Understanding the Distinction Between Money Bills and Financial Bills in Indian Parliament

Understanding the Distinction Between Money Bills and Financial Bills in Indian Parliament
Posted on 04-08-2023

Understanding the Distinction Between Money Bills and Financial Bills in Indian Parliament

The Digital Personal Data Protection (DPDP) Bill, 2023 has been a subject of contention in the Indian Parliament, with the Parliamentary Affairs Minister asserting that it is an ordinary Bill, not a money bill. Initially, there were reports that the Bill was being introduced under Article 117 of the Constitution, which deals with special provisions for Financial Bills.

In general, any Bill related to revenue or expenditure is considered a financial Bill. A money Bill is a specific type of financial Bill that must address only the matters specified in Article 110 (1) (a) to (g) of the Constitution. Financial Bills pertain to fiscal matters such as government spending and revenue, specifying the amount of money to be spent and the way it should be utilized. Article 117 of the Constitution contains special provisions relating to financial Bills, and they are an integral part of the Constitution and the Union Budget.

There are two types of Finance Bills. The first type, known as Financial Bills (i), includes subjects stated in Article 110 and other legislative provisions. It resembles a money bill in two aspects: it can only originate in the Lok Sabha (the lower house of Parliament) and requires the President's advice for introduction. The parliamentary procedures for this type of Finance Bill are similar to those of an ordinary bill.

The second type of Finance Bill, known as Financial Bills (ii), does not contain any items listed in Article 110 but may impact spending from the Consolidated Fund of India. This type is considered an ordinary bill and can be introduced in either house of Parliament. However, the President's recommendation is required, and the bill cannot be passed by either house without the President's request.

On the other hand, a money Bill, as defined by Article 110, deals specifically with provisions related to taxes, government borrowing, expenditure, or receipt of money from the Consolidated Fund of India. The passage of money Bills is governed by Article 109, giving the Lok Sabha overriding authority in their passage. The Speaker of the Lok Sabha certifies a Bill as a Money Bill, and the Speaker's decision is considered final.

The main difference between money Bills and financial Bills is that all money Bills are financial Bills, but not all financial Bills are money Bills. Money Bills must be introduced in the Lok Sabha and can only be introduced on the President's recommendation. The Rajya Sabha (the upper house) has limited powers over money Bills and can only make non-binding recommendations within 14 days of receiving the Bill from the Lok Sabha. If the Lok Sabha rejects these recommendations, the Bill is deemed to have been passed by both houses in the form it was originally passed by the Lok Sabha.

In contrast, any Financial Bill, which includes matters related to taxation or expenditure but covers other topics as well, must be passed by both houses of Parliament. While an ordinary Bill can originate in either house, money Bills can only be introduced in the Lok Sabha, and nobody can introduce or move them in the Lok Sabha without the President's recommendation. Amendments relating to tax reduction or abolition are exempt from the requirement of the President's recommendation.

Over the past years, the Indian government has introduced several legislations using the money Bill route, granting them more streamlined passage through the Lok Sabha due to its overriding authority. The DPDP Bill, 2023, has been at the center of the debate, with the government arguing that it is an ordinary Bill, not a money bill, to avoid bypassing the Rajya Sabha's scrutiny.

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