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The centre’s decision six years ago to demonetise currency notes of Rs 500 and Rs 1,000 passed the Supreme Court’s test Monday in a majority 4-1 verdict with four judges on a five-judge Constitution Bench holding that the November 8, 2016, notification withdrawing the legal tender of these notes “does not suffer from any flaws in the decision-making process”.
While Justices S Abdul Nazeer, B R Gavai, A S Bopanna and V Ramasubramanian upheld the Government’s move, Justice B V Nagarathna disagreed with the “reasoning and conclusions” in the majority judgment.
Rejecting arguments against the Government’s decision-making process, Justice Gavai, writing for the Bench, said the court had “scrutinised the entire record, i.e., the communication dated 7th November 2016 addressed by the Secretary, Department of Economic Affairs, Ministry of Finance to the Governor, RBI, the Minutes of the Meeting of the Central Board dated 8th November 2016, the recommendations by the RBI dated 8th November 2016 and the Note for the Cabinet Meeting held on 8th November 2016.
Upon perusal of the material on record, we are of the considered view that the Central Board had taken into consideration the relevant factors while recommending withdrawal of legal tender of bank notes in the denomination of Rs 500 and Rs 1,000 of existing and any older series in circulation. Similarly, all the relevant factors were placed for consideration before the Cabinet when it took the decision to demonetise.
It is to be noted that a draft scheme to implement the proposal for demonetisation in a non-disruptive manner with as little inconvenience to the public and business entities as possible was also prepared by the RBI along with the recommendation for demonetisation.
The same was also taken into consideration by the Cabinet. As such, we are of the considered view that the contention that the decision-making process suffers from non-consideration of relevant factors and eschewing of the irrelevant factors, is without substance.
Referring to the communication on November 7, 2016, from the Department of Economic Affairs Secretary to the RBI Governor, the court said that “a perusal…would reveal that the Government of India has shared its concern with regard to infusion of Fake Indian Currency Notes (FICN) and generation of black money.
It has been pointed out that FICN infusion is concentrated in the two highest denominations of Indian banknotes of Rs 500 and Rs 1000.
Online gaming draft rules: No betting, self-regulatory body (Page no. 3)
(GS Paper 2,Polity and Governance)
A self-regulatory body, grievance redressal mechanism and mandatory know-your-customer norms for verification are among the key proposals in the draft rules for online gaming, released by the Ministry of Electronics and IT (MeitY).
Online games will have to register with a self-regulatory body, and only games that are cleared by the body will be allowed to legally operate in India. Online gaming companies will not be allowed to engage in betting on the outcome of games, as per the proposed rules.
The proposed rules, aimed at safeguarding users against potential harm from skill-based games, have been introduced as an amendment to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021. The attempt is to regulate online gaming platforms as intermediaries and place due diligence requirements on them.
Minister of State for Electronics and IT Rajeev Chandrasekhar said that “around 40 to 45 per cent of the gamers in India are women, and therefore it was all the more important to keep the gaming ecosystem safe.
The objective of the proposed rules is to grow the online gaming sector and encourage innovation, Chandrasekhar said. “As per the principles laid under the rule, wagering on the outcome of a game will not be allowed.
All online gaming companies will have to register with the self-regulatory body that will decide on the action required to be taken as per the rules.
The self-regulatory body will have a board of directors with five members from diverse fields including online gaming, public policy, IT, psychology and medicine. It must ensure that the registered games don’t have anything “which is not in the interest of sovereignty and integrity of India, defence of India, security of the state, friendly relations with foreign states or public order, or incites the commission of any cognizable offence relating to the aforesaid.
There could be more than one self-regulatory body and all of them will have to inform the Centre about the online games they have registered, along with a report detailing the criteria for registering a certain game.
Chandrasekhar said that going forward, the government may also regulate the content of online gaming, and “ensure that the games do not have violent, addictive or sexual content”.
The revenue of the Indian mobile gaming industry is expected to exceed $1.5 billion in 2022 and is estimated to reach $5 billion in 2025.
The industry grew at a CAGR (compound annual growth rate) of 38 per cent in India between 2017-2020, as opposed to 8 per cent in China and 10 per cent in the US. It is expected to grow at a CAGR of 15 per cent to reach Rs 153 billion in revenue by 2024, as per a report by VC firm Sequoia and management consulting company BCG.
Editorial
What was RBI board doing? (Page no. 10)
(GS Paper 3,Economy)
Demonetisation was a shockingly cruel policy enacted under false pretences. It did not achieve any of its stated objectives: A cashless economy, a revenue bonanza for the government, cleaning the system of illicit money, or stopping terror finance.
It inflicted needless suffering and made fools of citizens, who willingly acquiesced. But the tragedy was followed by an institutional farce. The Supreme Court evaded pronouncing on the legality of the measure for six years.
Now it has, as was widely expected, upheld the legality of demonetisation in a 4-to-1 decision. But even farce can sometimes have lasting institutional consequences. In this instance, it will depend on whether we heed the warnings of the dissent.
Keep in mind one larger context. Independent institutions are meant to act as checks and balances on government. But it is a pipe dream to think that our understandings of what constitutes independent action, or the powers that we ascribe to these institutions, can be drawn independently of political judgment.
Sometimes people who normally worry about the power given to independent institutions because they entrench technocratic and elite power at the expense of mass legitimation, will change their positions when faced with a government they don’t like.
Often our views on the powers of an institution are also not straightforwardly a matter of statutory interpretation as they are judgments of comparative trust.
A lot of people put up with the collegium system, for instance, not because of its statutory underpinnings. It is that, as a matter of prudence, they trust judges a bit more. Often the formal powers of an institution are no predictor of its willingness to act independently.
In the case of central banks, this challenge is even more acute. We should not pretend that currency decisions do not have a political dimension to them.
In this case, the RBI Act was not designed for an unprecedented policy measure of this kind. It was designed for what might be called technical demonetisations, not the wholesale withdrawal of currency.
So the debate over whether the RBI’s power to demonetise “any” series implies “every” series has to be seen in this context. Section 26 of the RBI Act also envisages that any demonetisation must formally be initiated by the RBI itself; it cannot be at the direction of the government.
Ideas page
‘Demonetisation arose from the Centre …it should have enacted a law’ (Page no. 11)
(GS Paper 3,Economy)
According to sub-section (1) of Section 26 of the Reserve Bank of India Act, 1934, 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. This provision is subject to sub-section (2) of Section 26 of the Act.
Sub-section (2) of Section 26 of the Act applies only when a proposal for demonetisation is initiated by the central board of the bank by way of a recommendation being made to the central government.
The said recommendation can be in respect of any series of bank notes of any denomination which is interpreted to mean any specified series of bank notes of any specified denomination.
The expression “any series of bank notes of any denomination” has been given its plain, grammatical meaning, having regard to the context of the provision and not a broad meaning.
Thus, the word “any” will mean a specified series or a particular series of bank notes. Similarly, “any” denomination will mean any particular or specified denomination of bank notes.
If the word “any” is not given a plain grammatical meaning and interpreted to mean “all series of bank notes” of “all denominations”, it would vest with the central board of the bank unguided and unlimited powers which would be ex-facie arbitrary and suffer from the vice of unconstitutionality as this would amount to excessive vesting of powers with the bank.
In order to save the provision from being declared unconstitutional, the meaning of the provision is read down to the context of the central board of the bank initiating a proposal for demonetisation by making a recommendation to the central government under sub-section (2) of Section 26 of the Act of a particular series of bank note of any denomination.
On receipt of the said recommendation made by the central board of the bank under sub-section (2) of Section 26 of the Act, the central government may accept the said recommendation or may not do so.
If the central government accepts the recommendation, it may issue a notification in the Gazette of India specifying the date with effect from which any specified series of bank notes of any specified denomination shall cease to be legal tender and shall cease to have the guarantee of the central government.
The provisions of the Act do not bar the central government from proposing or initiating demonetisation. It could do so having regard to its plenary powers under Entry 36 of List I of the Seventh Schedule of the Constitution of India.
Express network
Guyana President, NRI who held langar during farm stir on award list (Page no. 13)
(Miscellaneous)
Guyana’s President Mohamed Irfaan Ali, US-based businessman Darshan Singh Dhaliwal, and DSB Group CEO Piyush Gupta are among 21 recipients of the 17th PravasiBharatiya Samman Award (PBSA).
PravasiBharatiya Samman Award is the highest honour conferred on overseas Indians during the PravasiBharatiya Divas Convention, which will be held this time between January 8 and 10 in Indore.
Irfaan Ali, 42, who was sworn in as the ninth President of Guyana in August 2020, belongs to an Indo-Guyanese Muslim family. He will also be the chief guest at the convention, according to a statement issued by the Ministry of External Affairs.
Dhaliwal, a US-based NRI, was sent back from Delhi’s IGI Airport on the night of October 23-24, 2021, over his alleged involvement in organising a langar for protesting farmers at Delhi borders against the three farm laws, now withdrawn.
Dhaliwal is the younger brother of Surjit Singh Rakhra, who was a minister in the previous Akali Dal government in Punjab.
Poland-based businessman Amit Kailash Chandra Lath, who assisted Indian authorities during the evacuation of students during Russia’s invasion of Ukraine, has also received the award.
Among other recipients are FedEx Corporation CEO Rajesh Subramaniam; Indian-Australian economist Chennupati Jagadish; and Kannam Ambalam, associate professor in Ethiopia-based Wolega University who is credited with building water springs and small bridges in the African nation.
Reena Vinod Pushkarna, an Israel-based chef who was part of the team that prepared dishes for Prime Minister Narendra Modi during his visit to the country in 2017 is among the recipients.
According to a statement issued by the MEA on Monday, the PSBA is conferred by the President of India as part of the PravasiBharatiya Divas Convention on Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs) or organisations established and run by NRIs or PIOs in recognition of their outstanding achievements — both in India and abroad.
Explained
Two views on six issues (Page no. 15)
(GS Paper 3,Economy)
In the Supreme Court’s majority opinion upholding the government’s demonetisation order of November 8, 2016, Justice B R Gavai — writing for himself and Justices S Abdul Nazeer, A S Bopanna, and V Ramasubramanian — reframed the questions referred to the Constitution Bench into six issues. In her dissenting judgment, Justice B V Nagarathna disagreed with the reasoning and conclusions in the majority opinion.
Section 26(2) of the RBI Act states that “on recommendation of the Central Board (of the RBI) 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.”
The petitioners argued that the word “any” would have to be given a restricted meaning to mean “some” and not “all” legal tender of a given denomination.
Senior Advocate P Chidambaram argued that RBI has power only to recommend “a particular series” of notes, but to demonetise “all series” of a particular denomination, it was considered necessary to do so by way of a separate enactment of Parliament.
The majority view disagreed, and held that the term has to be given a purposive interpretation and that any other meaning would lead to absurdity.
Justice Nagarathna held that if the word “any” could mean “all”, it would confer excessive and arbitrary powers on the RBI. In her view, “the contention of the Union of India that the Central Government has the power to demonetise “all” series of bank notes of “all” denominations which would mean that every Rs 1/-, Rs 5/-, Rs 10/-, Rs 20/-, Rs 50/-, Rs 100/-, Rs 500/-, Rs 1,000/-, Rs 5,000/-, Rs 10,000/-, could be demonetised.
Since the same is possible theoretically, in my view, such an extensive power cannot be exercised by issuance of a simple gazette notification in exercise of an executive power of the Central Government as if it is one under sub-section (2) of Section 26 of the Act.
Economics and politics in govt’s promise of a year of free food grains (Page no. 15)
(GS Paper 3,Food Security)
As 2022 drew to a close, the government announced that it would provide free foodgrains to eligible beneficiaries under the National Food Security Act (NFSA), 2013, for all of the new year.
The Union Cabinet’s December 24 decision came amid a debate over freebies to voters in the country. The political calendar of 2023 is packed with elections in nine states, which will be followed by Lok Sabha elections in 2024.
The Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY) — launched in April 2020 as a pandemic relief measure under which 5 kg of free foodgrains were provided to NFSA beneficiaries in addition to their monthly entitlement (35 kg to a Antyodaya household and 5kg per person in a Priority Household) of subsidised foodgrains under at Act — has been discontinued.
The NFSA, which was enacted by the UPA-2 government and came into effect on July 5, 2013, entitles 67 per cent of households — 50 per cent urban and 75 per cent rural — in India to subsidised grains under the Targeted Public Distribution System (TPDS). About 81.35 crore people around the country are covered under the NFSA.
The subsidised prices are specified in Schedule-1 of the Act which the government can change by executive order. In fact, the government issued a notification on December 30, 2022 to provide free foodgrains under the NFSA from January 1. The quantity of grains to which a beneficiary is entitled is also laid down, and cannot be changed without Parliament’s approval.
As of now, NFSA beneficiaries pay Rs 3, Rs 2, and Re 1 per kilogram of rice, wheat, and nutri-cereals (millets) respectively. These prices were initially fixed for three years.
Thereafter, the grains were to be supplied “at such price, as may be fixed by the Central Government, from time to time, not exceeding,(i) the minimum support price for wheat and coarse grains; and (ii) the derived minimum support price for rice, as the case may be”.
While the three years ended on July 5, 2016, prices have remained constant despite the steady rise in the Economic Cost of the foodgrains, and the government’s growing food subsidy bill.
The Economic Cost has four main components — Pooled Cost of Grain, Procurement Incidentals, Acquisition Cost, and Distribution Cost — which have increased over the years.
The Economic Cost of rice has risen from Rs 2,615.51 per quintal in 2013-14 to Rs 3,104.96 in 2016-17 to 3,670.04 in the current financial year. The Economic Cost of wheat has risen from Rs 1,908.32 per quintal in 2013-14 to Rs 2,196.98 in 2016-17 to Rs 2,588.70 in 2022-23.
For the first time in many years, no rhinos poached in Assam in 2022 (Page no. 15)
(GS Paper 3,Environment)
Assam Chief Minister HimantaBiswaSarma announced on January 1 that no rhinos were poached in the state in 2022, ANI reported.
Special DGP G P Singh posted data on Twitter that showed last year was the first since at least 2000 in which there were no incidents of rhino poaching in Assam.
Anti Rhino poaching efforts have yielded spectacular results. There has been no rhino poaching in Assam in Year 2022. Last poaching was on Dec 28th 2021 at Hilakunda, Kohora in Golaghat district. We would strive to keep the graph flat,” Singh tweeted.
The Indian rhinoceros (Rhinoceros unicornis) is found only in the Brahmaputra valley, parts of North Bengal, and parts of southern Nepal.
It has a single black horn that can grow up to 60 cm, and a tough, grey-brown hide with skin folds, which gives the animal its characteristic armour-plated look.
The Indian rhino is listed as vulnerable (better than endangered, worse than near threatened) in the IUCN Red List; it was earlier placed in the endangered category. The WWF says the “recovery of the greater one-horned rhino is among the greatest conservation success stories in Asia.
According to the WWF, there are around 3,700 Indian rhinos in the wild today. Assam’s Kaziranga National Park (KNP) alone has 2,613 animals, according to a census carried out in March 2022. There are more than 250 other rhinos in the Orang, Pobitora, and Manas parks.
Rhinos have been poached for their horn, which is prized in some cultures. An Assam Forest Department release in 2021 said “ground rhino horn is used in traditional Chinese medicine to cure a range of ailments.
In 2019, the Assam government constituted a Special Rhino Protection Force to keep a check on rhino poaching and related activities at Kaziranga National Park (KNP). On September 22, World Rhino Day, in 2021, almost 2,500 rhino horns were burnt publicly in Bokakhat in KNP to “bust myths about rhino horns”, and to send “a loud and clear message to the poachers and smugglers that such items have no value”.