ISLAMABAD: The Senate has called for demonetisation of Rs5,000 currency notes to reduce illicit money flow, encourage the use of bank accounts and minimise undocumented economy.

The house passed a resolution to this effect on Monday with a majority vote despite opposition by the government.

Opposing the resolution, Law Minister Zahid Hamid said there were Rs3.431 trillion currency notes in circulation, 30 per cent of which were Rs5,000 notes. “There will be chaos in the market if these are taken out.” He was of the view that demonetisation of Rs5,000 notes would hamper business activity and adversely affect the government’s policy of financial inclusion.

Senator Osman Saifullah Khan, who had moved the motion, said that he had not proposed an abrupt move towards demonetisation, the way India had. He explained that the government could stop printing Rs5,000 notes and phase them out in three to five years. He pointed out that the high denomination notes were used in most illegal transactions and said that the proposed step would help increase the size of the formal economy.

The senator dispelled the impression that he was trying to follow the Indian prime minister in this regard. He said he would be the last person to be impressed by PM Narendra Modi. India had demonetised Rs5,000 notes and introduced Rs2,000 denomination notes, but failed to print an adequate quantity of it, he said. The haphazard manner in which the decision was implemented had led to a currency crisis, Mr Khan explained.

Senators Azam Swati and Mian Atiq endorsed the idea. Mr Swati said he would support any step that could help check corruption while Mr Atiq said most of the fake currency notes in circulation were Rs5,000 notes and those who held money in cash preferred high denomination notes.

National Command Authority Act 2016

The Senate defence committee presented its report endorsing the National Command Authority Act 2016, envisaging a ‘master-servant relationship’ for the employees of organisations under the NCA and ousting the jurisdiction of courts, including the Supreme Court, from entertaining employees’ petitions. This was the first item on Monday’s agenda.

The report, presented by committee chairman Mushahid Hussain Syed, also contained a dissent note by Senator Farhatullah Babar which listed reasons for rejecting it and proposed a middle ground — which found no resonance with other members of the committee. The bill was passed by the National Assembly in September last year and was subsequently presented in the Senate. It was endorsed by the defence committee but was later sent back by the Senate chairman for reconsideration, citing several reasons including a conflict with fundamental rights.

The defence committee, however, maintained its earlier decision and endorsed the bill in its original form. The committee, by a majority vote, argued that it was the prerogative of parliament to legislate on any matter at any time and that the clauses proposing a servant-master relationship and ousting the jurisdiction of the Supreme Court were in national security interest.

Mr Babar, who alone opposed the bill, observed that demoralising employees would undermine the strategic programme. He pointed out that the matter was already before the Supreme Court in a review petition, and highlighted the illegality of thrusting new rules on employees without giving them an option and the concentration of too much power with the executive without a check by an independent judicial body.

The senator proposed the establishment of an independent special service tribunal on the pattern of the Federal Service Tribunal of Pakistan to deal with service matters of NCA/SPD employees, decisions of which could be challenged in the Supreme Court. The special tribunal may be set up under Section 11 of the NCA Act 2010 which provided for an appellate authority, he said.

Rejecting the proliferation argument as being self-serving, Mr Babar said that there was no proliferation because the various organisations, now under the NCA, worked independently under their respective service rules. “Proliferation had taken place after the formation of the NCA — a fact acknowledged by General Pervez Musharraf in his book, In the Line of Fire, the senator said in his dissent note.

The note said it would be wrong to penalise employees for the NCA’s fault. He said the amendment would de-motivate employees and would eventually undermine the strategic programme itself. He implored the authorities not to be “blinded by the quest of absolute power”.

The house also passed a resolution recommending that the government make necessary amendments to the Constitution to empower the Senate to pass the money and finance bills. The Senate also passed a bill seeking rehabilitation and restructuring of corporate entities (the Corporate Rehabilitation Bill, 2015) with a majority vote.

Published in Dawn, December 20th, 2016