This year has seen a slowdown in lawmaking by Parliament. The treasury benches, filled with the MPs of the ruling Bharatiya Janata Party and its allies, have blamed the Rajya Sabha for it, accusing the upper house of blocking key reform legislations. The constitutional amendment Bill to provide for the goods and services tax regime is cited as the example of this blockade. The government currently does not have a majority in the upper house and therefore has limited ability to pass certain type of laws. This becomes a problem for the government because it might not enjoy a majority in the upper house till 2019.
Ordinary bills (like Land Acquisition and Lokpal) and constitutional amendment bills (like the GST) must be passed by both house of Parliament. There is a third category of bills only requires passing by the Lok Sabha to become law. These Bills are called Money Bills.
An example of this type of bill would be the Black Money that which was introduced in May. It sought to impose a higher tax and penalty on undisclosed foreign income, and was certified as a Money Bill. This meant that upper house did not have the power to reject or amend the Bill.
Money Bills are sent to Rajya Sabha only for its recommendations, which Lok Sabha may reject if it chooses to. If such recommendations are not given within 14 days, the Bill is deemed to be passed by Parliament. So if a Bill is classified as a Money Bill, the government can effectively bypass scrutiny of the Bill by the upper house.
What qualifies as a Money Bill?
When the Insolvency and Bankruptcy Code, 2015, was introduced in the lower house in the recently concluded winter session, there was speculation as to whether it was a Money Bill. Earlier this year, questions were raised about what could be included in a Money Bill when the government introduced legislative proposals in the Finance Bill (which is a Money Bill) for creation of a Public Debt Management Agency. However, the government deleted these provisions before passing them in Lok Sabha.
For a Bill to be considered as a Money Bill, it must only contain provisions related to taxation, borrowing of money by the government, expenditure from or receipt to the Consolidated Fund of India, and matters that are incidental to such taxation, expenditure and related subjects. For example, the Finance Bill, which only contains provisions related to tax proposals, would be a Money Bill.
The Speaker of Lok Sabha is the final authority on whether a Bill is a Money Bill. The Speaker certifies a Bill as a Money Bill, and his decision is final. Since the constitution specifies that parliamentary proceedings may not be questioned by any court, it appears that after a Bill’s passage in the House, it cannot be challenged on the ground that it wasn’t a Money Bill.
The Commonwealth system
It was by design that the framers of the Constitution envisaged a limited role for Rajya Sabha when it comes to a Money Bill. The idea being that the Lok Sabha, as the directly elected House of the People, must have a greater role in scrutinising and passing Money Bills.
Our parliamentary system borrows heavily from that of Commonwealth system. Therefore, the treatment of Money Bills is similar to the practice followed in the United Kingdom. In the UK parliament, the House of Lords can neither amend nor reject Money Bills that are passed by the House of Commons. The House of Lords has 30 days within which to return it to House of Commons, failing which it will be deemed as passed. Similarly, in Australia, the Senate (Upper House) may neither originate nor amend Money Bills. It may only suggest amendments.
The position is vastly different in the United States, where both the House of Representatives (Lower House) and the Senate (Upper House) has equal powers over the passing of revenue Bills. However, such Bills may only originate in the House of Representatives. This has resulted in the US government shutting down multiple times because of the non passage of budgetary legislation.
Misuse of Money Bills
In the opinion of some Constitutional experts, the use of the word "only" in the definition of a Money Bill (which includes a Bill that "only" contains provisions related to taxation or expenditure) is to "safeguard the Upper House against any abuse of this provision by the Lower House". This is to limit the use of this special procedure only to Money Bills, and ensure that an ordinary bill is not treated as a Money Bill by simply adding some financial clause. The first speaker of Lok Sabha G V Malvankar, said that if a Bill substantially deals with the imposition of a tax, it should be certified as a Money Bill.
Our system of governance has a series of checks and balances. Legislative scrutiny by both houses and the role of Rajya Sabha to check hasty legislation is one of them. Cross-party consensus building and deliberation would always be the key to passing legislation in Parliament. This would ensure that laws passed by parliament receive adequate scrutiny. It would also have the added advantage of buy in from all political parties to ensure effective implementation on the ground.
Prianka Rao is a Senior Analyst with PRS Legislative Research.
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Ordinary bills (like Land Acquisition and Lokpal) and constitutional amendment bills (like the GST) must be passed by both house of Parliament. There is a third category of bills only requires passing by the Lok Sabha to become law. These Bills are called Money Bills.
An example of this type of bill would be the Black Money that which was introduced in May. It sought to impose a higher tax and penalty on undisclosed foreign income, and was certified as a Money Bill. This meant that upper house did not have the power to reject or amend the Bill.
Money Bills are sent to Rajya Sabha only for its recommendations, which Lok Sabha may reject if it chooses to. If such recommendations are not given within 14 days, the Bill is deemed to be passed by Parliament. So if a Bill is classified as a Money Bill, the government can effectively bypass scrutiny of the Bill by the upper house.
What qualifies as a Money Bill?
When the Insolvency and Bankruptcy Code, 2015, was introduced in the lower house in the recently concluded winter session, there was speculation as to whether it was a Money Bill. Earlier this year, questions were raised about what could be included in a Money Bill when the government introduced legislative proposals in the Finance Bill (which is a Money Bill) for creation of a Public Debt Management Agency. However, the government deleted these provisions before passing them in Lok Sabha.
For a Bill to be considered as a Money Bill, it must only contain provisions related to taxation, borrowing of money by the government, expenditure from or receipt to the Consolidated Fund of India, and matters that are incidental to such taxation, expenditure and related subjects. For example, the Finance Bill, which only contains provisions related to tax proposals, would be a Money Bill.
The Speaker of Lok Sabha is the final authority on whether a Bill is a Money Bill. The Speaker certifies a Bill as a Money Bill, and his decision is final. Since the constitution specifies that parliamentary proceedings may not be questioned by any court, it appears that after a Bill’s passage in the House, it cannot be challenged on the ground that it wasn’t a Money Bill.
The Commonwealth system
It was by design that the framers of the Constitution envisaged a limited role for Rajya Sabha when it comes to a Money Bill. The idea being that the Lok Sabha, as the directly elected House of the People, must have a greater role in scrutinising and passing Money Bills.
Our parliamentary system borrows heavily from that of Commonwealth system. Therefore, the treatment of Money Bills is similar to the practice followed in the United Kingdom. In the UK parliament, the House of Lords can neither amend nor reject Money Bills that are passed by the House of Commons. The House of Lords has 30 days within which to return it to House of Commons, failing which it will be deemed as passed. Similarly, in Australia, the Senate (Upper House) may neither originate nor amend Money Bills. It may only suggest amendments.
The position is vastly different in the United States, where both the House of Representatives (Lower House) and the Senate (Upper House) has equal powers over the passing of revenue Bills. However, such Bills may only originate in the House of Representatives. This has resulted in the US government shutting down multiple times because of the non passage of budgetary legislation.
Misuse of Money Bills
In the opinion of some Constitutional experts, the use of the word "only" in the definition of a Money Bill (which includes a Bill that "only" contains provisions related to taxation or expenditure) is to "safeguard the Upper House against any abuse of this provision by the Lower House". This is to limit the use of this special procedure only to Money Bills, and ensure that an ordinary bill is not treated as a Money Bill by simply adding some financial clause. The first speaker of Lok Sabha G V Malvankar, said that if a Bill substantially deals with the imposition of a tax, it should be certified as a Money Bill.
Our system of governance has a series of checks and balances. Legislative scrutiny by both houses and the role of Rajya Sabha to check hasty legislation is one of them. Cross-party consensus building and deliberation would always be the key to passing legislation in Parliament. This would ensure that laws passed by parliament receive adequate scrutiny. It would also have the added advantage of buy in from all political parties to ensure effective implementation on the ground.
Prianka Rao is a Senior Analyst with PRS Legislative Research.
