More than Rs 6 lakh crore have been deposited so far in banks after the announcement of the demonetisation move, the government told the Supreme Court today.
“There is a big surge in digital use of money transaction after demonetisation move,” Attorney General Mukul Rohatgi told a bench headed by CJI TS Thakur, adding that by December 31, Rs 10 lakh crore is expected to be deposited in banks.
The centre argued that cash transaction should not exceed four per cent of the GDP of a country whereas in our country the same was at 12 per cent. Once the process is over, he said, the cash transaction will be reduced to eight per cent of the GDP.
The government also asserted that the effects of the move to scrap old Rs 500 and Rs 1,000 notes had now started to show. The queues at banks had begun to get shorter, the AG informed the SC bench.
Listing out the benefits of the radical reform initiated by the government, the AG said that the biggest benefit would be that banks will have more money and interest rates for loans will come down.
He further informed the court that government has set up a committee which will assess the ground situation across the country on demonetisation move.
After hearing the AG’s arguments, the SC declined to stay the demonetisation proceedings against the government in several courts across the country and said that it will now take up the matter for further hearing on December 2.
Apart from the top court, petitions have been filed in courts including in Chennai and Kolkata asking for the demonetisation to be declared illegal, which judges have said they will not do because that would amount to interfering with a major government decision.
The apex court also issued notice to the petitioners who had approached various courts challenging the government's demonetisation policy. At an earlier hearing last week, the apex court had said the move could lead to riots on account of the severe cash crunch following the sudden withdrawal of 86 per cent of the currency in circulation.
The government, however, has informed the court that there was no shortage of new Rs 500 and Rs 1,000 currency notes and that the delays in these reaching banks were on account of logistical problems. There was no need for panic, the government told SC.
The Centre had moved the apex court on November 17 seeking a stay on the proceedings before various High Courts and other courts except the apex court against demonetisation issue, saying it would create a lot of confusion otherwise.
The court, however, had refused to pass any order and dubbed the long queues outside banks and post offices as a ‘serious issue’ and expressed its reservation on the Centre's plea. It had also asked the Centre to file another plea seeking transfer of cases on demonetisation filed in different courts across country to one High Court.
Prime Minister Narendra Modi, in a televised address to the nation on November 8, had announced that Rs 500 and Rs 1,000 notes will no longer be legal tender from November 9.