(Before It's News)
by Pratik Datta, Radhika Pandey, Suyash Rai, Shubho Roy, Ajay Shah.
In the demonetisation problem, there is an economics dimension [example], and there is a public administration dimension [example]. These two dimensions have, thus far, dominated the discourse. In addition, we feel there are three important questions of law which deserve attention:
- Restrictions were imposed on withdrawing money in bank accounts. What is the legal validity of such restrictions?
- The notes cease to be legal tender, i.e. valid for exchange between counterparties to a transaction. However, what happens to the signed promise of the Governor of the RBI to honour the notes?
- What happens to the assets (on the RBI balance sheet) which back the notes that are not exchanged?
The authors are researchers at the National Institute for Public Finance and Policy.