living.

“Only those who have gone through this knows the pain. But now, our hunger for justice have also died. We have lost all hope for the culprits to be punished. Every year many journalistst turn up, they talk to us, express their grief and gratitude, but nothing fruitful comes of it,” he replied.

“An earnest request,” Singh paused before adding: “Please do write something that forces the government to take up our case seriously.”

(Somrita Ghosh can be contacted at somrita.g@ians.in)–IANS