When Yashwant Sinha, the finance minister in 1998, went to meet the then Prime Minister Atal Bihari Vajpayee to tell him about the need for re-introduction of Rs1,000 notes, he heard him and said 'zaroor kijiye'.
Interestingly, Vajpayee was undoing the decision of the Union Cabinet, of which he was a part, in 1978. Eighteen years later, another BJP Prime Minister has undone a decision by abolishing Rs1,000
After the suggestion was made by RBI for higher denomination notes, Sinha went to meet Vajpayee to convey it to him. "After having concluded that Rs1,000 currency notes had to be issued I went to Vajpayeeji and after he was convinced, he said zaroor kijiye (definitely do it)," Sinha recalled.
The draft legislation was then brought to Parliament in the Winter Session of 1998. Since it only involved re-introduction of Rs1,000 note, there was no need for secrecy, unlike in the demonetization move.
While Sinha was not opposed to Prime Minister Narendra Modi's announcement to demonetize 1000/500 rupee notes, he said government should take steps to attack the root of black money. "Demonetization is in order and will have the desired impact. But, at the same time, we must strike at the root of black money generation. I am sure the government is taking steps along these lines," he told DNA.
He said the government had already taken a step against benami property transactions. "Another important step was looking at the tax rates and improving compliance," he said. Sinha also said that GST would help and recommended implementation of direct tax code.
In 1998, the reason for re-introducing Rs1,000 note was that taking 1982 as base year, the value of the note was just Rs160, bringing down the purchasing power drastically. This had happened in a gap of 18 years and by 2016 it was another 18 years. The value of Rs500 notes would be even less.
At that time, the Opposition took on the government for bringing back the high-denomination note. The government had argued that the Congress government had taken the decision in 1994 that Rs1,000 note should be printed.
When the Bill was taken up, Sinha had rejected the argument of the Janata Party government for demonetizing. He said "members of this August House will share my view that the root cause for illegal transaction lies not in notes of high denomination but elsewhere."
Though Sinha refrained from being critical of the Modi government's demonetization decision, his insistence on striking at the root cause of black money is reflective of his views then.
