Explained: The Money Bill route and why the opposition is up in arms

What is the role of the Rajya Sabha in the Indian parliament?

Yesterday, the opposition scored a minor, even if temporary victory, in the Rajya Sabha, when it recommended five amendments to be made to the Finance Bill 2017 passed by the Lok Sabha last week. The victory was shortlived as all the amendments were rejected by the Lok Sabha today and the Finance Bill 2017 was passed by the parliament thus completing the budgetary exercise for 2017-18. The Finance Bill was a Money Bill and the Upper House (Rajya Sabha) could not amend or reject this bill. 

The passing of the Finance Bill (money bill) has sparked a controversy as it included 40 amendments which the opposition said could not be part of a money bill since they are not money matters. The Opposition said the government slipped several non-financial amendments into the Finance Bill because, being a money bill, it did not need approval of the Rajya Sabha, where the ruling NDA is in minority.

Read: Parliament approves Finance Bill 2017; Rajya Sabha amendments rejected

Money Bill- An overview

The definition of "Money Bill" is given in the Article 110 of the Constitution of India. According to Article 110, a Bill shall be deemed to be a Money Bill if it contains only provisions dealing with all or any of the following matters, namely:-
 

(a) the imposition, abolition, remission, alteration or regulation of any tax;
 

(b) the regulation of the borrowing of money or the giving of any guarantee by the Government of India, or the amendment of the law with respect to any financial obligations undertaken or to be undertaken by the Government of India;
 

(c) the custody of the Consolidated Fund or the Contingency Fund of India, the payment of moneys into or the withdrawal of moneys from any such Fund;
 

(d) the appropriation of moneys out of the Consolidated Fund of India;
 

(e) the declaring of any expenditure to be expenditure charged on the Consolidated Fund of India or the increasing of the amount of any such expenditure.

Read: Using Finance Bill to amend non-financial laws is not proper

Role of Rajya Sabha in passing money bill

Money Bills can be introduced only in Lok Sabha. Once money bills are passed by the Lok Sabha, it is sent to the Rajya Sabha. The Rajya Sabha may not amend money bills but can recommend amendments. To make sure that Rajya Sabha doesn't amend the bill by adding some non-money matters (known as Financial Bill), the Lok Sabha Speaker certifies the bill as a money bill before sending it to the upper house, and the decision of the Speaker is binding on both the Houses. A money bill must be returned to the Lok Sabha within 14 days or the bill is deemed to have passed both houses in the form it was originally passed by the Lok Sabha.

Implications of money bill

Money bills include provisions for imposition and abolition of taxes, for appropriation of moneys out of the Consolidated Fund. Rajya Sabha can make amendments in a Money Bill passed by Lok Sabha and transmitted to it. It is open to Lok Sabha to accept or reject any or all of the recommendations of Rajya Sabha with regard to a Money Bill. The Lok Sabha has the powers to vote these amendments out and then the Rajya Sabha can not make any changes.

Article 110 of the Constitution of India defines what a money bill is. The finance minister has justified inclusion of other matters under the money bill umbrella by arguing that these have financial implications on the consolidated fund of India. The opposition has argued that this is a spurious argument since any bill has some financial implication and therefore can be called a money bill, which will beat the very purpose of having this provision.

Why Rajya Sabha matters

The Indian parliament has two houses. One is the Lok Sabha which has members directly elected by the people and the other is the Rajya Sabha which has representatives of the state. In the Indian federal system, it is entirely possible that a government at the centre in Delhi, may not have a single MP from some state. This would lead to a situation in which that particular state may not have any say in how this country is run by the Union government. In such a situation, the state has its representatives in the Upper House (Rajya Sabha).

The Rajya Sabha ensures that states can have their say in running the country when laws are made. By adopting the money bill route for matters which (as the opposition alleged now) may not qualify to be money bill matters, the government has sought to bypass the will of the states, which is expressed through the Rajya Sabha.

The Rajya Sabha is also the permanent house and can guard against momentary rushes that can sometimes dictate Lok Sabha majorities.

Moreover, as Pavan K Varma argues in this piece, the Rajya Sabha also has some exclusive powers

In addition, Rajya Sabha has two exclusive powers: it can with the support of two-thirds of its members delist a subject under the exclusive State List and declare it to be of national importance, empowering Parliament to legislate on it; and it can create one or more new All India Services.

Whether a bill can be a money bill is decided by the Speaker of the Lok Sabha whose decision is deemed final. There are no other checks on the use of the money bill route by a government with absolute majority in the Lok Sabha.

The same route was used to pass the Aadhaar Bill in 2016 and its classification as money bill by the Lok Sabha speaker has been challenged in the Supreme Court.

Current controversy

Lok Sabha on last Wednesday completed the Budgetary exercise for 2017-18 by passing the Finance Bill 2017. The Opposition said that the government included non-financial matters in a money bill to escape scrutiny in the Rajya Sabha where the NDA is in minority.

The Finance Bill 2017 gives the central government power over the appointments, tenure, removal, and reappointment of chairpersons and members of several tribunals. The shifting of these powers, which now vest in the respective laws governing these tribunals, to the government can lead to abuse and manipulation.

The Finance Bill 2017 has made several structural changes, including making Aadhaar numbers mandatory for filing tax returns, allowing companies to make bigger, anonymous political donations and capping single cash transaction at Rs 200,000.

The opposition is saying that the government passed the provisions dishonestly through a money bill which could be voted only in the Lok Sabha where the NDA has a majority. Otherwise, these provisions would have faced resistance in the Rajya Sabha. Though Finance Minister Arun Jaitley has termed the amendments only 'incidental'. He has also argued that certain non-financial provisions could be included in a money bill.