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Money Bills and Financial Bills

GS Paper 2

 Syllabus: Parliamentary procedures

 

Source: IE

 

Context: Recently, Minister for Parliamentary Affairs clarified that The Digital Personal Data Protection (DPDP) Bill is a normal Bill and not a Money Bill. The article discusses the differences between Money Bills and Financial Bills, along with the court’s view on the issue

Money Bills and Financial Bills:

Any bill related to revenue or expenditure is a Financial Bill.

A Money Bill is a specific type of Finance Bill that deals only with matters specified under Article 110(1) and deals with taxes, borrowing, expenditure, etc. It can only be introduced in the Lok Sabha and must be certified by the Speaker.

 

All Money bills are Financial bills but all Financial bills are not Money bills

 Recent controversies:

ControversyDetails
2017 Finance Act AmendmentsThe Constitution Bench of the Supreme Court struck down amendments made to the 2017 Finance Act, which was passed as a Money Bill. The amendments altered the functioning of various tribunals.
Question of Money Bill ClassificationThe Supreme Court referred the matter of whether the 2017 Finance Act amendments could have been passed as a Money Bill to a seven-judge bench, indicating uncertainty about their classification.
Doubts on Aadhaar Act RulingThe Supreme Court has expressed doubts about the correctness of the 2018 verdict that upheld the Aadhaar Act as a Money Bill.

 

Preconditions for a Financial Bill to become a money bill

  • Introduction: Must be introduced only in the Lok Sabha and not in the Rajya Sabha, as per Article 117(1) of the Constitution.
  • President’s Recommendation: Can only be introduced on the President’s recommendation, as per Article 117(1) of the Constitution.

 

Financial Bills (I) VS Financial Bills (II) :

 Financial Bill (I) encompasses matters both related to money bills and general legislation.

  • It is presented under Article 117 (1) of the Constitution
  • Similarities with money bills: It can only be introduced in the Lok Sabha and upon the President’s recommendation.
  • Dissimilarities: Unlike money bills, a Financial Bill (I) can be subject to amendments or rejection by the Rajya Sabha. In case of disagreement between the two Houses, a joint sitting can be convened by the President to resolve the deadlock.

 

Financial Bill (II) concerns provisions involving expenditure from the Consolidated Fund of India but does not cover the subjects outlined in Article 110.

  • Governed by Article 117 (3) of the Constitution, Financial Bill (II) follows the legislative procedure of ordinary bills.
  • It can be introduced in either House of Parliament, and while the President’s recommendation is not necessary for introduction, it becomes crucial during the consideration stage.
  • Without the President’s recommendation, neither House can pass the bill.

 

Comparison of Money Bills and Financial Bills:

AspectMoney BillsFinancial Bills
IntroductionCan only be introduced in the Lok SabhaCan be introduced in either the Lok Sabha or the Rajya Sabha.
President’s RecommendationMust be introduced on the President’s recommendation.President’s recommendation is necessary for Category I at the introduction stage and for Category II at the consideration stage.
Originating HouseMust originate only in the Lok Sabha.Category II can originate in either the Lok Sabha or the Rajya Sabha.
Rajya Sabha InvolvementRajya Sabha’s involvement is limited; it can only provide recommendations. (Article 117)Rajya Sabha can fully participate, including amendments and discussions.
Inclusion of RS RecommendationsNot mandatory for Money Bills to include Rajya Sabha’s recommendations.Provision for Rajya Sabha’s recommendations to be included in Financial Bills.
Subjects CoveredDeals exclusively with matters listed in Article 110(1) of the Constitution.Deals with matters beyond those listed in Article 110(1) and can include other financial provisions.
CertificationCertified by the Speaker as a Money Bill if it falls under Article 110(1).
Overriding AuthorityLok Sabha’s decision prevails in case of disagreements with the Rajya Sabha.Requires agreement of both Houses for passage.
President’s RolePresident’s recommendation is essential for the introductionPresident’s recommendation is required if the Bill involves expenditure from the Consolidated Fund of India.

 

Insta Links:

What are money Bills?

 

Mains links:

How does a money bill differ from a financial Bill? Analyze whether the process of classifying a bill as a money bill needs to change. (250 words)