Money bill

Polity & Governance glossary

Also called: Article 110 · Topic: Parliament: Composition, Powers and Law-making · NCERT: Class 8, Ch 6 "The Parliamentary System: Legislature and Executive"; Class 11, Ch 5 "Legislature"

Meaning

A money bill is a bill that deals only with the subjects listed in Article 110(1). These include taxes, government borrowing, and money going into or out of the Consolidated Fund of India. The Speaker of the Lok Sabha decides whether a bill is a money bill, and the Speaker's decision is final.

It matters because a money bill almost cuts the Rajya Sabha out of law-making. The Rajya Sabha can only suggest changes, and it must do so within 14 days. That gives the Lok Sabha, the House the people elect directly, control over the nation's money.

Explanation

What counts as a money bill (Art. 110(1))

A bill is a money bill only if it contains nothing but these matters:

  1. Putting a new tax on, removing a tax, or changing or regulating a tax.
  2. Government borrowing, and guarantees (promises the government makes to repay someone else's loan).

  3. Keeping the Consolidated Fund and the Contingency Fund, and putting money into them or taking it out. - The Consolidated Fund is the government's main account. - The Contingency Fund is kept for sudden, unforeseen spending.

  4. Appropriation (legal permission to spend) of money from the Consolidated Fund.

  5. Declaring some spending to be charged expenditure. This is spending that Parliament does not vote on, such as the President's salary.
  6. Receiving money into the Consolidated Fund or the public account, and keeping or paying out that money.
  7. Any matter incidental to (closely linked with) the matters above.
  • The key word is "only". If a bill has even one other kind of matter in it, it is not a money bill.
  • What does not make a bill a money bill (Art. 110(2)): a bill is not a money bill just because it:
  • provides for fines or penalties;
  • charges fees for licences or services; or
  • deals with taxes collected by local bodies.

Steps in passing a money bill

  1. President's recommendation. The government must get the President's approval before it introduces the bill (Art. 117).
  2. Introduced in the Lok Sabha only. A money bill can never start in the Rajya Sabha (Art. 109).
  3. Passed by the Lok Sabha by a simple majority (more than half of the members present and voting).
  4. Speaker's certificate. The Speaker signs a note on the bill saying it is a money bill. This certificate is final (Art. 110(3)). It goes with the bill to the Rajya Sabha and to the President (Art. 110(4)).

  5. Sent to the Rajya Sabha. It can only make recommendations, and it must return the bill within 14 days (Art. 109). - The Rajya Sabha cannot amend the bill or reject it.

  6. Back in the Lok Sabha. The Lok Sabha can accept or reject any or all of the recommendations. - In either case, the bill counts as passed by both Houses. - If the Rajya Sabha does not return the bill within 14 days, it is still treated as passed by both Houses.

  7. President's assent (formal approval, Art. 111). The President cannot return a money bill for reconsideration.

Limits and special features

  • There is no joint sitting (Art. 108). The Lok Sabha already has the final word, so no deadlock can arise.
  • The Rajya Sabha has the least power here. Of all kinds of bills, this is where its power is weakest.
  • Only the Speaker decides. The Rajya Sabha, its Chairman and the President cannot question the certificate.

In the Constitution and practice

  • Where it sits: Part V of the Constitution (the Union), in the chapter on Parliament.
  • Art. 109: special procedure for money bills.
  • Art. 110: what a money bill is, and the Speaker's final certificate.

  • Art. 117: President's recommendation, and the related financial bills.

  • Who uses it: the Union government, through the Finance Minister and other ministers. Budget-related laws that only deal with taxes or spending from the Consolidated Fund are passed as money bills.

  • How it works in practice:
  • The Rajya Sabha represents the states. On money bills, though, it can only advise.

  • Money power therefore stays with the Lok Sabha and the Council of Ministers that answers to it.

  • Disputes over the Speaker's certificate:

  • The Aadhaar Act and some Finance Acts were certified as money bills.
  • Critics said these laws contained more than Art. 110 matters, so they should have gone through the full process in the Rajya Sabha.

  • This raised the question of whether the "final" certificate can be used to get around the Upper House.

  • Why joint sittings never involve money bills: all three joint sittings so far were on ordinary bills. These were the Dowry Prohibition Bill (1961), the Banking Service Commission (Repeal) Bill (1978) and the POTA Bill (2002) [2]. A joint sitting cannot be used for a money bill [2].

Don't confuse with

  • Financial bill, Category I (Art. 117(1)): like a money bill, it needs the President's recommendation and starts only in the Lok Sabha. But it also contains matters other than money-bill matters. So the Rajya Sabha can amend or reject it, and a joint sitting is possible.
  • Financial bill, Category II (Art. 117(3)): it involves spending from the Consolidated Fund but contains no Art. 110 matters. It can start in either House. The President's recommendation is needed only before a House considers it. Otherwise it is treated like an ordinary bill.
  • Ordinary bill (Art. 107): it can start in either House, and the Rajya Sabha has full power to pass, amend or reject it. A deadlock is settled by a joint sitting (Art. 108). The President may return it once for reconsideration.
  • Constitution amendment bill (Art. 368): it can start in either House and needs no President's recommendation. Each House must pass it by a special majority, so the Rajya Sabha has equal power. Like a money bill, it has no joint sitting.

Prelims Hooks

  • Art. 110(3): the Speaker's decision on whether a bill is a money bill is final. It is not the Chairman's or the President's decision.
  • Art. 109: the Rajya Sabha must return a money bill within 14 days, with recommendations only. If it does not, the bill is treated as passed by both Houses.
  • Art. 117: a money bill needs the President's recommendation before it is introduced, and it starts only in the Lok Sabha.
  • A money bill has no joint sitting, and the President cannot return it for reconsideration.
  • Trap: a Financial bill Category I also starts only in the Lok Sabha. Unlike a money bill, the Rajya Sabha can reject it, and a joint sitting is possible.
  • Trap: a bill is not a money bill just because it provides for fines, licence fees or local taxes (Art. 110(2)).

Mains Points

  • Is the Rajya Sabha being bypassed?
  • The Speaker's certificate is final. So a government without a majority in the Rajya Sabha can label a mixed bill a "money bill" to avoid the Upper House, as critics said about the Aadhaar Act and some Finance Acts.
  • This weakens the Rajya Sabha's role as the House of the states, and so weakens federalism (the sharing of power between the Union and the states).

  • Reform ideas: clear legal tests for what counts as a money bill; allowing judicial review (courts checking whether an action follows the Constitution) of the Speaker's certificate; or certification by a committee instead of the Speaker alone.

  • Why it makes sense for the Lok Sabha to control money:

  • The Lok Sabha is directly elected, and the Council of Ministers answers to it. So the House that can remove the government also controls taxes and spending.
  • The 14-day limit stops the Upper House from blocking the budget or delaying the government's money.
  • The balance to aim for: keep this rule for real money matters, without using the money-bill route to cut short debate on wider policy laws.

Related concepts

Read more

Sources

  1. 1Class 8, Ch 6 "The Parliamentary System: Legislature and Executive"; Class 11, Ch 5 "Legislature" (primary)
  2. 2Legislative Procedure in the Rajya Sabha, Rajya Sabha Secretariatcms.rajyasabha.nic.in · tier 1