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Thursday, July 6, 2017

New window will defeat demonetisation reform, government likely to tell Supreme Court

While the Centre will “respectfully consider” the Supreme Court’s observation that the government and RBI provide another window for exchanging demonetised Rs 1,000 and Rs 500 currency notes, it will also tell the court that opening such a window “may defeat the purpose” of a radical reform like demonetisation. 

Senior officials familiar with the government’s thinking on the matter told ET that opening another window for exchanging old notes may lead to “many abuses” of the facility. 

“But if a facility for exchanging old currency is opened, high-denomination notes outside the country will come back,” a senior official said. “We share open borders with countries such as Nepal and Bhutan. There is a likelihood that a lot of currency will make its way back into the system… this will ruin the purpose of demonetisation. We will inform the Supreme Court of this and seek its advice,” he added. 

New window will defeat demonetisation reform, government likely to tell Supreme Court

Officials also said demonetisation has had a “tremendous impact” on curbing funding of terrorism and Naxalite operations, and another window may also lead to “such elements” exploiting the facility. 

SC on Tuesday asked the government and RBI to consider another note exchange window. The government is likely to reply on July 18, the next date of hearing. 

“With due respect to the Supreme Court’s order, we would want to say that we have done everything to make it possible for people to exchange notes. We would want to list everything that we have done to facilitate the process and reduce the difficulty people faced. Any more exemptions will lead to dirtying a system that was cleaned up after much effort,” another official said. 

Source:-The Economic Times

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