Modi government's post-dated ordinance on demonetisation is a joke

S Murlidharan
S MurlidharanDec 29, 2016 | 14:40

Modi government's post-dated ordinance on demonetisation is a joke

An ordinance is an emergency measure to tackle urgent problems when Parliament is not in session. If Parliament is in session, legislation must be brought in and approved by it and then subsequently assented by the president. An ordinance, on the contrary, is issued by the government, assented to by the president and passed within six months as a law in the normal course by Parliament.


The Specified Bank Notes Cessation of Liabilities Ordinance, 2016 (demonetisation ordinance) perhaps would be the first-ever with bulk of provisions meant to kick in at a future date – after March 31, 2017, when the RBI’s 19 exchange counters for demonetised currency notes across the country close. Till then it has no use.

Why then has the Modi government brought the demonetisation ordinance in a tearing hurry?

Ordinances are meant to take immediate effect. A cheque can be post-dated, but a post-dated ordinance is a contradiction in terms, an oxymoron. 

The long and short of the ordinance is prescription of penalty by way of jail term up to four years and fine up to Rs 10,000 or five times the value of the demonetised notes found in one’s possession beyond 10 pieces after March 31, 2017.

The opposition’s non-cooperative attitude will continue into the budget session. Photo: PTI

It is also to regularise the declaration as non-legal tender of the demonetised notes by the RBI and the government. In the absence of such legislatively sanctioned demonetisation, there was a lurking doubt whether the government could renege on its promise to pay contained in currency notes.

None of these reasons, however, warranted issuance of an ordinance which would actually be effective after March 31, 2017.  By doing this, Modi has further vitiated the air.


The opposition’s non-cooperative attitude will continue into the budget session on the legally correct ground that heavens would not have fallen had the law contained in the ordinance been reserved for the budget session, which is hardly a month away.

The harried government could compound the issue by presenting the demonetisation bill as a money bill so as to escape defiance in the Rajya Sabha, where the NDA still doesn’t command a majority.

It is possible that the government chose the ordinance route to warn people of the dangers of not surrendering bad notes to the banks by December 20, 2016, as deposits or to the RBI by March 31, 2017, for exchange. But that could have been done through official warnings and advertisements alluding to the penalty in the anvil. 

Incidentally, the RBI exchange counters till March 31, 2017, are going to be inaccessible to the rural folks who perhaps need them more in view of the unbanked areas predominantly being in rural places. The 19 RBI counters are all in urban areas, chiefly state capitals. How can the government expect rural folks to make a pilgrimage to the nearest RBI counter for this purpose?  It would cost money and inconvenience galore.


The job cannot be entrusted to agents either, as in the recent act of dilly- dallying, the government has made exchange at the RBI counters subject to a lot of conditions not announced earlier. For example, one must cite valid reasons for not depositing the notes in the bank accounts by December 30, 2016. The reasons that are going to pass muster are service in remote areas by armed forces personnel, foreign posting/living/travel etc. 

The government ought to have been firmer in its resolve to finish the entire demonetisation process by December 30, 2016.

It unnecessarily stuck its neck out by offering to keep the RBI exchange counters open till March 31, 2017. But having done so, it must have ungrudgingly allowed exchange of bad notes in these counters. Conditions such as the above listed are sure recipe to harassment and frayed tempers.

In any case, these counters are bound to witness considerable indiscipline and jostling. And the ordinance flies in the face of such exchange counters available and open till March 31, 2017.

Last updated: December 30, 2016 | 11:07
Please log in
I agree with DailyO's privacy policy