The Union Budget outlines the government’s spending priorities and can alter tax collection and revenue distribution, making it essential to the functioning of the country. But unlike ordinary legislation, which must be discussed and passed by both the Houses, the passage of the Budget only requires scrutiny by the Lok Sabha, in effect, bypassing Parliament and the President. This special process has scope for abuse, given the limited checks on the passage of a money Bill.
Budgets have been used by the executive to enforce its will without relying on Parliament. Such processes undermine democracy and without legislative scrutiny, could damage the country’s political economy. Justice D.Y. Chandrachud, in a dissenting opinion against the passage of the Aadhaar Act (2016) as a money bill, had argued: “Passing of a Bill as a Money Bill, when it does not qualify for it, damages the delicate balance of bicameralism [having 2 houses of Parliament] which is a part of the basic structure of the Constitution. It constitutes a fraud on the Constitution.”
In an increasingly polarised political system, strong checks on the executive abuse are necessary to diffuse tensions and ensure accountability. Money Bills and the role of the Speaker in classifying them must be reconceived to help balance the dual aim of ensuring spending and strengthening democracy.
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Money Bills and their origins
The Budget is classified as a ‘money Bill,’ by the Speaker of the Lok Sabha under Article 110 of the Constitution. The Rajya Sabha can recommend non-binding amendments to a money Bill, and it cannot be vetoed. This prevents a government shutdown and ensures that an unelected House of Parliament does not remove an elected government.
The practice of bypassing certain legislation through the money Bill route goes back to a dispute in Britain between the House of Commons and the House of Lords. The House of Lords, an unelected House, blocked a Budget introduced by the then Liberal Government, despite the latter’s majority in the Commons. Eventually, the Commons passed the 1911 Parliament Act that removed the House of Lords’ right to veto budgets by classifying them as money Bills. This was incorporated into the Government of India Act (1935) and then in the Indian Constitution (1950) after Independence. Other former British colonies such as Canada and South Africa have similar provisions in their constitutions.
The founders of the Constitution envisioned that money Bills would be used to prevent an unelected upper House from destabilising an elected government. In Constituent Assembly debates on provisions for money Bills, there was a stronger focus on understanding how the Budget ought to be passed, rather than on the discretionary power of the Speaker. For example, Shibban Lal Saksena, a freedom fighter, questioned if adequate time could be allocated by the Constitution to debate the Budget:
“Everyone knows that here in India at present we finish the whole general discussion and the discussion of cut motions in seven days and the entire budget is then passed finally…This really means that the Assembly does not get the opportunity to perform its duties and whatever the Ministry of Finance says is carried.”
This concern focuses on the budgetary process itself, and the ability of Parliament to scrutinise government spending. Saksena was foreshadowing the potentiality of a government to reduce debate time on a Budget, undermining the power of Parliament to review expenditures.
Parliamentarians cannot challenge the Speaker’s ruling on the classification of a money Bill and cannot compel the speaker to ask for her reasoning. The potential for abuse of money Bills and legislative discretion is exacerbated by the Anti-Defection Law, where a whip issued by a party prevents MPs from voting against the party line or they could be expelled from Parliament. A government with a majority in Parliament can pass the Budget or any money Bill unamended as a result.
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Discretionary powers and their potential abuse
Governments have attempted to pass legislation by avoiding parliamentary conventions that allow the proposed laws to be effectively scrutinised, such as sending Bills to committees for further review. This reduces the time to debate and leads to the passage of laws using voice votes, effectively leaving MPs screaming their vote in favour or against a Bill. For example, in 2016, the government passed the Aadhaar Act by classifying it as a money Bill over protests by the opposition, activists and civil society. Jairam Ramesh, chief whip of the Congress in the Rajya Sabha, had questioned its constitutionality in the Supreme Court. The court upheld its validity as a money Bill, with one dissenting opinion by Justice Chandrachud.
The 2017 Budget introduced electoral bonds, which legalised unlimited anonymous donations and removed caps on corporate donations to political parties. It also used the money Bill to amend the Foreign Contribution Regulatory Act (2010) to remove limits on foreign donations to parties. This move legalises quid pro quos between government and its donors and reduces accountability over political spending.
Moreover, the 2017 Finance Act also fundamentally changed the working of 26 judicial bodies such as the National Green Tribunal (NGT), and the Income Tax Appellate Tribunal, among others, clearly undermining the separation of powers between branches of government. The Bill was challenged in court, which eventually struck down provisions related to the tribunals, and questioned whether passing such provisions through the money Bill route was legitimate.
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Potential ways to strengthen the budgetary process
The abuse of money Bills to bypass the Rajya Sabha is evident, as is the discretionary power allocated to one individual to classify legislation. Other countries have found ways to strengthen their budgetary processes to ensure that the opposition and both Houses of Parliament can provide their perspectives too.
In the US Senate, its upper House, a special procedure is used to pass the Budget, known as Budget Reconciliation. Under this process, the Senate can pass legislation through a simple majority, not a supermajority of 60 votes. However, this process can only by used once a fiscal, and all legislation must be approved by the Senate Parliamentarian, a non-partisan appointee, and must not increase the Budget deficit, among other conditions. Moreover, committees in both Houses play essential roles in drafting the Budget, before it is discussed in the legislative chamber.
In France, the constitution mandates that after the Budget is presented to Parliament, it has 70 days to discuss and pass the Bill. Its Parliamentary committees play an essential role in drafting the Budget, and the process takes months before being presented for vote.
Similarly, India could delegate the task of classifying legislation to an individual or a panel that is constituted by the opposition and floor leaders in Parliament, while also involving committees in the Lok Sabha and Rajya Sabha. Involving Parliament in Budget discussions from the onset of the process will strengthen oversight and more voices will be represented.
India needs to sustain its checks and balances on executive control; curbing the abuse of money Bills will be an important step. Discussion, debate and dissent are essential features of any democracy. Notwithstanding the need to ensure continued government spending, Article 110 must be reconceived to reduce discretionary power and ensure that money Bills are used for their correct purpose — to fund the government, not undermine the separation of powers.
Vibhav Mariwala studied History and Anthropology at Stanford University. Views are personal.
(Edited by Anurag Chaubey)