UPSC Prelims 2023 Q37: Money Bill vs Finance Bill — Explained
With reference to Finance Bill and Money Bill in the Indian Parliament, consider the following statements:
1. When the Lok Sabha transmits Finance Bill to the Rajya Sabha, it can amend or reject the Bill.
2. When the Lok Sabha transmits Money Bill to the Rajya Sabha, it cannot amend or reject the Bill, it can only make recommendations.
3. In the case of disagreement between the Lok Sabha and the Rajya Sabha, there is no joint sitting for Money Bill, but a joint sitting becomes necessary for Finance Bill.
How many of the above statements are correct?
- Only one
- Only two
- All three
- None
Answer: (b) Only two
Statement-wise explanation
- 1: correct — Here 'Finance Bill' means a Financial Bill that is not a Money Bill. A Financial Bill under Article 117(1) can only be introduced in the Lok Sabha, on the President's recommendation. After that, the Rajya Sabha has the same powers over it as over an ordinary bill. It can pass, amend or reject the Bill, and the Rajya Sabha Secretariat records 'no limitation on the power of Rajya Sabha' over such Bills.
- 2: correct — Under Article 109, the Rajya Sabha must return a Money Bill to the Lok Sabha within 14 days of receiving it, with or without recommendations. It cannot amend or reject the Bill. The Lok Sabha may accept or reject any of the recommendations. If the Rajya Sabha does not return the Bill in 14 days, it is deemed passed by both Houses in the form the Lok Sabha passed it.
- 3: incorrect — The first half is right: Article 108 rules out a joint sitting on a Money Bill. The second half is wrong. A joint sitting is never 'necessary' for a Financial Bill. If the Houses disagree, the President 'may' notify an intention to summon a joint sitting, so it is a discretionary option, not a compulsory step.
How to eliminate
Start with Statement 2. It is basic textbook polity under Article 109: on a Money Bill the Rajya Sabha can only make recommendations within 14 days. So the answer cannot be 'None'. Next, look at the word 'necessary' in Statement 3. Article 108 says the President 'may' summon a joint sitting, so a joint sitting is never compulsory for any bill. Statement 3 is therefore false, which rules out 'All three'. You are now choosing between 'Only one' and 'Only two', and Statement 1 decides it. To settle it you must know one fact: a Financial Bill that is not a Money Bill (Article 117) can be amended or rejected by the Rajya Sabha like an ordinary bill. The restriction is only on where it is introduced (the Lok Sabha) and on needing the President's recommendation. Remember that the 'only recommendations' limit applies to Money Bills, not to Financial Bills.
Know more
Money Bill, Financial Bill and Finance Bill are three different terms.
- Money Bill (Article 110): contains only the matters listed in Article 110(1): taxes, government borrowing, the Consolidated or Contingency Fund, appropriation, and similar matters. The Lok Sabha Speaker certifies it, and under Article 110(3) that decision is final.
- Financial Bill Category I (Article 117(1)): contains Article 110 matters plus other matters. Like a Money Bill, it can only be introduced in the Lok Sabha, on the President's recommendation. After that, it is treated as an ordinary bill.
- Financial Bill Category II (Article 117(3)): contains no Article 110 matter but involves spending from the Consolidated Fund. It can start in either House. The President's recommendation is needed before either House considers it.
- Finance Bill: the yearly bill that puts the Budget's tax proposals into law. It is usually certified as a Money Bill. The term is also used loosely for financial legislation in general, which is how Statement 1 uses it.
| Feature | Money Bill | Financial Bill (Cat I) | Financial Bill (Cat II) |
|---|---|---|---|
| Where introduced | Lok Sabha only | Lok Sabha only | Either House |
| President's recommendation | Before introduction | Before introduction | Before consideration |
| Rajya Sabha can amend/reject | No, recommendations only | Yes | Yes |
| Time limit in Rajya Sabha | 14 days | None | None |
| Joint sitting (Art 108) | Not possible | Possible | Possible |
| President can return for reconsideration | No | Yes | Yes |
A joint sitting is never compulsory. Article 108 lets the President call one if a bill is rejected, the Houses disagree on amendments, or six months pass without the other House passing it. It cannot be used for Money Bills or Constitution Amendment Bills. Only three joint sittings have been held: Dowry Prohibition (1961), Banking Service Commission Repeal (1978) and Prevention of Terrorism (2002).
In the news
In the 2023 Budget Session, the Lok Sabha passed the Finance Bill, 2023 on 24 March 2023. The Rajya Sabha returned it with a recommendation for an amendment, which the Lok Sabha accepted on 27 March 2023. This was a recent example of the Rajya Sabha's limited role on Money Bills. The use of the Money Bill route for laws like Aadhaar was also a live debate at the time.
NCERT Concepts to Revise
- Money Bill: Statement 2 and the first half of Statement 3 depend on what makes a bill a Money Bill under Article 110.
- Financial bill (Category I): Statement 1 depends on how a Financial Bill under Article 117(1) differs from a pure Money Bill once it reaches the Rajya Sabha.
- Finance Bill: The question uses 'Finance Bill'. Knowing what the annual Finance Bill is helps you read Statements 1 and 3 correctly.
- Speaker's certification of money bills: The Speaker's certificate decides whether a bill goes the Money Bill route, which changes what the Rajya Sabha can do with it.