The perversion of ‘money bill’

February is budget month in India. The Union and various state governments will lay out their plans to raise and spend money for the next year, and they will all look to pass a ‘money bill’ for this purpose. This ‘money bill’ (usually called a ‘Finance Act’) will be introduced and passed in the Lower House of Parliament or Assembly (the Lok Sabha or Vidhan Sabha) and, unlike other bills, gets sent to the Upper House (Rajya Sabha or Vidhan Parishad) only for their information. The Rajya Sabha, for instance, cannot make any changes to a money bill passed by the Lok Sabha and has to return it within 14 days or it is assumed that the Bill is passed.

This is not common across all democracies. In the United States, for instance, both the Senate and the House of Representatives have to pass any spending bill for it to become law. In fact, the US federal government shuts down when one or the other chamber fails to pass the Bill for partisan reasons. So, why does the Indian Constitution require that money bills need to be passed only by the Lower House?

The answer lies in the history of the United Kingdom Parliament.

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Like the Indian Parliament, the UK Parliament has an Upper House (House of Lords) and a Lower House (House of Commons). Unlike the Rajya Sabha, the House of Lords is made up entirely of nominated “lords” and, over centuries, there has been a constant tussle for power between them and the popularly elected House of Commons. Over the years, the House of Commons became more powerful since it was the elected body, but the House of Lords tried to find ways to assert itself.

This conflict in the UK became a serious constitutional crisis in 1909. Under Prime Minister Lord Asquith, the Liberal Party proposed a so-called “People’s Budget”, which hugely increased the taxes on the wealthy. Income taxes were increased and land taxes levied with the idea of taxing the UK’s landed classes and redistributing wealth. Unsurprisingly, the landed nobility, who mostly filled the House of Lords, blocked the budget, resulting in a deadlock. Without a budget, the government could not function, but the Liberal Party did not back down.

Fresh elections were called for in 1910, seeking the people’s mandate to reduce the power of the House of Lords, but the Liberal Party only got a hung verdict. Though the budget was passed, it took another general election in the same year to finally pass the Parliament Act, 1911, which removed the power of the House of Lords to reject ‘money bills’ passed in the House of Commons. Only the Speaker of the House of Commons could certify any Bill as a ‘money bill’, and once it was so certified, no one could challenge it.

Interestingly, the newly crowned King George V played a key role in convincing some recalcitrant lords to vote for the 1911 UK law. If the Bill did not pass, he threatened, he would create hundreds of new peerages and have them outvote the existing hereditary lords in the Upper House.

The provisions of the 1911 UK law have been incorporated into the Constitution of India in so far as money bills are concerned. The members of the Constituent Assembly took it for granted that the provisions relating to a ‘money bill’ are needed in India. Under Article 110, once the Speaker of the Lok Sabha certifies a Bill as a ‘money bill’, it only needs to be passed in the Lok Sabha and does not need to be passed by the Rajya Sabha to become law. Like with the 1911 UK law, the Constitution forbids courts from examining whether the Speaker correctly certified a Bill as a ‘money bill’.

Recently though, the Union government’s use of the ‘money bill’ route to bypass the Rajya Sabha has been controversial. What the Constitution-framers did not foresee, perhaps, was the Speaker becoming a partisan agent of the ruling party and certifying all sorts of bills as ‘money bills’. One hopes that the Supreme Court will soon clarify the matter in the pending case and restore ‘money bills’ to their original democratic purpose.